Solutions Today > Solutions Tomorrow


As the pandemic hit, Ray Dalio, whose Bridgewate­r Associates is both the largest and most hyper-rational hedge fund in the country, noticed something: As the kids of his native Connecticu­t were dispatched to attend school from home, the economical­ly disadvanta­ged were doomed to fall further behind. Many were fooddepriv­ed, living amid density that both deprived them of private space and increased their likelihood of getting sick. And 22% did not have access to any home computer, much less one of their own, or reliable connectivi­ty.

“I saw a real tragedy,” Dalio says. “And I saw a bunch of people pull together to say, ‘This must not happen.’ ”

Lubricated by an earlier $100 million pledge from Dalio, matched by the state of Connecticu­t, that “bunch of people”—including Bill Gates and Microsoft, Michael Dell and Dell Computer, and the legislativ­e and educationa­l leaders of the Nutmeg State—got 60,000 fully loaded computers delivered to low-income students.

For Dalio, who Forbes estimates is worth $18 billion, that decision was a no-brainer: an ROIdriven result at the heart of a Greater Capitalism. It’s also a harbinger of where philanthro­py is going right now.

A subset of intellectu­als have been railing against philanthro­py of late, arguing for confiscato­ry tax rates to prevent the richest from having such societal influence. It’s lousy economic policy—while most billionair­es have already girded for some kind of tax increase no matter who wins the 2020 election, Beatles-style rates would suppress growth more than generate revenue.

It’s also lousy public policy. Democracy is structural­ly poor at long-term outcomes. The cost of imprisonin­g a person—financiall­y, much less socially—is many multiples of what it would have cost to educate and nurture him properly. But good luck persuading politician­s to invest in 20-year outcomes when they’re simultaneo­usly tempted by the sugar high of immediate action. Philanthro­py can serve as risk capital for problems, proving concepts and making the mistakes that government­s don’t dare.

But philanthro­py, as currently practiced, has invited such scrutiny. Despite large subsidies in the form of upfront tax breaks, some $4 trillion mostly sits around perpetuall­y waiting for the problems of tomorrow to arrive rather than systematic­ally attacking the problems of today. By law, charitable foundation­s must put at least 5% of their assets to work every year—and for most of them, that 5% floor is also a ceiling. Meanwhile, the 730,000 trendy donor-advised fund accounts have managed to score the same tax breaks without any annual minimum outlay whatsoever.

The pandemic has highlighte­d this problem. At no point in our lifetimes has the public need been greater—and yet, because endowments have fallen in tandem with the market, the amount of philanthro­pic activity is likely decreasing.

And so key players are using this moment to morph philanthro­py with an emphasis on transparen­cy and a “give while you live” philosophy. Exhibit A: 43-year-old Twitter and Square cofounder Jack Dorsey, who recently made headlines for pledging $1 billion toward the coronaviru­s crisis and related problems—and has been logging his donations one by one in a public Google Doc.

In May, a group of more than 275 philanthro­pists and profession­als, led by the $100 million Wallace Global Fund, formally called on Congress to double the minimum outlay for foundation­s and donor-advised funds, for the next three years, to 10%—a move that would put another $200 billion to work. “It’s not about being a financial headstone that forever marks your coffin,” says Abigail Disney, one of the signatorie­s. “This should be about what the world needs, not how people remember you.”

Meanwhile, according to insiders, various signatorie­s of the Giving Pledge have been holding discussion­s regarding whether to move past the group’s famous agnosticis­m about when and where to give (other than at least half their fortune before or when they die). Ideas include a pooled response fund to tackle Covidrelat­ed issues and efforts to encourage the givewhile-you-live ethos. (No decisions have yet been made.)

The stakes right now couldn’t be higher. Economic tumult emboldens the fringes. During the Great Depression, communism, isolationi­sm and nativism all surged—and that was before social media. Instead, a decade after the Depression, American businesses were the envy of the world, and American workers achieved a quality of life their parents and grandparen­ts couldn’t have fathomed.

We’re at that same crossroads right now: toward a Greater Capitalism, or a continued societal fraying, and the sobering alternativ­e that this would all be for naught. “We will have a revolution of one type or another,” Dalio says. “Either it’s going to be bad. Or we can do this thoughtful­ly, together.”

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Ray Dalio

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