"My grandfather, in part, has been so successful because he has identified the best human capital for managing businesses," Buffett tells Fast Company. Emulating the strategy of investing in people who have proven strategies, the younger Buffett is building a coalition of already-successful leaders in each niche of food security.
The approach, he hopes, will become the standard for his family's growing network of mega-philanthropists: rather than dolling out cash to independent, uncoordinated actors with the most heart-string-tugging story, they could take on an entire social problems (like food security or breast cancer) by systematically lining up nonprofits to tackle each part of the causal chain, from federal policy to victim resources.
Getting Rid Of Redundencies
"If you are an NGO, doing the exact same thing as another NGO, and that other NGO is doing better than you're doing it, then you are in business for the wrong reason," Buffett says in an exasperated rant against the individualist nature of charities. Overlapping operations, he says, not only waste money through redundant overhead, but keep brilliant minds occupied with logistical distractions that sap their potential impact.
"We will give you money to execute your mission," Buffett says, "if you work together and identify the most cost-effective and successful ways to achieve that."
Meanwhile, looking at the entire causal chain of a crisis is key to revealing missing links in the solution, such as political or logistical hurdles that are essential to success, but not appealing enough to raise dollars.
Buffett learned the importance of interconnectedness after witnessing efforts to save forests be thwarted by starving locals. "They're going to cut down the forest, burn the trees, and then try to grow food on something that has horrible productivity value," he says. The horrific conditions led the foundation to not only shift from environmental stewardship to food security, but to the current strategy of solving problems as a closed ecosystem. Now, the Buffet foundation sponsors everything from an endowed political science chair at Texas A&M that studies conflict and hunger to public awareness campaigns.
A New Take On Evaluating Philanthropic Impact
"Emotion is not fungible, so to measure success through the emotional feeling we get from doing something is not an effective way of measuring," says Buffett, who needs a way to objectively evaluate the unwieldy volumes of grants proposed to his own foundation. But, unlike money, he says, "there is nothing that exists as a universal measure of impact for a philanthropic endeavor."
To make the tough comparisons between education, hunger, veterans, or disease eradication, Buffett designed an "issue agnostic" survey of scope, relevancy, cost-efficiency, and risk of any proposal.
The first question, for instance, is "Assuming we are successful, how many people would we reach directly with the funding of this gift?" Proposals gets 3 points for affecting +1 million people, 2 for greater than 100,000, and 1 for less than 100,000. Those proposals with a less ambitious scope can secure a coveted spot on the portfolio team by being particularly unique or cost-efficient.
He maintains that the measure helps him balance caring for the needy with the harsh realities of inefficient programs. "There's absolutely nothing wrong" with emotion, he says, admitting that the crisis of global food security has a particular effect on him. "My fear is when emotion clouds rationality."
"In the philanthropic world, the problem is the product, in the business world, the product is the solution." says Buffett, who argues that NGOs are forced to "sell suffering." The needless focus on sappy narratives often overlooks sophisticated solutions that can't be easily marketed with a T-shirt-clad celebrity holding a small child.
As an example, he notes, hunger-stricken continents are perfectly capable of offsetting their own crises , since famine and food surplus hit neighboring countries in the same year. If food-swap agreements were in place, the surplus country could donate food when they have more crops, knowing they'd get reciprocation in an inevitable drought.
"I see this as sexy," he says, half-jokingly. Buffett argues he's able to harness these kinds of sophisticated solutions because of his foundation's unique approach to objective measures and a broad-spectrum tackling of whole social issues.
A Business-Minded Approach To Philanthropy
Frustrated by the bureaucratic restraints of government and inspired by the nimbleness of the growing social entrepreneurship industry, the 27-year-old Buffett aims to bring some private sector savvy to the philanthropic world. He hopes his coalition strategy will encourage nonprofits to consider their "comparative advantage," and that his universal measure of "impact" can be as fungible as money. Finally, he aims to move charities away from selling narratives to selling solutions.
He even imagines a world were nonprofits can acquire one another. "You want to bring this back to the business world, there are no incentives for philanthropic organizations to merge," he says, adding that there are no easy legal means by which nonprofits can combine their resources as for-profits do.
Buffett was raised to blur the lines between nonprofit and for-profit: He is the product of a billionaire grandfather who has both pledged to give most of his money away and maligned the concept of inheritance as perpetuating "members of the lucky sperm club."
Yet, grateful for the opportunities his family gave him, and the legacy of giving his grandfather catalyzed, Buffett aims to make this exceptional charitable philosophy a mainstream belief for his generation.
"Our old definitions of success were wealth, power, and fame," he says. "We need to see those as a means to an end, and those need to be impact."