Yesterday the Chronicle of Philanthropy reported that the Bill & Melinda Gates Foundation received $10.4 million in unsolicited donations. This isn’t suppose to happen. Donors give money to charities or they put their money into their own foundation. They don’t give their money to other people’s private foundations.
But of course the Gates Foundation is as big as it is today because Warren Buffett made the decision to give his money to the Gates Foundation rather than start his own foundation. Buffett made it clear when he made the gift that he did so because he thought the Gates Foundation was better at philanthropy than he was.
Inspired by Buffett’s gift, a 7-year-old girl named Olivia made a gift of $35 to the Gates Foundation. At the time, then CEO Patty Stonesifer said, “Do you say no to a 7-year-old girl, but yes to Warren Buffett? One way or another, she did convince us to do some deep thinking." That thinking led the Gates Foundation to make it their official policy to accept donations, albeit under strict guidelines.
Donations have been growing steadily and have exceeded $10 million for the first time this year. So what’s going on here?
I think this is direct evidence of individual donors’ increasing interest in impact.
The Gates Foundation actual encourages people to give money directly to their grantees rather than to the foundation. But at least some donors seem to think that entrusting their money to the Gates Foundation is the best way to go. When these donors think that the Gates Foundation is a better donor, what does this mean? That the Gates foundation knows which nonprofits are better than others.
Investors regularly entrust their money to professionals with the belief that these professionals are better at managing it then they are. There are reasons that I think most donors will not want to do this with their philanthropy. But I do wonder whether large private foundations might become high profile “brands” that represent excellent giving. If they could attract outside donations, they could commit more capital to the organizations they fund. In fact, they could permanently increase their payout rate.
If you were going to donate to a well known foundation, which one would it be?