The event “Wealth, Philanthropy, and Inequality”, featured a conversation between Jeff Raikes and Ethics in Society Program Director Rob Reich. Raikes is the CEO of the Bill and Melinda Gates Foundation, the co-founder of the Raikes Foundation with his wife Tricia, and also a member of Stanford’s Board of Trustees. Cubberley Auditorium was filled to capacity with students, faculty, and community members for this event, which was part of the Ethics of Wealth series.
Here is one exceptional highlight from that Raikes during this conversation:
For many philanthropists, their heart is drawn to an issue that they want to address in society, a gap they want to fill. And there may be no theory of systemic change, but their impact is basically to help fill that gap. That operating model – I would call it checkbook philanthropy. And I think [that] characterizes a lot of philanthropy, and that’s very important.
There’s another segment of philanthropy that I would call organization building, or something along those lines, where the operating model is more venture philanthropy, where the philanthropist will see that there’s a social entrepreneur and his or her organization has a theory of systemic change that they want to invest in. Maybe it’s Sal Khan and Khan Academy, and so on and so forth. And so the philanthropist in effect has a portfolio of bets, much like a venture capitalist.
Then, specifically [related] to catalytic philanthropy… We’re big believers in the private sector. The market system is a very effective way to allocate resources to produce goods and services for society, if there’s a market opportunity. But if there’s no market opportunity, or what Bill Gates might describe as a market failure, there’s no incentive to invest, there’s no profit opportunity, and so the market system doesn’t address those issues. The public sector is also a very important part of providing goods and services to society, but less likely to take risks. After all, it’s your tax dollars. And there are political consequences to taking risks with your tax dollars to address serious issues in society.
So the core with catalytic philanthropy is to identify that gap where there’s a market failure, [and] where the public sector is not going to take the risk. And the catalytic part of it is for us to underwrite the risks in innovative interventions. If we can prove the efficacy of their impact for society, they can be scaled up and sustained by the private sector and/or the public sector, depending upon the characteristics of those interventions.
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