Ed. note: Ed Michael Reggie ’71 received the Ward Medal at a special assembly on May 13, 2016, in the Phillips Stevens Chapel. Read more here.
I am here to talk to you today about “Doing Good Well.” But I would like to say upfront that when it comes to giving back, I say no. And I encourage you to say no.
That’s right—I am saying don’t give back. So does that make me a heartless capitalist? How can I tell you not to give back? And with an attitude like mine, how did I even end up here before you this morning? Well, it wasn’t always a sure thing that I’d graduate from Williston much less end up here accepting this award. Let me tell you why.
I arrived at Williston from a small Cajun town in Louisiana when I was 15-years-old. If ever there was a fish out of water, I was it. Some of you here no doubt know the feeling.
It was the 1970s and it was a time of great turbulence in the world and here on campus.
In my senior year, I was elected student body president. And I protested everything from the war in Vietnam to the food we were being served.
So I got kicked out of school two months before graduation. I was only permitted to graduate if I completed and passed an independent study project – at home. I was banned from campus until graduation.
I ended up focusing my project on the history of banking in my parish – or as it is known in the 49 other states, my county. That topic –the history of banking – might not sound too exciting, but it allowed me to graduate from Williston. And it also started me on my career path.
After Williston, I graduated from college with a degree in Finance, then an MBA from Tulane. I became a banker in one of those parishes. I rose through the ranks to become bank president and made my living by making loans to small businesses.
I lent money to farmers borrowing to plant their crops. I lent money to chefs to open restaurants. I lent money to musicians looking to start their own jazz clubs – yes, I was in New Orleans! It was a great way to learn about business while at the same time giving people the financial backing to pursue their dreams. Eventually I left banking to found my first start-up business – a healthcare company.
Now during these early years of my career, I didn’t have a sophisticated approach to how I donated money. I followed the crowd. I gave without much thinking and mostly to those charities around me that asked.
But after selling my healthcare company, I became a venture capitalist. And my attitudes toward giving started to change.
So what is a venture capitalist? Answer: An early stage investor in new companies. When a new company is showing early signs of success, it almost always needs additional money to grow. And often these companies turn to a venture capitalist that needs to be skilled at evaluating start-ups to ensure that those in which they invest money have a viable plan and have demonstrated early success. We strike out a lot more times than we hit homeruns though.
And even though my company – it’s called Future Factory – primarily funds our own ideas, we do sometimes fund other startups. I’ve been pitched a thousand times by start-ups hoping to become the next Google. Now Google, of course, wouldn’t have become Google without venture capital. And it is not alone. Amazon, Facebook, Snapchat – to name just a few – all have benefitted from venture capital funding at critical times in their histories.
When you think of those names and consider that venture capital has also funded numerous other companies and is helping to fund new drugs to fight diseases, you can get a sense of the power of venture capital.
It is transformational. It has funded catalytic change in our society. And I’d argue, change for the good. So as I was developing my expertise in venture capital, I was beginning to re-think my approach to giving.
In 2003, I went to Haiti to observe a nonprofit organization called Freedom From Hunger. And it blew my mind. I saw this nonprofit making micro-loans to small business people:
- A $40 dollar loan for a farmer raising chickens;
- A $25 dollar loan to a baker selling bread in the market; and
- A $50 dollar loan to a woman sewing and selling fish net.
These tiny loans were real and binding, and they were accompanied by an educational component. Most importantly, they had to be paid back. No handouts. Amazingly the repayment rate exceeded 99 percent. That’s a far higher repayment rate than banks ever get on loans in the U.S., and that is coming from the very, very poor.
You’ve heard the parable…Give a man a fish, he will eat for a day. Teach a man to fish and you will feed a man for a lifetime. That is what Freedom From Hunger is all about.
Yes, real sustainable businesses were being created that helped raise the living standards not just of the borrower and her family, but of the village as well. Seeing this system in action excited me and pointed me in a new philanthropic direction. Can you see how I looked at it? This micro-lending to third-world, poor business people was just another form of venture capital. The results – like venture capital – were very measurable.
How many loans got paid back? How many new businesses were created? Let’s measure how living standards were changed in the village after one year, after three years, after five years. And guess what followed? Savings programs. These business people actually started putting small amounts of money away. Real village banks were being created.
What I saw clearly in Haiti was that we had a long-term solution to poverty – a self-sustaining solution. Not just parachuting airdrops of food and medical supplies. Don’t get me wrong, those are vital. But capital is critical.
I was so impressed I served on the board of directors of Freedom From Hunger for 12 years. I also was a founding board member of two other micro-lending entities. I believed, and still believe, that micro-lending is huge and transformative. And it wasn’t surprising to me that the father of micro-finance, Mohammed Yunus of Bangladesh, was awarded the Nobel Peace Prize in 2006. He has championed a new, more effective way to achieve transformational change.
And that is my main point — philanthropy should have as its aim the same goal venture capital has – to maximize return on investment. In the case of philanthropy, that means effecting transformational change.
But in today’s prevailing view, a philanthropist can be celebrated for giving away millions of dollars to a charity, but still not have advanced the cause very much at all. Why? Too many times there is no measurable proof that this big gift will result in real positive change. Donating is not an outcome. It is what happens with that money that creates outcomes!
I mean, do we care how much money was spent in creating a restaurant? No, we care only if it is good. Do we celebrate the people who put a ton of money into that restaurant? No, we celebrate great restaurants and those who make them happen, only when the outcome is excellent. If the outcome is failure, the money invested was a big waste.
Shouldn’t the same apply to philanthropy? The outcome is what matters much more than how much was given. Smart giving is what I am talking about. Big gifts are wonderful, but only if they are smart.
Consider that billions of dollars of aid were donated in the aftermath of Haiti’s devastating earthquake in 2010. But what happened to all that money? All those donations helped build important infrastructure like roads, bridges and buildings. But they didn’t provide much opportunity for Haitians themselves.
To me, that’s like spending a lot of money on new computer hardware, but not spending anything on new software – the operating system. Humans are the operating system.
What if some of those dollars had been directed to entrepreneurs in Haiti? What if those entrepreneurs had a great invention or an idea that would have helped or employed hundreds or even thousands of people, possibly raising employee wages and living standards in whole communities? Considering on average that most Haitians only earn $3 dollars a day (those that have jobs, that is), this could have been a game changer for so many lives.
Do you think that would be possible? Well, let’s think about how things changed when an entrepreneur in the U.S. did just that. Let’s talk about Henry Ford.
Henry Ford didn’t invent the automobile or even the assembly line, but he was able to transform and revolutionize society by creating a company that was able to mass produce cars. Funding his dream were businessmen who were inspired by his vision.
Now does anyone bemoan the fact that Henry Ford wasn’t running a charity?
Probably not his employees at the time. He doubled their wages to $5 dollars a day to reduce turnover at his factory. And in doing that, he raised their living standards and actually turned them into car customers. That is transformational change.
Now what if those businessmen who backed Henry Ford had decided instead to invest their money in local charities during that time? A local shelter? A church to help the needy?
Certainly, those would have been worthwhile contributions, but the magnitude of positive change in the community would have been dwarfed in comparison to investing with Ford. Why shouldn’t the wealthy invest in innovations and at the same time create more wealth for those around them?
Why shouldn’t they and we be focused on the outcomes – catalytic change to save and improve lives; to raise living standards and help rescue those in poverty. Educate students. Cure diseases. Imagine if that had been done in Haiti.
It has been reported by The National Cancer Institute that more than $90 billion a year is being spent on the war against cancer and that there are 260 U.S. nonprofits fighting cancer. In addition many for-profit pharmaceutical companies and start-up firms are spending significant money to find a cure. One of my startups right now is running clinical drug trials across the country testing new medications.
Does it really matter to you who finds the cure first? The objective has to be the cure. Sometimes that cure might come from a for-profit company. I don’t care where it comes from. I just want great outcomes.
Last year, $60 billion dollars of venture capital was invested in start-up companies.
$360 billion dollars – six times more – was given to charities.
But consider that less than 10 percent of charities rigorously measure whether their programs are working or not, according to a University of Chicago study. So, in my humble opinion, most charities need to up their game if they want our money.
So if instead of $360 billion dollars going to charities, what if those dollars went to investing in entities – non-profit and for-profit companies – aimed at generating measurable improvements in society?
Entrepreneurs like billionaire Google CEO Larry Page are thinking about this idea. He has said that upon his death, he would prefer Elon Musk, the founder of Tesla Motors and SpaceX, to inherit his fortune rather than leaving it to his heirs or a non-profit. Page believes Musk is the kind of visionary whose ideas will do untold amount of good for the world. Would replacing gasoline-powered cars with vehicles powered by alternative energy be a transformational change for the betterment of our society? That is what Elon Musk is doing at Tesla.
Mark Zuckerberg and his wife pledged to donate 99 percent of their Facebook shares to the Chan Zuckerberg Initiative. It is structured as a company rather than a charitable foundation so it can fund non-profit organizations and make for-profit investments in its effort to advance human potential. Do you think Mark Zuckerberg might invest his $45 billion dollars and deliver better outcomes than a typical charity would? Think about it.
I wouldn’t sell Zuckerberg short.
But as I have said, we’ve gotten stuck on this notion that we are doing good only when we are giving lots of money. That is not enough! We must measure the impact of that investment.
You can bet that many philanthropists who give without demanding a plan and measurable results are wasting their money. Remember, only 10 percent of charities measure whether their programs actually work.
Add to that: we focus on “giving back” as if we are guilty of having a past due debt to society. We owe the community.
Instead, we should focus on the idea of giving as a wonderful voluntary act of generosity, not the paying off of some imaginary debt. Skip the guilt and let’s proactively give to those that convince us – prove to us – that they are positive agents in making society better.
Give forward. Yes, I am telling you to give forward.
Become an evangelist, tell your parents and promote giving with a focus on transformative results, not just what feels good. And when you are giving, make sure you’ve evaluated who you are giving to and why. Measure their success – or lack of it.
I give to Williston because it is an agent of change that is indeed making the world a better place. I know. It changed my life. And having served as a board member for 10 years, treasurer for eight, and having participated in writing the school’s last two strategic plans, I have taken its full measure. I urge you to read the most recent plan. See the benchmarks that Williston has established to measure its success.
I believe in Williston’s goals and believe this school is headed for a greater future and its students – you – will help us in our efforts to build a better society.
So, I ask you, my fellow Willies, to please join me. Don’t give back. Give forward.
Again, thank you so very much.
[Ed. note: see photos of the Ward Medal Assembly at our Flickr page.]