Episode Notes

• Follow David on LinkedIn

• Read Inside Philanthropy

• Check out David’s book, The Givers: Wealth, Power, and Philanthropy in a New Gilded Age

• Read David’s article “Philanthrosaurus Rex: Why the Age of Big Foundations Is Almost Over”

• Read more about MacKenzie Scott’s $15B in philanthropy

• Learn more about giving trends from Giving USA 2025: The Annual Report on Philanthropy for the Year 2024

• Background on Andrew Carnegie’s wealth and how the modern Carnegie Corporation of New York  is funding public libraries

• More information on the historic Missoula Carnegie Library 

Transcript:

This transcript was automatically generated.

About a block away from the Seminole office in Missoula, Montana sits a stately two story red brick building with neoclassical columns and nineteen oh three chiseled in its cornerstone.

These days it houses the Missoula Art Museum, but for its first seventy years of life it was a library. A Carnegie library.

Dollars twelve thousand five hundred of its construction cost was funded by steel magnate Andrew Carnegie.

That's about a half million dollars in today's money. And it's not the only one. There are sixteen hundred of these Carnegie libraries across the United States.

What Carnegie chose to do with a sliver of his wealth was to build a ton of libraries.

He set out to build libraries in places he had personal connections with, like his birthplace in Scotland and his adopted hometown of Allegheny, Pennsylvania.

But then he started getting requests from other municipalities, so he hired a personal assistant to help. This assistant would send out a short questionnaire to applicants and, if the town met Carnegie's requirements, he'd help fund it. This simple funding process resulted in one of the most significant philanthropic initiatives of the twentieth century, with Carnegie ultimately spending more than one point three billion dollars in today's dollars.

But here's the deal. Carnegie's wealth in today's money is estimated to be three zero seven billion dollars Elon Musk? Four thirteen billion dollars at the time of this recording.

Carnegie turned part of his steel wealth into libraries. What will Musk turn his wealth into? And what about Warren Buffett? Mackenzie Scott? And what about their heirs?

And ultimately, how will their choices reshape philanthropy in society?

Welcome to Impact Audio. I'm your host Sam Kaplan, vice president of social impact at Submittable. Today, I'm joined by David Callahan, founder and editor in chief at Inside Philanthropy.

David spends much of his time studying and writing about how the ultra rich of today's society shape philanthropy. His work has culminated in multiple books including a personal favorite of mine, The Givers, which I highly recommend.

Recently I sat down with David to hear how today's mega donors are using their wealth to shape society through philanthropy and, perhaps more consequentially in the long run, how their heirs are planning to do the same.

David Callahan from Inside Philanthropy, one of my all time favorite philanthropy journals that I keep track of every single day. Welcome to Impact Audio, man. Great to have you aboard.

It's great to be here.

Yeah.

So, David, we we have met before. I don't know if you remember, but we were in New York City together, and this is going back like an eon. And, I was working for a different company. And we were at the Ford Foundation.

Somehow, I got really thrown into the fire. I'd I had been working at the Walmart Foundation leading technology there, and suddenly, my new company said, you get to lead a panel discussion. Was it was you and Nick Tedesco and Darren Walker from the Ford Foundation and me of all people asking you guys questions about philanthropy. So, it was for sure a huge career highlight for me.

I'll never forget it. And and I don't know that you even remember that day, but it was a lot of fun. I do. Yes.

Awesome. Alright, man. So, tell me a little bit about you and about inside Inside Philanthropy.

Well, my background is as a a nonprofit entrepreneur, I guess. I cofounded a think tank called Demos in two thousand and helped lead that for, about fourteen years and, wrote a bunch of books along the way. And in two thousand fourteen, started Inside Philanthropy, and I've been editing that ever since. Wrote a book called The Givers, which looks at the changing world of philanthropy and particularly the new mega donors coming onto the scene and have written a couple hundred articles about philanthropy along the way. So, yes, this has been a world that I've been immersed in for quite some time. I also now write a weekly top lines newsletter, for inside philanthropy.

Yeah. I'm a subscriber, and I love it.

How in the world do you and your team stay abreast of everything that's happening in philanthropy these days? Like, there's not enough hours in the day to to to keep track of everything going on and then to turn around and, like, write so intelligently about it.

Well, it's hard. It's a really big, waterfront of of funders and issues. And not only is there all the different national funders, but in every major city, there's a distinctive ecosystem of funders who are extremely important to the nonprofits in that city. There's also all these new major individual donors coming on the scene, many of whom keep a very low profile. And we're always interested in, like, who are these billionaires?

What are they funding?

And that can be difficult to find out because there's so much money that flows in nontransparent ways these days.

So we just do our best. You know? We talk to a lot of funders. We write as many articles as we can. We try to constantly sort of shine the spotlight around in different places, be relatively comprehensive, in terms of the breadth of of topics that we cover.

We parachute into these different local philanthropic ecosystems and try to figure out who's who and write about top players in those world those different worlds. But, you know, there's never enough hours in the day and never enough reporters to do this job well.

Yeah. Speaking of those local ecosystems, like, outside of New York or or San Francisco, like, what are what are one or two regions where there's really interesting activity happening in terms of philanthropy and and nonprofit?

Southern Florida is very interesting right now. You have a lot of wealthy people who've moved there famously, including some top hedge fund billionaires who relocated to Florida.

And in addition, there's funders who are, shall we say, indigenous to the area who have long been operating there.

But it that's a philanthropic ecosystem that's very much in flux. You know, other philanthropic ecosystems are, more dominated by familiar cast of characters. You know, in Chicago, for example, there's a handful of funders that have been sort of pillars of that, funding community for a long time. You see that also here in Los Angeles.

That said, in each of these areas, there's often newcomers who are who are showing up and and making waves.

Yeah. Like, in terms of those individual areas, do you feel like is there sort of a did each of them have, like, a personality, or are there, like, unique causes that are getting funded based on those geographies?

Like, did they all feel sort of different to you?

Some of them are just much more mature than others. Right? You know, in in New York City, you just have a set of really august institutions that have been funding in and around New York City for a long time.

Chicago, to to some extent, I mean, the Chicago Community Trust is very old, well established.

Right.

Foundation MacArthur has been there forever.

You know, the Crown family has been a sort of major presence on the scene for for many years. You know, in Los Angeles, you also have a kind of set of very, long established players. Wallace Annenberg was one of them who recently died, you know, but but a a number of others.

And, you know, they're all they're they're they're all different. Right? It's not it'd be hard to say, like, to to some fund more in some areas than others. But, you know, in LA, it's sort of more fragmented because of the nature of the city. It's a very big and sprawling place. You don't have quite the same cohesion, and that's often been a complaint of the of the, the foundations and people who operate in here in philanthropy that you know, I live in Los Angeles, so I'm this is my home territory again.

And, you know, Boston's another place with a bunch of sort of well long established players.

So This is probably a great segue.

Like, I read your book, The Givers, many years ago, and I think one of the things that I have learned most from you and and from inside philanthropy about the nonprofit sector and about philanthropy is this sort of like emergence of individual high net worth people, you know, the billionaire class and all that they're doing. And like, as you were describing a lot of those local communities, we naturally gravitate towards talking about like the Ford Foundations and the MacArthur Foundations and the Chicago Trusts and these organizations that have been around for a very, very long time. But now

we have this, like, I don't even know if you can call it an emergence anymore because it's been going on now for for a decade or more. But these, you know, people who who were, you know, they started tech companies and and and seems like overnight, they generated billions of dollars in personal wealth. And, you know, many of them, I think, have come to recognize that philanthropy is is the right approach for what they should do with all of that wealth. Talk with me a little bit about this sort of rise of the billionaire class and how that has impacted philanthropy over the last ten to fifteen years.

Yeah. Well, let's start with sort of how it's impacted local philanthropy because that's what we were just talking about. And and some in some cases, you have these billionaires who've really changed the philanthropic landscape. And so you have, in New York City, Barry Diller, who has spent a couple hundred million dollars building a kind of marquee park in the city. You know, you have the hedge fund wealth has coalesced around turning Robinhood into a massive anti poverty funder in the city. Robinhood Foundation is one of the biggest anti poverty funders in the city.

And, you know, there's a a number of other, top individual philanthropists, Shelby White being one of them, who's given a lot of money to stuff in Brooklyn, who who have really changed the philanthropy landscape, in particular places. In Tulsa, you have, like, a George Kaiser who's spent hundreds of millions of dollars in that city, Ken Griffin in Chicago, which, you know, given major gifts to all of the major top Chicago cultural institutions.

And and all that is sort of relatively new money compared to these legacy foundations.

Meanwhile, on the national stage, the impact has been even greater. I mean, you you have every time we turn around, it seems some new mega donor who is parachuting into some issue area with transformative amounts of money.

A lot of these people have shown up in the climate space, in recent years and, really changed fundamentally, who's giving around climate, with a number of new billionaires who were not even on the scene five years ago or ten years ago when we started inside philanthropy who are now among the top donors in the space. Jeff Bezos being a great example. Right? Like, when I first started inside philanthropy, Jeff and Mackenzie Bezos were a married couple that basically did no philanthropy except a couple of one off gifts.

Right? And now they're both really significant donors. Mackenzie Scott is a much more significant donor than than Jeff Bezos, but he he's a pretty big player too. Right?

So, Yeah. And all that is new compared to, ten years ago. Or, Steve and Connie Balmer who, when we started in philanthropy, were just beginning to make a few gifts. And now they're among the biggest, philanthropists in America with the Ballmer group.

They are, among other things, now very large climate funders, which they just added, like, in a couple within a couple of years. I mean, I could keep going, but that it's transformative.

And one kind of effect is that over time, these legacy foundations have become smaller and smaller players in relative terms. Right? Like the Rockefeller Foundation. I don't even know if it's in the top fifty funders in in America right now. Right?

Yeah. And and tell me a little bit more about from an operation standpoint, a lot of these these mega donors are using intermediaries or they're using consulting groups like Bridgespan to help with their grant making, but they're what they're not doing is forming these, you know, sort of modern legacy foundations for lack of a better term. Right. Like, how how are they doing it differently, and why are they doing it differently?

Yes. I wrote an article a few years back called, Philanthroposaurus Rex, Why the Age of the Big Foundation is Almost Over. And, basically, the argument was that the the the large foundation, a place like the Ford Foundation or Rockefeller, is really a a legacy of the mid twentieth century operating model where, you know, it's the IBM, you know, General Motors era where, you know, large organ you wanna get something done, you start a large organization to do it and fill a building with a bunch of people. And, you know, and I really think that the modern billionaire donor class has moved away from that model in in significant ways and that the, you know, the Gates Foundation, I often say, is sort of the last gasp of the old model.

I mean, Gates created one of these giant foundations, but, you know, I don't know. A lot of donors have not followed in his footsteps in the last twenty five years. And, you know, there's a few that have the Arnold Foundation, Arnold Ventures, as it's now called, created by Donna Arnold and his wife. It's a pretty substantial operation.

Organization, but it's not a foundation.

It is, you know, I think an LLC, and it, has many characteristics that are not like a foundation. Right? And I think that these donors have moved away from this model because you don't need it. Right?

You can hire bridge man as Mackenzie Scott has to help figure out how to give away your money. You don't need to hire permanent staff to do that. You can put your money in a donor advised fund. You don't actually need to keep it in a in a private foundation.

And, of course, there's other appeals such as the you know, more anonymity. You don't have to have a nine ninety. Right?

And that's you can see why donors would like that, but it's problematic for journalists like me.

If you don't know, like, Lorraine Powell Jobs is one of the biggest philanthropists in America, but she moves her money through the Emerson Collective. And that is essentially a black box, so we don't really know what's going on in there. But the Emerson Collective, like the Balmer Group and like the Omidyar Network, unlike the Chan Zuckerberg Initiative, is just the the way that a lot of these donors wanna do things these days.

And and with these mega donors giving away, like you said, fifteen billion dollars, are we seeing impact being generated by all of this giving that has been happening.

I mean, it feels like an absolute ton of money. And at the same time, I often wonder, like, are the systems being changed? Are they achieving what they're hoping to, with these ultra ginormous contributions that they're making to nonprofits?

Well, you you you just asked the, the six hundred billion dollar question, how much Americans gave to charity last year.

Yeah.

And, you know, one of the realities is that despite all the new billionaires showing up on the scene, the share of GDP that goes to the charitable sector in the form of private contributions has not really budged beyond two percent in the last fifty years. Right? So there's not substantially new levels of money going into the to the sector because even as a lot of big donors have come in, a lot of small donors have exited, which reflects various trends among them rising economic inequality. Right? They're like, all the income gains primarily have gone to the top of the of the economic ladder, and those are the people with money, and those are the people who are increasing their giving while everybody else is just trying to keep their head above water and and not giving or giving less.

Yeah. So, it's hard to have for the charitable sector to have more impact when its amount of funding hasn't really changed. And, and then in terms of the causes that these billionaires have taken on, you know, it's hard to know what their impact will be, over time. Right? Because a lot of these issues they're tackling are really big and complex.

You know? How do you know when you've had an impact on climate change? Right?

Right.

When you when when you know, when when carbon emissions go down? And and then, and then how do you pinpoint philanthropy's role in that? And as always, it can be difficult to know the causal effect of particular philanthropic investments.

Yeah. You know, it it feels like in a way too, philanthropy was often described as, like, risk capital and the idea being like, we're gonna try a bunch of things. And hopefully when we discover something that seems like it really works, then the federal government will come in and help scale these solutions into something really meaningful, and that's how systems get changed.

Now I'm I'm sort of wondering, David, like, is the federal government really interested in scaling some of these solutions? And if I'm if I'm the Gates Foundation right now, I I think they're actively worried because so much of the great work that they have done is now being, if not undone, like, it's no longer being picked up and and scaled by the federal government anymore.

Right. It's a profound inflection moment, for a philanthropic sector, as you say, that has put public private partnerships at the center of a lot of its work. And, yeah, what's the point of the pilot program if it's never gonna scale?

But in many cases, philanthropy doesn't have, enough resources to really move the needle itself.

And that's particularly true in really large expensive areas like homelessness or housing or k twelve education.

So I think that the sector is gonna have to do a lot of reevaluation.

And, and it's important to understand that the decline in federal dollars is not just about the current administration that's in power.

This is a long term tightening of the fiscal screws that we're gonna be looking at at the federal, state, and local level for the reason that our population is aging. You know, the entitlement spending at the federal level is gonna go way up and have a crowding effect on discretionary spending in other areas.

And at the state and local level, underfunded pensions are gonna put a lot of pressure on on spending for things like schools and parks. And so the downward trajectory of government funding is gonna continue no matter who's in power.

And that raises the question of what's gonna happen to all these nonprofits that depends so heavily on federal or state or local funding.

Even if we have a new administration in power that burst in twenty twenty nine that restores a lot of funding cuts, that pressure is not gonna go away.

And with the charitable sector only, getting about two percent of GDP in contributions, the funds there are very limited. So we're gonna have to, you know, think about is there ways to raise that you could raise a lot more money, particularly from smaller donors, which is a topic that I've been writing about lately.

Yeah. Yeah. Like, it it if I if I remember correctly, like, the theme there is that larger donors are doing more, but smaller and mid sized donors are doing less. Right? And this creates a really stressful environment for a lot of nonprofit organizations who have, you know, developed funding models based on, like, grassroots funding.

Absolutely. And, and the problem there is that there's only so much money that the billionaires are likely to give or even could give. I mean, the the the net worth of America's billionaires right now is is seven trillion dollars, which is a crazily large, I'd say, grotesque amount given, you know, that we're talking about seven hundred people here. But, you know, the real where the real money is is in their is in household wealth held by other parts of held by non billionaires.

Right? So the top twenty percent has about sixty two trillion dollars in assets. Right? And if you can get, you know, ordinary upper middle class Americans who are not you know, can afford to give a little more to fundamentally change their giving habits, then maybe you could start to move the needle above that two percent level and bring a lot more money into the charitable sector.

And I guess the other big question for you, David, is do you have a sense of, like, what it will take to get those, you know, sort of middle class Americans to to contribute a little more than they are or contribute at all when they're when they're not, regularly, making any sort of donations to their local nonprofits.

Yeah. Well, just to just to reiterate, I said upper middle class Americans. Okay.

Think that the middle class Americans are very squeezed right now Right.

And will be more squeezed as some of the, you know, recently enacted budget cuts kick in and affect, health care and, and, the cost of groceries, you know, through the tariffs and and those other developments.

The the upper middle class is is doing pretty well, and as I said, is sit spending on sitting on sixty trillion dollar dollars plus in assets.

In terms of how to get those people to give more, there is some good news, which is we have seen the success of the collective giving movement in recent years of of, you know, thousands of new giving circles that have come into being. And we've also seen changes in technology that make it a lot easier for individuals to give.

I point to the area of politics where you've seen a transformation in in how money flows in politics with with small donors playing a lot bigger role in, financing politics than they did in the past. And, and I think that that has had a lot to do with a new technology, and it has also had, even more to do with the urgency people feel around elections and and political outcomes. And that same kind of urgency could certainly envelope the nonprofit sector in coming years as people watch the devastating effects of funding cuts on, you know, human beings and on families and on cultural institutions they care about and on their parks.

And, you know, so the combination of this collective giving movement, infrastructure, these new giving circles, the new technology, the sense of urgency, Together, you could see those things really producing, far more giving by the top twenty percent of Americans who can afford to give and and hopefully middle class and and lower middle class people as well.

One topic I I have been very, excited to talk to you about is, sort of this concept of the heirs, h e I r s. So I I've seen you speak and and write about this. I always go back to my roots at the Walton Family Foundation. You know, they're with the direct descendants of Sam Walton, Alice Walton and her, siblings.

And now, they have children. Right? And those children are the heirs that are really beginning to influence philanthropy a lot across the United States. Like, I'd love to hear you talk a little bit about, this emergence of, you know, the newer generations of mega donors.

It's a really intriguing, topic because there are a lot of these next gen donors coming onto the scene.

Some of them are positioned to inherit among the largest fortunes in the world.

We've heard, for example, that, Warren Buffett's hundred billion dollar plus fortune is not gonna go to the Gates Foundation after all. Instead, it's gonna go to the foundations controlled by his three children who are going to become among the biggest philanthropists in the world. In fact, his three children are already among the biggest philanthropists in the world, each commanding foundations that give out give away several hundred million dollars, and that's gonna be sort of supersized further. Right? And what's gonna happen when, Mike Bloomberg is no longer on the scene? Well, Emma Bloomberg is probably, and her sister are are probably gonna be the people to see if you wanna, tap another hundred million dollar plus fortune hundred billion dollar plus fortune.

And, you know, I could keep I could keep going down down the list. Right? There's a lot of these heirs at the very top echelons of philanthropy that are gonna be among the most important people in the sector, for decades to come. And meanwhile, there's just a ton of rich kids, basically, who are gonna inherit fortunes in the, you know, ten million dollar to two hundred million dollar range who are also gonna be significant philanthropists.

And what we know about these next gen donors is that a lot of them wanna do things differently. They don't wanna just cut the check to the, you know, the MET anymore, right, or or make the big gift to the alma mater. They wanna do impact investing, and they wanna invest in more cause driven, things. And and and they're really gonna shake up a lot of ways in which money has moved, particularly in those local ecosystems, I I was talking about.

Is there one or two of them who you find especially interesting?

Well, you know, it's hard to know where to start. I mean, I'm I've I've been really fascinated by the the Simons Foundation. You know you know, James Simons, the, Simon, the hedge fund, billionaire who recently passed away, who let leaving behind, like, a twenty to thirty billion dollar fortune.

His children all have foundations.

Those, operations are likely to scale up significantly in coming years.

We have a sense of what what a few of them are are are doing, but, you know, there's gonna be surprises. Right?

And then what about those Gates kids? Right?

Well, I can't wait to see what happens with all of them. And, I my closing question for you is if if any of them came to you, David, and said, give us some advice on on what we should do with this pile of money, what what would you do to to to advise them?

Well, what I've been saying to the foundation world writ large over the past few months is that they need to understand that everything they wanna accomplish lives downstream from politics and who holds power.

And that politics in that arena of power, in turn, is heavily influenced by culture and narrative and who shapes the narrative.

And if philanthropy wants to accomplish a lot of its goals in areas like climate change or reducing poverty or expanding health care or fighting, you know, gun violence, it's gonna have to pay a lot more attention to these upstream arenas of politics and culture and pay a lot more attention to who holds power and gear more of their grant making strategies to influencing, those dynamics. Because if you just work downstream on your in your siloed issue areas, you're, easily swamped by things that happen upstream, and a lot of your work can be washed away and effectively rendered moot. So that's my main message to philanthropy right now.

Awesome.

David Callahan of Inside Philanthropy and, author of books and founder of a think tank. This has been a great conversation, my friend. Thank you so much for carving out a little bit of time to have it with me. And, can't wait to continue to read your writings and, and learn from you as I, read Inside Philanthropy.

Yeah. Thanks for having me on.

It's an interesting time to be in philanthropy to say the least.

Because something tells me Elon Musk won't be remembered for funding libraries.

If you wanna see how people like him will use their wealth, subscribe to Inside Philanthropy to stay up to date on David's writings and read his book The Givers as well. There's links in the episode description.

That's all for me today. Thanks for tuning in to Impact Audio produced by your friends at Submittable.

Until next time.