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This seems to be a common question these days, especially among the growing breed of billionaire philanthropists. For the rest of us, it looks like a good problem to have, but its not an easy one to tackle.

As a thought experiment, lets imagine one fine morning I discover my bank balance has increased by $1 billion, bequeathed to me by a loving uncle, with two conditions. I must give it all away and I should significantly change the world in a positive way. I cannot use a single dollar for myself, even to buy a candy or whatever little a dollar can buy these days. As a loving nephew, I simply can’t refuse. I jump at the opportunity to significantly change the world. With a billion dollars at my disposal, if I can’t change the world, who else can? We all know money makes a difference, and I reckon a billion dollars can make a big difference. I start right away, exploring options.

  1. As a naive philanthropist, the first idea to hit me is to find a million poor people and give $1000 each. Or I should hunt for 1000 really poor & deserving folks, and handover $1million each. No, that doesn’t sound right, I should be more selective. I should look for deserving people all over the world, folks who are really suffering because of poverty, war, disease etc. and handout cash to them, in the proportion I deem effective, based on their conditions. Then I remember my uncle’s second condition – I should significantly change the world. Handing out cash provides immediate & short-term relief to distressed folks, but I can’t hope to change the world in a significant & lasting way.
  2. Another option is to donate to my favorite charities and spend on causes close to my heart. This sounds quite easy as all I have to do is find a few good charities and handover some portion of the billion dollars. I can check out their history, integrity, effectiveness etc. beforehand and hope they can change the world significantly on my behalf. I can spend the rest of the billion dollars on causes which interest me – like building hospitals, endowing universities, donating to museums, providing scholarship to deserving students etc. Now, this sounds better than handing out cash. This can create lasting positive changes to people’s lives and communities, over time. But can I change the world in a significant way doing this? I look around at other philanthropists who have been doing such good deeds, over decades & centuries. Good, positive & lasting changes? Yes. But did they significantly change the world? No.
  3. How about endowments & trusts? They hold a corpus fund, invest it and spend the income on  various charitable activities. Should I setup a charitable trust? The good thing about such trusts is they can last for decades & even centuries if the trustees do a good job in investing the funds prudently and are good fiduciaries. The trust becomes my legacy and I become immortal. Wow, it sounds good. But, no, stop. If I can’t spend the corpus and only the trust income can be given away, I won’t be giving away the billion dollars the way my uncle wanted me to. Moreover, with a relatively smaller income from the corpus fund, can I really hope to change the world in a significant way? Guess not. Besides, my uncle could have setup a trust himself, without having to give me the billion dollars.
  4. I always dreamt of being an entrepreneur. Why not use this opportunity, spend the billion dollars on social ventures which create an impact, a big bang change in the world? I could support green energy ventures like solar & wind. I could fund pharma companies to find cures to various diseases. Some of these ventures could fail, but a few of these could have asymmetric payoffs. Besides, I can support (or even start) campaigns all over the world to improve child care, protect wild life, fight climate change and so on.  I can go further and figure out ways to deploy my funds to lobby governments & influence public policies to benefit the world at large. Now, this sounds promising. Better than the earlier options. Of course, I need to be selective, I can’t do all of these. The risk is that returns are not certain. Such activities have not been attempted at a large scale before. While they are interesting (& even exciting) alternatives, they are uncertain…I am not sure if they can help me to change the world in a significant way.
  5. Why not try a mix of all the above options? Perhaps such a mix can compound the benefits as well, thereby changing the world in a significant way. I need to figure out how best to handle them all – cash handouts, donating to charities, building hospitals, funding social ventures, running campaigns, lobbying government, etc.  I also need a good capital allocation discipline across these various options, which is not easy, but doable.  This seems to be the best way out. Or is it?

I look up history. Who significantly changed the world in the past? Who made a positive impact, to not just a few hundred people or a single town, but to many millions of people, across borders & communities….significant changes to lives which can be felt even after decades & centuries?

A few examples spring to the mind – Jesus Christ, Buddha, Mahatma Gandhi, Nelson Mandela…and a few others (including the likes of Hitler & Mao Zedong as examples of people who changed the world significantly in a negative way).

What do they have in common? What were their motivations, methods, behaviors, thoughts & actions? Why did they succeed?

They were fanatics & reformers. They dedicated their lives to their causes. They didn’t mind dying for their beliefs. They had bold & big dreams. They almost believed in the impossible. They were ignored, ridiculed, & criticized, before being accepted, respected & admired. They mobilized not just people, but all kinds of institutions – cultural, political, religious – to fight alongside them. They inspired devotion among their followers. They changed the world significantly.

And interestingly, for many of them, money was not an important factor in their lives. Though, of course, the times they lived in were not as money-haunted as today’s world is.

Now, the chances of me becoming a fanatic are pretty slim. If I do end up becoming one, the billion dollars in my account will be excellent ammunition. I would have done my uncle proud.

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