Panel, Conference Presentation
Strategic Philanthropy: Investing in the Next Generation of Entrepreneurs
- The Center for Strategic Philanthropy was established earlier this year to develop efficacy metrics aimed at ensuring sustainability over dependency, while the Hunter Foundation plans to allocate 5% of resources to developing such metrics.
- Philanthropy is predicted to shift from passive check-writing to active, accountable funding models with an inflection point toward demanding measurable results, including a strategy where the Milken Family Foundation funds programs for five years with capital dropping from 50% in year one to 0.5% by year six to force organizational independence.
- Small funding amounts ranging from one to ten million dollars are expected to match government and industry funding to unlock over one billion dollars, with specific mechanisms like the Milken Family Foundation using recyclable capital and the Cystic Fibrosis Foundation creating a private equity portfolio to fund medical research.
- Education is identified as a primary challenge for the next 20 to 30 years, with the World Quant University planned to scale from hundreds to millions of users by leveraging internet speed to deliver content to high-population regions like China, India, and Nigeria, while the Hunter Foundation intends to fund Scotland's education sector by absorbing initial risks before government adoption.
- Medical research and public health are projected to account for more than 50% of all economic growth, with disease-specific organizations expected to take first-loss positions to accelerate returns, exemplified by Kalydeco therapies effective for 4% to 6% of cystic fibrosis patients.
- Technology and big data are expected to revolutionize healthcare, banking, power, and education, with over 10 times as many students in Singapore interested in coding and robotics compared to traditional subjects, necessitating a curriculum focused on a "love of learning" rather than static facts.
- Government institutions in 19 countries have adopted fast-track responses that fund ideas within 90 days and notify applicants within 60 days, while the Milken Institute plans to release a public domain template on venture philanthropy for medical care in the fourth quarter.
- Investment strategies include Warren Buffett co-investing with the Gates Foundation, the Hunter Foundation seeking to finance social businesses where 100% of profits support charitable causes, and World Quant applying Sharpe ratios to measure philanthropic efficacy similar to for-profit investments.
- Risks include the negative wake of unintended consequences, resistance to fundamental change, and structural barriers such as Japan's requirement for philanthropy to invest in government bonds which yields a return of only $5 million for every billion put up.
- Human capital development emphasizes that the quality of teachers in a $500 billion to $600 billion industry determines most public school outcomes, with mentorship and social safety nets projected to achieve a 99% success rate for students from the lowest socioeconomic groups based on compensation versus the mean.
- The outlook predicts that seven careers rather than seven jobs will characterize the future workforce, requiring education to adapt to a flattening world where small and medium businesses drive nearly all job creation and skills must be tailored for small entrepreneurial teams.
- Specific timelines include funding disbursements drip-fed over six, 12, 18, or 24 months for three-year commitments with reviews at six-month intervals, and World Quant University aiming to scale rapidly by leveraging technology that was impossible 50 years ago.
- Challenges in attracting talent persist due to the 990 form judging nonprofits on low compensation, creating a barrier to hiring the best and brightest, while the strengthening of disease-specific organizations remains a mission to create economies that sustain survivors, such as in the case of HIV in Africa.