The old model of billionaire philanthropy is ending

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Bill Gates is an optimist. He believes the world will be a better place in 20 years, that diseases like polio, measles and malaria will be eradicated, and that there will be other rich people lining up to fill the void when, as he announced recently, his foundation shuts its doors in 2045.

Of all these audacious goals and wishes, it's the last that might be the furthest out of reach. Gates is right that there will be plenty of rich people in two decades. But what's far less certain is just how willing they'll be to give away their money with the abandon and largess shown by Gates.

The announcement that the Gates Foundation will close in 20 years came on the heels of news that Warren Buffett will soon retire as CEO of Berkshire Hathaway Inc., creating a distinct "end of an era" vibe. It was Buffett who introduced Gates to the idea of giving it all away, and together they've convinced and cajoled plenty of other billionaires to do the same. In 2010, they announced the Giving Pledge, in which hundreds of the world's richest people have committed to giving away half of their money, ushering in an amped up "with great wealth comes great responsibility" paradigm. (Michael Bloomberg, the founder and majority owner of Bloomberg LP, is a Giving Pledge signatory and his philanthropic organization has worked with the Gates Foundation.)

Today that idea seems to be falling out of favor. In its place, a new model is bubbling up, driven by a subset of the Silicon Valley elite. It goes something like this: Why donate your money when you've already given so much to society through the technology you've created? Gates and Buffett felt they were returning something to a system that had allowed them to amass such wealth; the new guard believes it's already contributed more to the system than it will ever get back in return.

Plenty of these younger billionaires are still committing to giving away their money. But they're thinking differently about their wealth and what they want to do with it. Amazon.com Inc. founder and Executive Chair Jeff Bezos has said that the most important thing he's doing to improve civilization is his company Blue Origin's quest to expand humanity beyond earth. Google co-founder Larry Page once said that the best thing he can do with his fortune is to give it to Elon Musk to pursue his Mars quest with his "philanthropical" company SpaceX.

Perhaps no one better encapsulates this changing worldview than venture capitalist Marc Andreessen, who wrote in his 2023 blog post The Techno-Optimist Manifesto, "Technological innovation in a market system is inherently philanthropic, by a 50:1 ratio. Who gets more value from a new technology, the single company that makes it, or the millions or billions of people who use it to improve their lives? QED."

At one time, Andreessen was on the Gates path, with his firm's general partners committing in 2012 to donate at least half of all income from their VC careers to philanthropic causes during their lifetimes. It was his way of upholding his end of what he calls "The Deal." As Andreessen explains it, this idea emerged in the 1990s when startup founders would make a lot of money, be celebrated for doing so, and then eventually donate their fortunes to philanthropy. "That washes away all of your sins, reclassifies you from a sort of suspect business mogul to a virtuous philanthropist, and that's the arc, and it's all great and wonderful," he said on The Free Press podcast late last year.

But Andreessen says The Deal dissolved in the mid-2010s as the public started to ask whether tech was contributing to society's ills rather than solving them, as the Silicon Valley elite had promised it would. It seemed that philanthropy was no longer absolving tech founders — a point that hit home for Andreessen when he saw Meta Platforms Inc. CEO Mark Zuckerberg and his wife Priscilla Chan criticized for how they structured their philanthropic foundation, the Chan Zuckerberg Initiative (CZI), in 2015. (CZI has since scaled back its work and the causes it supports.)

It seems that the promise of The Deal has not been upheld for Gates either. He's faced more criticism since starting his foundation than he did running Microsoft Corp. From the right, he's been at the center of numerous conspiracy theories, and his foundation has been called one of the "cancers on American society" for funding "radical left-wing ideology" by Vice President JD Vance. From the left, he's been accused of moving his wealth to a foundation that he directs rather than paying taxes that would fund government projects.

The model of billionaire philanthropy that Gates represents is far from perfect, and critiquing it is fair game. But there's a striking difference between using your wealth to try to solve the very real problems that the world is facing right now versus pouring it into efforts like space travel or artificial intelligence. While those kinds of technologies have enormous potential (both in terms of helping humanity and further enriching their inventors), their benefits lie years or even decades in the future. If you're hungry, sick or poor today, the idea that humans may someday colonize Mars isn't going to do much to improve your life.

There's also a difference between an effort that aims to solve a problem with no profit motive and one where any such outcome is just an added benefit. Andreessen once wrote in a since-deleted Tweet that Airbnb, one of his firm's portfolio companies, reduced income inequality by allowing anyone with a house or apartment to rent out a room. And sure, Airbnb has put money that would otherwise have gone to a hotel company into the pockets of homeowners. But — setting aside the fact that you need the resources to own a home to get in on this new source of income — I doubt anyone would argue that the app is the most effective way to close the yawning gap between the rich and poor.

Gates has at least as much claim to having created world-changing tech. Yet he has said while software his company makes is "empowering," it's not been as impactful as deploying his dollars in the poorest countries. As Gates once told Bloomberg Businessweek, "When a kid gets diarrhea, no, there's no website that relieves that."

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Beth Kowitt is a Bloomberg Opinion columnist covering corporate America. She was previously a senior writer and editor at Fortune Magazine. Andrea Felsted is a Bloomberg Opinion columnist covering consumer goods and the retail industry. Previously, she was a reporter for the Financial Times.

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