Do as much good as possible with your resources
David Goldberg, co-founder and global CEO of Founders Pledge in an interview with Anna Korzeniewska, founder of Social Impact Alliance for Central & Eastern Europe. The interview was published in Forbes Poland on April 5, 2022.
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Anna Korzeniewska, Founder of Social Impact Alliance for Central & Eastern Europe: David – you founded Founders Pledge. What is it?
David Goldberg, Founder of Founders Pledge: Founders Pledge is a community of almost 1700 technology entrepreneurs trying to find solutions to the most pressing social challenges. We work with our members to help them develop and implement impact strategies that utilize their unique resources – primarily financial, but also their time.
How is Founders Pledge different from the Giving Pledge established in 2010 by Bill and Melinda Gates, and Warren Buffett?
Well, I should say that Bill and Melinda Gates and Warren Buffett sort of trailblazed this space many years ago. They invited billionaires to dedicate at least 50% of their wealth to charitable causes during their lifetime. And this is wonderful, but this is exclusively for billionaires. Most of our members, who have already pledged 7bn dollars, and donated nearly 800mln, are not yet at the scale at which they have enough resources to set up their own structures, although some of our members have become signatories of the Giving Pledge. This is why we provide them with a multi-family office of support, including research, strategic advice, and a global giving platform.
The numbers you provided are impressive – 7 billion dollars pledged. But in the start-up ecosystem which you work with only some companies succeed and of those who succeed, only a few are really transformative. How do you estimate the value of future pledges?
At Founders Pledge we try to follow data as much as we can. And since we only accept pledges from later stage companies and founders at this point, we know how much the company is valued according to their latest investments and how much of the company’s equity the founder currently possesses. So it’s a pretty straightforward multiplication of the valuation of the founder’s holding of that company by the pledge percentage.
We expect that the pledge value we have now is only going to go up. The technology sector is not going anywhere. It’s only going to get bigger.
Once the founders have liquidity, who decides how the money is deployed?
Our members have the ability to choose how to deploy their assets. It’s their choice to decide how to give their money away. Many members decide to entrust Founders Pledge with their gifts and some of our members choose to be very actively involved and do it all themselves.
Do you have any members from Central & Eastern Europe?
We have a very large community in Estonia – it’s a phenomenal country when it comes to the number and success of start-ups. A majority of Estonian unicorns are represented among our membership. We have several Polish members and a few in Romania, but as of yet, Central & Eastern Europe is not significantly represented in our community. We hope to change that in the coming years.
Where do most of your members come from?
The UK and USA. And then I believe Germany.
Have you supported any impactful causes in Central & Eastern Europe in the last few years from the money donated in pledges?
Well, we take our members’ interests into consideration when choosing areas to support. And as I mentioned, the majority of our members come from the US, or the UK, or Western Europe; members from Central & Eastern Europe represent a small percentage of our whole community. But it’s our job to reframe how our members think about the world and how they deploy their assets to social interventions.
We believe that focusing on lower- and middle-income countries compared to high-income countries produces better outcomes and results.
More and more of our members recognize the privilege that they had of growing up in developed and high-income countries and want to provide people that have had less opportunity than they did a better chance of success and quality of life.
Can organizations apply for your support?
No, we don’t accept funding applications.
So how do you find solutions?
We conduct our own research. Our philosophy is aiming to do as much good as possible with each Dollar, Euro, or Pound donated. In order to accomplish this, we use our ITN framework – Importance, Tractability, Neglectedness. That means we focus on cause areas that have really large total addressable markets – a large population must be affected by a given problem. We focus on issues that we think have solutions that will work; we don’t want to work on an issue that is unsolvable. And then, finally, the area we focus on has to be neglected by philanthropists or governments. In order for us to invest in a given area, all three conditions have to be satisfied.
Is it how you understand wise giving?
For me and for Founders Pledge, wise giving is basically trying to do as much good as possible with your resources.
Keeping in mind that good is subjective and that everyone has a different understanding of it. It’s the same as how you invest your money in the stock market – you want to invest in a way that generates as much return on the investment as possible. So if you put a thousand Euro on something, you want to see a 10% return and will know you have succeeded when you see that return. This is a very obvious thing. Philanthropy is similar – if you put a thousand Euro into something, you expect to see the social return on investment from it. But it is much more difficult to measure. There are huge differences between social programs – for the same amount of money, you can help a thousand or a million people.
I fully agree, but measuring the social ROI, from outputs to outcomes to impact, is very hard because it requires reliable data. And in many cases, this data is missing.
Yes. And this presents challenges. Not just for current generation explorations. It presents even greater challenges when you try to focus on a hundred years from now. How can you have reliable data? The answer is: you can’t. This is why we distinguish between different types of giving strategies. There are the short-bet giving strategies where we have very reliable data and randomized control trials. In this case you are sort of buying the impact. But if you focus on a long-term future, you can’t utilize data the same way. We call these high-risk or high-reward strategies. They are based on trends and characterized by a high expected value.
The question that comes up to my mind right away is what’s the percentage of your members who are interested in buying impact here and now and how many focus on high-risk, long-term strategies? Do you track it?
We do. It’s one of the key things that we track once our members actually have money to give away. It’s a 60:40 ratio. But in the majority of cases, they invest in both categories.
This is incredible. I thought it would be more like 90:10 ratio.
We are focused on long-term impact. And we do everything we can to get our members focused on it too.
So do you, as Founders Pledge, invest only in big, systemic issues?
We focus on very specific issues that affect a large number of people – mental health, economic empowerment, neglected tropical diseases such as parasitic deworming. They are not related to crises or natural disasters.
I understand. But I’m sure that during the time of crisis, such as the COVID-19 pandemic or the war in Ukraine, your members certainly feel an urge to act. Do you offer any guidance to them?
We care deeply about those currently affected by the war in Ukraine and those who may be affected by its escalation in the days, weeks, months to come. The Ukraine crisis is rapidly evolving, and we don’t feel there’s sufficient evidence available to create recommendations around immediate relief efforts in the region at this time. Though we think this evidence may develop in the near future. We believe that a donor disturbed by the rapidity and destructiveness of this conflict would be able to make the most significant difference by working to prevent future conflicts.
So if one of your members had 10 million dollars to donate in reference to the current conflict, would you advise them to invest only in long-term impact?
No. I would recommend splitting this sum into thirds to focus on immediate, medium-term, and longer-term impact.
On the long-term impact, I’d recommend supporting Professor Philip Tetlock’s critical work on probabilistic forecasting to better predict existential risks like great power conflict and influence policy to mitigate those risks, and our Patient Philanthropy Fund to benefit and safeguard the future of humanity. In the medium-term, I’d recommend holding the funds and assessing the field in 6 months and then again in another 12 months. This would allow you to see the scope of the need, players that are still responding to the needs, and where any critical gaps remain, e.g. long-term, sustainable housing for refugee resettlement, legal assistance, and ongoing direct aid such as medical or food assistance. When it comes to immediate relief efforts, we don’t tell our members where to give because we are not experts in it. We provide our members with insights from those who are experts. But even in times of crisis it is important to focus on scale, tractability, and additionality as I mentioned before.
Thank you David, it was a very practical, but at the same time very universal advice. I have one last question. Your website says: zero cuts, zero fees, 100% impact. And it’s a very strong message. But how do you do it? Nonprofits do need funds to build their capacity and cover their operational costs.
We are a nonprofit but we operate as a business. Our 100% model is true but that doesn’t mean we’re free. We cost money to exist. Last year we spent nearly 5mln dollars on our operating costs. And we can do this because
there is a small group of philanthropists, Dominika Kulczyk among them, who have funded us to be able to provide services to our members at zero cost.
And even though we do not require our members to support us financially, if we are successful in supporting them in their impact journey, they often decide to support us. It turns out that if you do something exceptionally well, and you do it for free, people want to make sure that others have access to it too.
This is a beautiful end to our conversation. Thank you David.
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David is the co-founder and Global CEO of philanthropic community, Founders Pledge. He moved into the non-profit sector from an eclectic commercial background. Having run the gauntlet of finance, start-up, and academia, he started Founders Pledge to make it absurdly easy for entrepreneurs to do good in their work and lives. Following high school, David joined Mortgage Capital Associates, one of the largest privately held mortgage banks in the U.S., where he launched the secondary marketing department. After that, he worked as a mortgage and investment banker at CS Financial in Beverly Hills. David also founded and ran a boutique real estate firm in Germany and was the general manager of Urban Motion. David is a graduate of UCLA and the University of Cambridge.
Anna is the founder of Social Impact Alliance for Central & Eastern Europe, an international think tank operating in 11 countries of the region. Having begun her career in business, she now works across sectors. Forbes contributor and a member of two international networks – Catalyst 2030 and WINGS. Expert of Google.org Impact Challenge CEE. Initiator of hundreds of valuable partnerships with the most renowned companies and organizations in the world. Graduate of the City University of New York (BA) and Nottingham Trent University (MBA). The first Pole to receive a Professional Certificate in Fundraising at New York University (NYU).