How billionaires are mastering impact

Billionaires are transforming the business of global philanthropy

07 Nov 2019

New ways to engineer social and environmental change

Key takeaways

  • Self-made billionaires are seeking new ways to make the world a better place.
  • Philanthropists are collaborating to make a difference with other billionaires, NGOs, charities and governments.
  • Billionaires are using their wealth,  their appetite for risk and ambition, to develop new models that achieve the greatest impact.
  • Learn more in the UBS Group AG/PwC Billionaires Report: The Billionaire Effect.

Fresh from creating pioneering businesses, a small but growing number of billionaires have become even more ambitious: They want to make the world a better place. They are leveraging the same characteristics that drove their business success to address the UN’s 17 Sustainable Development Goals (SDGs).

As we report in the 2019 edition of the Billionaire Report, called The Billionaire Effect, these ultra-wealthy entrepreneurs are increasing the impact of philanthropy, just as they drive their businesses to outperform.

“Billionaires are creating businesses that consistently outperform equity markets,” comments Josef Stadler, Head of Ultra High Net Worth at UBS Global Wealth Management. “This business acumen has also translated into their philanthropy, as billionaires seek new ways to engineer far-reaching environmental and social change. This Billionaire Effect is alive and well across the world and shows little sign of slowing.”

“Impact” is the key word for these ultra-wealthy entrepreneurs, as they address the pressing social and environmental issues summarized in the UN SDGs. For instance, if you improve education in a country, you lift living standards and economic growth.

Modernizing models of philanthropy

Away from the headlines, strategic philanthropists have been quietly building new ways of working and notching up successes. Notably, the Bill & Melinda Gates Foundation is collaborating with NGOs, other donors, charities and governments, focusing its resources on where it can have the greatest impact and using data to help. After contributing to the virtual eradication of polio globally and of meningitis A in sub-Saharan Africa, it has set its sights on nothing short of a “world free of malaria.”

A growing number of foundations are taking a similarly collaborative and catalytic approach. The Children’s Investment Fund Foundation, backed by a London hedge fund, is an example. It works with a range of partners to transform the lives of children and adolescents in developing countries, aiming to have a catalytic role and effect change at scale.

Beyond the US and Europe, Asia’s billionaires are also backing the trend. Take the Yidan Prize, established in 2016 by Dr. Yidan Chen, a founder of Tencent Holdings, the Chinese tech company. Making awards of HKD 60 million (about USD 7.8 million) each year, the prize rewards outstanding research and innovative ideas in education.

Architects of impact

For billionaires, what counts above all is making an impact. They are increasingly impartial about how they achieve this. While some make grants, others put aside capital for sustainable investing.

Breakthrough Energy Ventures is a network of 21 entrepreneurs—including Richard Branson, Jack Ma and Prince Al-Waleed bin Talal—who are investing in new technology ventures, aiming to achieve both environmental impact and making a competitive financial return.

On the frontier between philanthropy and investing are development impact bonds, which have been backed by a small number of billionaires. Investors earn a financial return on these bonds if specific social goals are met. The Quality Education India Development Impact Bond, launched in 2018, aims to improve the numeracy and literacy of about 300,000 children. Among others, it is backed by the Michael & Susan Dell Foundation, Tata Trusts and The Mittal Foundation, all of which are billionaires’ charitable foundations.

A sense of purpose

Of the wealthiest 500 billionaires globally, 400 participate in philanthropy to varying degrees, according to the 2019 Billionaire Report.

One Dutch entrepreneur sums up the urge to make a difference as follows: “Society expects me to be a philanthropist with my money, but the motivation for my philanthropic activities comes from a sense of purpose and changing the status quo.”

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