To the Heirs and Peers of Mr. Paul Allen:
Our world lost a hero when Paul Allen passed on October 15th.
Mr. Allen was probably best known for being a co-founder of Microsoft and as both owner and avid fan of his beloved Portland Trail Blazers and Seattle Seahawks. At the time of his death, Mr. Allen’s net worth was projected to be $20 billion dollars. Readers may be interested in the fact that Mr. Allen practiced philanthropy with a zest that equaled what he brought to his business career, but in a manner very different than his Microsoft partner Bill Gates. This blog reveals Paul Allen’s unique approach to bettering the world and what his heirs can do to continue it.
Paul was the founder and Chairman of Vulcan Inc., which managed his various business and philanthropic efforts. He had a multi-billion-dollar investment portfolio including technology and media companies, scientific research, real estate holdings, private spaceflight ventures, and stakes in other sectors.
Mr. Allen’s philanthropy included giving more than $2 billion to causes such as education, wildlife and environmental conservation, the arts, healthcare, community services, and more. He received numerous awards and honors in several different professions and was listed among the Time 100 Most Influential People in the World in both 2007 and 2008.
Perhaps less known, but I would argue, most important of his many contributions to the world was his ongoing philanthropy on behalf of science. In making this commitment, Mr. Allen left a legacy that will shape the future of mankind like very few others have done. He was the founder of the Allen Institute for Brain Science, Institute for Artificial Intelligence, Institute for Cell Science, and Stratolaunch Systems. Each has made tremendous contributions to our future.
While he was living, Mr. Allen followed a different path in using his wealth than his Microsoft partner Bill Gates. He was more concerned with pure scientific research while Mr. Gates, through the Bill and Melinda Gates Foundation, remains more focused on the application of science and technology to achieve social justice. Almost all Gates Foundation projects are concerned with serving the needs of developing nations for healthcare and economic development. Today, some wealthy families are fulfilling their philanthropic goals by donating to and supporting the Bill and Melinda Gates Foundation, as for example, Warren Buffet does.
As I thought about the philanthropy of Mr. Allen as compared to that of Mr. Gates, it struck me that Mr. Allen placed his bets on the future, whereas Mr. Gates and others seem committed to a form of past-based philanthropy that seeks to undo perceived injustices due to the wide disparity between rich and poor that exists in the world today. One almost senses that much of this philanthropy is aimed more at assuaging the guilt of the donor than it is to create better futures. That’s an open question.
I don’t think Mr. Allen was saddled by this type of guilt. He appears to have had loads of fun, owning sports teams and spending some of his money on a wonderful lifestyle. He seems to have had a healthy relationship to wealth, recognizing that he truly earned and deserved what he made, yet desiring to use some of that wealth to secure brighter futures for all as HIS legacy. One can see this balanced approach in his portfolio, from brain science to NBA basketball, from cellular research to professional football. Unlike Gates’ “give it back” philanthropy — which in fairness is a widespread, though in my opinion ill-conceived philanthropic basis — Mr. Allen preferred to “pay it forward” to the benefit of generations to come.
For that reason, I invite Mr. Allen’s heirs to set up a separate foundation that follows Paul Allen’s vision rather than donating to the Bill and Melinda Gates Foundation. I would be honored to advise the Allen heirs in how to make effective use of his wealth to support scientific research and development in the interest of mankind, without following the lead of the Gates Foundation. This is critically important. Progress in medicine and science would be far more rapid if more private funding were devoted to research. There is a tremendous need for additional funding of scientific research, both pure and translational. Government grants can’t grow further due to budget limitations, but there is no real limit to the amount that wealthy families could donate to research.
There are ways for wealthy individuals and families such as the Allen heirs to effectively and meaningfully fund scientific research without being scientific experts themselves. One strategy is to invest in PRI’s (Program Related Investments), which generate vitally important dollars for high-risk, and extremely high reward, research companies. PRI’s allow donated funds to be returned to the giver out of profits (like an investment) to be recycled into other projects. Brilliant. Another strategy is to fund partnerships between University research institutes and private companies. A third is to establish annual endowments to private foundations that sponsor important scientific research projects.
This type of philanthropy is not a violation of Paul’s pledge to donate 50% of his wealth to charity, as part of the Gates-led Giving Pledge. The Giving Pledge does not favor any particular cause; it is simply a pledge by the world’s wealthiest families to donate more than 50% of their wealth either during their lifetimes or in their will. Therefore, supporting science is consistent with the Giving Pledge. Both grants and even investments for scientific research of all kinds can fit within the Giving Pledge. In fact, one of the strategies I mentioned earlier, Program Related Investments, is one already employed by the Gates Foundation.
It is absolutely critical that those who have focused entirely on “give it back” philanthropy understand that their “multi-generational goals” as the GivingBack.org website phrases it, will be best served if the pioneering companies that are dedicated to creating positive future outcomes for humanity are properly funded from concept to commercialization. Government grants and many types of foundation grants currently focus entirely on Research and Development (R&D. Angel investors, Venture Capital funds and private equity firms only enter the game at the later stages, when commercial viability is proven and often only after significant profits are generated. A gap exists between R&D and commercial viability. As a result, some of the most promising research in medicine, engineering, robotics, environmental technology, and other critically important areas is never translated to products that can make a profound impact for people and planet.
This is outrageous! We, as a culture, are spiting ourselves by spending billions and billions to assuage the symptoms of our problems (paying back) while failing to properly fund the cures (paying forward). Fortunately, there is immense wealth on the planet already committed to philanthropy. We simply need a balance between “pay it forward” endeavors and guilt-ridden “pay it back” endeavors.
I believe Paul Allen would agree. His track record proves it.
To his heirs, you have a unique opportunity to carry on the spirit of Mr. Allen by earmarking the money he pledged to set aside for philanthropy to bridge the gap between R&D and commercialization of thousands of products than could transform the world in positive ways. You can accomplish this using well-known approaches as I’ve described in this letter. You can lead the way, encouraging other wealthy families to invest similarly.
I think Paul would have liked that.
To A Bright Future!
Robert Steven Kramarz
Key Takeaways:
- Paul Allen left a legacy of “pay it forward” philanthropy, donating billions to scientific research.
- The Gates Giving Pledge is well-meaning but flawed because it is coming from a place of guilt over the extreme wealth certain people have earned — hence a “pay it back” approach.
- Paying it back cannot create a brighter future, merely a more comfortable present that is unsustainable, because it does little to cure the causes of our most pernicious challenges.
- Philanthropy can be directed to scientific research through PRI’s, public-private partnerships and endowments and these investments can bridge the gap between concept and commercialization for thousands of companies whose products could cure the causes.
- The Allen Heirs are uniquely positioned to nudge philanthropy toward the “pay it forward” type of philanthropy that Paul Allen would have endorsed.