I’ve been reading a lot lately about the Giving Pledge — Bill and Melinda Gates and Warren Buffet’s campaign to get other billionaires to pledge at least half their fortunes to charity.
I am of two minds on this. On one hand, I think people can spend their money however they want, and there is a lot of innovative work going on in philanthropy right now. The Gates Foundation is transforming the playing field in global health and vaccines, and hopefully someday will do so more effectively in education than the misguided small schools initiative the foundation had been championing. The Broad Foundation is also doing good work in education.
But I wish we could broaden the definition of charity a bit. You don’t have to be giving money away with no possibility of financial return to be doing good for the world. Indeed, you might do plenty of good by aiming to get a return. I’ve always loved the adage that the best social program is a job. The non-profits these billionaires are pledging to fund create jobs, but so do for-profit companies. When billionaires invest or loan money to start-ups, they are creating jobs. New companies are responsible for the majority of job creation in the American economy. As people land these new jobs, they spend their paychecks on housing and furniture and cars and clothes and gadgets and everything else, thus stimulating demand, which in turn leads to more companies employing more people.
In other words, such investing creates benefits for society. Of course, it tends to also create benefits for the investor, but so what? Perhaps there could be some sort of hybrid of the two, with charity-minded wealthy investors putting money into slightly riskier ventures than they otherwise might, or showing a bias toward ventures that employ more people rather than fewer. But just because something is called “charity” doesn’t mean it’s inherently more worthy than the other activities people do. There are many ways to give back.