At the height of the late-'90s internet boom, eBay founder Pierre Omidyar was faced with a dilemma: Having made a fortune through his web startup, he wanted to take his philanthropy to another level, but he wasn’t sure how to go about it. It wasn’t that Pierre and his wife, Pam, had no experience giving away money; like many generous people, they had a long history of writing checks to favorite organizations. But faced with new wealth, the Omidyars came to believe that writing checks wasn’t sufficient. "There were too many good causes," Pierre told a Forbes reporter in May 2000. "How do you do it well?"
On the counsel of other successful Bay Area philanthropists, the Omidyars established the Omidyar Foundation to make gifts to nonprofits. But they soon came to believe that even this approach wasn’t enough to achieve the social results that they desired. And so, guided by a philosophy that “business could also be an effective tool for making the world a better place,” they pivoted and established the Omidyar Network, which combines traditional grantmaking tools and for-profit social investments to achieve social change.
Getting involved—really involved—in philanthropy can be like going on a voyage in uncharted waters.
As the Omidyars learned, getting involved—really involved—in philanthropy can be like going on a voyage in uncharted waters. It is exciting to explore your beliefs and aspirations, learn from experts and practitioners, and experiment with different types of grants and organizations. So great are social and environmental needs, however, that it’s also very often difficult to decide where to start, how to proceed, and how much time, effort, and funding to expend in any given direction—particularly when you are giving very large sums of money, and planning to keep giving for a long time. The recommendations contained in these pages are designed to help you prepare for your own journey. But before going any further it is important to consider a few essential questions.
Questions to ask before you begin
You aspire to make a real and lasting difference in the world, and so you have decided to get more involved in philanthropy. Before you take any action, however, it is important to consider the following questions for getting started:
Have I thought about how my family and others close to me will be involved in my giving? In particular, am I (or are we) clear on whether and how I/we will make decisions?
If you answered “no” to either of these questions, take some time to think through the appropriate roles for those around you. You may do this alone, or with someone you trust deeply.
Have I determined how much of my time I’m willing to commit to this process?
Your initial answer to this question doesn’t have to be set in stone, but having a general sense—whether this will be a few hours a week or a full-time job for you—will help you set reasonable expectations for what you’ll be able to accomplish. (Bear in mind, it’s not unusual to wind up surprised by just how much time you will spend once the process is underway.)
Have I settled on one or more legal structures through which to conduct my giving?
What giving instruments will you employ—for example, a private foundation, a donor-advised fund (DAF), or some combination of both—early on? There are tax and other legal implications regardless of your choice, so working with a lawyer or financial advisor is your best bet here. If you’re not familiar with your options, you will want to learn more before consulting an advisor. You may find that you will reassess the appropriate structure for your giving over time. For more, see "What Legal Structure or Structures Should I Use to Give My Money Away?"
Have I decided whether I will give beyond my lifetime?
Deciding on when you want to give your money away depends on your personal beliefs and goals. If you believe that the problems you’re addressing will stick around for the foreseeable future, you might choose to invest in a foundation that makes grants in perpetuity. Or, you may choose to let those who come after you deal with the problems of the future while you choose to invest more in those around you today, and, so, set an end date for your philanthropy. As you think through this question, it may be useful to understand these considerations and others, as well as how other donors have approached the decision. For more, see "The Philanthropist's Dilemma: Do I Spend Down or Form a Foundation in Perpetuity?"