Michael and the $70 Million Problem (Redux)

Michael and I looked over the 500 plus comments and suggestions that were generously offered regarding his upcoming dilemma:

How should I give away $70 million?

We were joined by his sister, Cathy, who also has a “small sum of money” (her words) that she needs to donate in the coming decade. Apparently, she will have to give away “only” about $45 million.

The three of us were overwhelmed at the number of thoughtful responses. Michael and Cathy’s specific reactions are presented below. We all agreed that the discussion should be continued.

Most of their friends won’t receive their trust-related disbursement for a few years, so I offered to bring together other privileged twenty- and thirty-somethings who might be looking to give away large sums of money to charity. If any aristocrats in the blogosphere would like to join me for a discussion, I invite you to e-mail me and come to N.Y.C. Don’t worry, I’ll pick up the tab for coffee and lunch.

PhilanthropySudhir titled this photo “Philanthropy.”

I also shared with them the suggestions of “The Thugz,” the group of ex-street hustlers/gang members with whom I watched season five of The Wire. Shine and the others laughed when I asked them, “How can Michael use his charitable dollars most effectively.” They all wished they had this problem. Their replies echoed some of their earlier thoughts on the state of modern society:

SHINE: Like we always tell you, Sudhir — a man wakes up in the morning in most poor places, and his first problem is, “What am I going to eat?” He has to feed his family. Lots of people don’t realize that if you can’t eat, your whole day gets messed up.

I can’t tell you how many n– -s do stupid shit because they couldn’t get no food. Lot of people rob and steal to put some food in their belly. Make sure people got food. A man stops feeling angry against the world when his belly is full. That’s what I’d tell the brother to do with his money. And, make sure the older folks got food, not just the kids.

ORLANDO: Get them guns off the street. And, I don’t mean just around here (New York City). I mean go where them white folks live — New Jersey, and places like that.

If brothers want to fight, they should do like they did in the old days: with their hands. You get guns off the street, you’ll get rid of a lot of problems. I agree with Shine, people have to eat. But, there’s always going to be angry folks. The problem is when they start shooting each other.

TONY-T: The suburbs. My cousin grew up there. Went to college. Ain’t learned a thing. Tell Michael he should pay these kids to go do something so they can really learn what life is like.

Instead of going to college, pay them to go fix a house, or hang out with hustlers who struggle out here. I’ve been to the suburbs. You got some seriously ignorant people out there who need help.

KOOl-J: You want the truth? I’d make it a law that if people get money when their parents die, they have to spend ten years doing some kind of free work. You know, like what I had to do after jail: clean up the streets, paint buildings.

I sell a lot of dope to the rich kids, so I know what they’re like. They got a lot of time, and they don’t do nothing! That’s a crime. Make it so they can’t sit around all day, snorting coke. If they want their money, they have to get up off their a–. Like Michael is doing.

Michael and Cathy both admitted that their peers had relatively little pressure to make a “positive societal contribution.”

You grow up like I did, and it’s all so easy,” said Michael. “And, your parents really don’t think a lot about what you need. I mean, every time I had a problem, my mom wrote a check. My dad was never around.

“Right, and when Dad wasn’t around, his secretary wrote us the checks!” laughed Cathy.

So, I spent six years getting high, doing coke and feeling horrible about myself. Kool-J is absolutely right. There’s no one who teaches us what our responsibility is. And, now, I have to give this money away. But, how?! I really struggle to figure out where to begin.

I mentioned several options, including giving money to an established foundation and making a career out of philanthropy, as opposed to simply writing checks. Or, why don’t they draw on experts who help the rich give their money away?

Honestly, when you work with consultants, the first thing they do is make sure you don’t see what is really going on. If I have to see another brochure about a kid who beat the odds, or attend another party where my friends get applauded … It’s sickening, I don’t want consultants to protect me from the outside world. My parents already accomplished that.

Cathy continued by turning the lens inward. She pointed to GiveWell, an organization that she felt understood one of the central problems for her generation.

I’d like to help other people I grew up with first. I know that sounds crazy. If I tell you I’ve got hardships, you’ll laugh, right? I mean who really believes we have a hard life? The problem is that we have resources, but no direction. My friends like this group called GiveWell because they sort of get how we think, they understand where we are coming from. I would like to get to my friends just after they graduate, right when they start having problems — drugs, depression, getting bored. That’s the time I think I could help them. But, I still don’t know how, exactly, to do that.

“I know what I don’t want to do,” shouted Michael, spilling his coffee on his lap. And, at this point, the conversation turned to the comments of Freakonomics.com readers:

I will never act like I know better how people should spend their money. The one thing I can’t stand is when my friends give away money and then write a report card. At some point, I think you just have to trust that the money is doing good.

My friends give away millions, and all they do is b–ch and moan that they didn’t get the results they wanted. What did they expect? To end poverty overnight? They all want this oversight, but frankly it’s all armchair complaining.

Michael liked the suggestions regarding assistance to hospitals and medical clinics. He felt passionate about making sure people had access to good medical care: “I agree (with johnjac, #60). People shouldn’t die because they couldn’t get to a hospital.”

He wanted to combine health-related philanthropy with an approach to solving hunger in America.

I think that Debra (comment #380) is thinking like I am. I’d like to create a place where you come in, get a meal, get checked out, and get medical care. One stop. I’d also like to make sure we end hunger in this country. I think Shine is right: you can’t function if you’re hungry.

But, he quickly made the point that U.S. needs deserve priority over international charity — a point contested with great passion by many Freakonomics.com readers.

I can’t believe all these people think we should first give outside America! That’s exactly the problem.

I go to the Hamptons, and they have these stupid fund raisers for things going on that are thousands of miles away. And, then you go back to 5th Ave (on Manhattan’s Upper East Side), and you tell your doorman to make sure no homeless people ask you for money on the block. It’s sick.

Michael suggested that the government force rich, new philanthropists to give only in their own town or city. “Give locally. That way you’ll be forced to see the pain close up. And, you’ll see you can’t fix it overnight.”

“So, you’ll be giving to whom exactly? The poor child at 84th and Park?” I said with just a hint of sarcasm.

“No, but maybe I could give to their maid or nanny,” he quickly retorted. “She is getting $5 per hour, and is probably getting treated like crap!”

Cathy chimed in.

A lot of people (on the blog) talked up the idea that we should be social “entrepreneurs.” I disagree. I don’t like it when people like me give money away to get a return on their investment. That’s disgusting. I didn’t do anything to get rich, so why should I deserve to get anything back? And, I think that the micro-lending people also do the same thing. Give a dollar, get back 30 cents. Wow, that’s not charity, that’s selfish.

Michael felt similarly, but moved the conversation in a different direction — along the lines suggested by comment #299.

I like the idea of having people do things like building roads, or teaching the poor. But, I don’t like the Teach for America program. Two years, and then you go and work for Merrill, feeling good that at least you tried to save the world.

For God sakes, do it for longer. And, I think that people should do it differently. Maybe they have to teach for a year, go to work at Merrill, and then come back after five years. Then go back to being an I-banker, and then teach again. This way, you have to reconnect, and feel the pain of the world around you.

Michael kept saying “feel the pain” throughout the conversation, so I asked him what his next steps would be to get out of his insular world.

He said that he’d like to take a car and drive around the country and talk to people for a year. “I know I would prioritize hunger and hospitals and things like that. But, maybe I should get to know what’s out there. For a year, I’d like to feel my way around.”

Happy trails. Stay tuned.


Mike

Berkeley Center for New Media has started "Donation Dashboard," which "uses machine learning techniques to recommend a customized portfolio of good causes based on your personal ratings of sample non-profit organizations."
http://dd.berkeley.edu/user/about.php

Looks intriguing.

link via boingboing.net

soaresb

Run for public office -70 million should get you there -and save the world from there (at the very least your constituents can be proud that they have a representative free for 'special interests', whatever that means).

Gustavo

Screw everybody. hire world class teachers, take homeless kids or abandoned kids from a poor neighborhood off the street and have them live at this school or work something around with their parents. Kids should benefit the most.

PEK

What about using the money to fund "green" building projects in inner cities? Cities are some of the biggest emitters of greenhouse gases, so there is a lot of potential to reduce their carbon footprint. You could use the money to fund the training of inner cities adults and then pay them to retrofit buildings - schools, office buildings, hospitals, etc. Those buildings would save a lot of money in energy costs, and they could be asked to donate the money to after-school childcare programs, health centers, or community activities in poor inner-city neighborhoods.

Dale S.

It's very simple.

These two should spend the next several years actually working in charity. No, not in administrative jobs, but on the front lines, feeding the homeless, in medical clinics, etc.

The lowest-level employees in an organization are usually much more aware of the missed opportunities at efficiency as well as waste that goes unnoticed.

Before either of these children give away their money, they should know exactly how it should and should not be spent.

A. Carlill

"And, I think that the micro-lending people also do the same thing. Give a dollar, get back 30 cents. Wow, that's not charity, that's selfish."

Surely social entrepreneurship/microlending is worthwhile if you can use that 30 cents to continue helping communities? It's not about greed, it's about using money efficiently.

Rob van Stee

>

It seems that Michael's ideal world is one where all local problems have been solved. He wants to go "out there" (but naturally remain inside the United States) and "feel the pain". He knows that the problems cannot be solved overnight, but this is what he would want. So, as long as there are no homeless people on your block asking for money, everything is fine.

It appears to me that Michael does not WANT to break out of his insular world.

All that he wants to do is to make his island *bigger*, so that it contains the entire United States. Then at least he will not have to be personally confronted by all these poor people, since they will all be "thousands of miles away" and therefore (obviously) much less important.

I do not know how to respond to this sentiment.

IG

hi,

i think is an interesting dilema. i can try to suppose, speculate and logically deduct thoughs for (my) eternity but the problem remains.

If you are seriuos about "transforming", and i think you want to do this, my first recommendation will be to separate yourself from your current enviroment.

second, ignore all self-constatrains for giving away (only 1M batch, only locally, etc..) and forget about the money. (honestly the ammount you want to give away is not enough to change any major/global burning issue today)

third, forget about giving away and develop yourself. get meaning in life, like you said, travel, read, have a kid, whatever. when you'll get there, you'll know where to do good.

Luckily free will, personal choice and democracy(kind of) are still here. if we would have found a mathematical solution for charity and problems to solve we would have a cure for AIDS but people would die of flue(or not :).

good luck.

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Anthony

"If you really want to "feel the pain" abandon your wealth completely. You are not going to feel the pain by driving around in your nice car watching what happens outside the windows of your nice hotel."

Won't work. He'd be a tourist taking a holiday in other people's poverty, and he would always know that he could leave and go back to the rich man's life at any time.

Rent a flat above a shop, cut your hair and get a job, smoke some fags and play some pool, pretend you never went to school - still you'll never get it right, 'cos when you're laying in bed at night watching roaches climb the wall, you can call your dad, he can stop it all... You'll never live like common people, never do whatever common people do, never fail like common people, never watch your life slide out of view, and then dance, and drink, and screw, because there's nothing else to do!

-- Pulp, 'Common People'

GaryB

Cathy> I would like to get to my friends just after they graduate, right when they start having problems - drugs, depression, getting bored. That's the time I think I could help them.

So people who grew up with no challenge and no purpose are going to be helped by more spoon feeding and hand holding?

There's no end of scientific and social problems to be solve, things to be invented, new subjects and areas to be mastered. Give yourself a purpose that you're a little passionate about and you won't have to be bored depressed. I have little kids now, one of them told me "I'm bored".

I wrote her a little song: "I don't have time to be bored anymore, I don't have time to be bored. When I was young, the days were a haze, but that isn't true anymore. I don't have time to bored anymore ..."

BTW. I did check out that GiveWell http://mssv.net/wiki/index.php/Givewell . The founders were completely unethical in a way that suggest rather deep mental illness/compulsive liers. I wouldn't go anywhere near it.

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Dave

Good discussion.

That said, I think they completely misunderstood microlending here: It's not that they would get a return on investment, it's that the FOUNDATION they started/gave to would get an ROI. That is, $70 million could be lent out dozens time times, creating hundreds of millions in microloans rather than just $70M.

They wouldn't get anything back, but their money would go much further...

Marcus

Sudhir always has some of the best updates.

I'm curious to hear (from Cathy and Michael) what they feel that giving away all their cash will provide them with.

I'm also unsure why Cathy is against the whole 'social entrepreneur' thing. Surely the goal of charitable work is to do the most good for the most people. If the work manages to be self funding then more people can benefit over time.

For example, Microfinance:

a) Enables people to better themselves.
b) Improves communities for the long run, and
c) Has a chance of breaking even, hence ensuring that the good work can continue.

This seems much better than giving people what amounts to handouts. Cathy and Michael have essentially received handouts and they seem to be unhappy with their lot.

In response to #45 - aspiring to future philanthropy:

No.

In response to #47 - strong opinions blah blah blah...

Most of us like having strong opinions. Perhaps you should stop trashing people for this.

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GaryB

We need solar power. Either learn to VC for it and/or create training programs for some of the down and out kids to become installers.

roystgnr

"I can't believe all these people think we should first give outside America!"

I can't believe he's surprised that readers of an economics blog would base their decisions on a consideration of the law of diminishing marginal utility. If you're a Florida resident with 75 million oranges to give away, you're probably best off searching more than your home town for likely recipients.

Shannon Vyff

I think people who are bored, can be inspired by the prospects of humanity's future. Balancing donations to organizations on the front-lines of helping end hunger and inequality now can be done along with supporting advanced technology such as the development of artificial intelligence. Working to build super computers millions of times beyond the capacity of today's, that can help solve problems of aging, over-population, resource depletion, environmental toxicity amongst a few hot-topics including drug addiction. Novamente and Singularity Institute--are some of the many companies trying to help humanity by advancing technology. The Methuselah Foundation is stimulating research into ending age-related diseases.

I teach religious education to children at my church, and they are excited about life and learning--they have not yet hit the responsibilities and disillusions of adulthood. They help raise money for Unicef, and Heifer Foundation, they also love to hear about neuro chip implants, how humans are working on ending aging, space travel--etc. I wrote an adventure story for kids "21st Century Kids" to teach how the future could be, according to scientists now. We have problems, but we have hope. People looking to donate large sums of money now, can help those who are desperate--and still stimulate technology research and development to help advance all of humanity's future.

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Matt

These guys need to figure out what they feel is important. The size of the donation is enough to have a serious impact.
Interestingly, I have recently been through a similar exercise recently, albeit on a much smaller scale, because of the sale of my business. We felt a strong responsibility not only to give back, but to give responsibly. The obligation, we feel, extends beyond writing the check. The more we talked about it the more we realized that we were setting up hurdles the non-profit had to jump through in order to get funding. So we decided on setting up a non-profit version of a venture capital fund. Mechanically it is a donation, but the same planning and thought process is used. The non-profits we partner with are typically early stage and need help in developing their business plans through seed capital and
The traditional economic model of non-profits is vastly different from for-profits. The satisfaction of the customer need has nothing to do with organizational survival. If a non-profit can raise enough funds to cover their overhead, it lives to fight another day. Not so in the for-profit world.
By tying future funding to performance, and using the skills and resources at our disposal to help the organization achieve their benchmarks and run their business in a customer focused manner, this ensures that effort (and $) is not wasted and every move is well thought out. It also corrects the inefficiencies inherent in the non-profit economic model.
This is still very much an experiment at this point, but we are 6 months into it and have several "portfolio" organizations that we are currently helping. I wish these guys luck and hope their good fortune can benefit society in a huge way.

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example

GiveWell = idiotic scam.

Jerry Tsai

If there is one thing of which I am certain, it's that pure charity is not truly fulfilling. The idea of not simply giving a person a fish, but teaching her how to fish may be trite but it is also true. I would encourage the philanthropists to fund causes that enable those who want to help themselves to help themselves.

Omair

I think Cathy's aversion to micro-lending is definitely understandable, especially considering that some folks now are charging near 100% interest a year. But if she's got this large amount of money to work with, why not do some micro-lending and charge a very low rate of interest that people aren't going to be able to get elsewhere. She can use the proceeds to keep on lending to people who need it, and stop short of making a profit. And if she is still completely against charging interest, I still think more good can be done by giving people small sums of money so they can afford efficiency enhancing products such as a bicycle, cell phone, or even a buss pass. This is the sort of giving that will help people help themselves.

Also, I really like what Shine said about feeding people, and making sure older folks get food too, and not just kids. Too much charity goes to schools for war-affected youth and operations for kids with cleft lips; I guess people just get more satisfaction out of helping the most sensationalized groups.

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Phil Maymin

CHAIN REACTION
For the kind of passionate person he is and the big but not overwhelming amount of money he has, Michael should travel the country (kind of like Borat did), meeting random people in random places, and really get to know them. Find out what their problems are. Then secretly use his money to solve those problems.

The best part is the chain reaction it will start. When something good happens anywhere, in any town, perhaps after a stranger has passed through, even if it wasn't him, people will always whisper, "It was Michael."