Failure and the Giving Pledge

Why did the 35 billionaire philanthropists who gathered in Santa Barbara on May 9th hold their meeting behind closed doors? After all, as Matthew reported in the latest issue of The Economist, they were only invited to attend as a result of having been very public, declaring their intention to give away at least half of their wealth by signing the Giving Pledge launched two years ago by Warren Buffett and Bill and Melinda Gates. Why be bashful now about meeting to talk about the practicalities?

As Mr Buffett told Matthew, the aim of the meeting was to “get smarter”; that, by talking to each other about their philanthropic experiences, they would “come away and do a better job of giving their money away than they would otherwise.” One reason to keep the meeting private, according to Mr Buffett, was to “create a safe space to open up about failures. You can’t have that honest conversation except in a safe space.”

The need for philanthropists not just to talk about failure but to fail more often was a theme of remarks Mr Buffett made over dinner at the start of the gathering. “If you are not failing, you are not doing the right thing,” he said, urging his fellow billionaires to swing for the fences rather than aim just to get on first base every time, a baseball metaphor celebrating trying every time for a potentially game-changing home run over the less risky and less rewarding alternative.

One of the hallmarks of the sort of entrepreneurial wealth creators who have signed the Giving Pledge is that they made their money by taking lots of risks. One of the hallmarks, alas, of much of the established philanthropic world they are entering is its risk aversion – particularly once the wealth creator has passed his foundation into the hands of professional ‘philanthrocrats’ – and an almost Trappist refusal to speak about failure. Yet, as Elon Musk, a founder of PayPal and Tesla, and a recent signatory of the Giving Pledge, told Matthew, “if you try a bunch of things, you often learn more from failures than from success.”

The importance of failure as a way to learn is now well understood in the world of business. In Silicon Valley, entrepreneurs wear their first disastrous start-up or two as a badge of honour. Philanthropy, by contrast, has long missed out on the feedback loop from failure that is so valuable to business, and so often ends up frittering away scarce resources on projects that someone else has already found wanting. Thus it is excellent news that in Santa Barbara the leaders of America’s new generation of philanthropists started to take their failed efforts at giving seriously enough to learn from them. Nonetheless, how much better if at next year’s gathering they open up and let the rest of us learn those lessons from failure too.