02/07/2013 | 3.5 mins |

The Bold Philanthropy of Laura and John Arnold Embraces Risks and Bets Big

02/07/2013 | 3.5 mins |
Laura-Arnold-and-John-Arnolds_198x135.jpgJohn Arnold, and his wife, Laura, answered the call of philanthropy at an age when most professionals dedicate their time and energy to the business world. The thirty-something couple left prestigious careers—he announced his retirement from hedge fund management last year, she is an attorney and a former oil company executive—to pursue substantial reforms to pension plans, education, and criminal justice.

Beginning philanthropy early has allowed the Arnolds to see the effects their giving is having earlier in life, they say, and they are committed to giving while living. In 2008 they signed The Giving Pledge, and that same year they established the Laura and John Arnold Foundation (LJAF). Grantees include Teach for America, KIPP, YES Prep Public Schools, and the Pew Charitable Trusts. In addition, they are currently in Phase II of the Giving Library, an online video library the LJAF is funding that is designed to help philanthropists more efficiently survey the landscape of giving opportunities and connect with nonprofits through engaging video interviews. They've invited nonprofits to apply (by Feb. 11) for one of the 600 spots that are open.
  The Arnolds take a portfolio approach to their philanthropy. Some of their philanthropic dollars go to large, established organizations. The Arnolds consider these mature organizations the “low-risk” portion of their philanthropy. But the Arnolds embrace riskier ventures as well. In fact, they say that for a large portion of their portfolio they try to be “more aggressive than the market” and focus on smaller organizations. "If you invest dollars with the large, established, mature organization, you’re pretty sure what you’re going to get,” says John. “If you invest it with a new organization, you might get nothing, but it might get a much bigger return.” This risk tolerance is key, he says, and as he and Laura are becoming more knowledgeable in their philanthropy, “more of our money’s going to the riskier things, which I think in the market of philanthropy tends to be underfunded.”
  Philanthropy—especially philanthropy that seeks to create transformational change—is not easy to do well, and having the time to experiment has been an integral aspect of the Arnolds' strategy. “Some of these issues are very hard to tackle; they have very long time horizons,” says Laura. “As we execute in our strategy, we’ll have the luxury of time to understand what’s worked, what hasn’t worked, what we need to tweak, what we’ve been successful at, and how we can replicate it.” In other words, the Arnolds are willing to fail in order to pursue transformational change. “We would be very worried if we never failed," says Laura, "because that meant that we would never have taken a risk.”

Video: The Arnolds are open to failure in their philanthropy

You can learn more about Laura and John Arnold and find a complete archive of their videos for Conversations with Remarkable Givers on this page.
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