Give fast, spry young: the new philanthropists

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Hello and welcome to the Intelligence from the Economist. Today from London, I'm your host, Jason Palmer. Every weekday we provide a fresh perspective on the events shaping your world. Early in the pandemic, every American taxpayer got a stimulus check, including prisoners. That windfall created a new class of investors behind bars. We dive into the curious world of inside trading. And the eldest daughter of Pablo Picasso spent her childhood doing paintings and sketches. Beside him, our obituary's editor looks back on Maja Widmayer Picasso's life as not only the artist's muse, but also an expert on his work. First up, though, More than half of the 50 richest people in the world, Forbes reckons made their money heading technology firms. But the super rich of Silicon Valley aren't just good at making money. It seems they're ambitious, even when it comes to giving it away. And that tide of charity carries with it the culture and the worldview of the industry that created it. Tech has spent the past two decades disrupting everything from shopping to television. Charitable giving, it seems, is next.

So in recent decades, the tech sector has minted a whole generation of millionaires and billionaires.

Avatika Chilkati is our international correspondent.

These people are getting rich very young and there's this sort of move fast and break things attitude from the world of tech. That's now being translated into the world of philanthropy as well.

So for the benefit of us who don't know any billionaires who would like to give millions away, let's talk about how philanthropy has worked in the past.

So it's worth going back through the generations. And you'll see that every generation of the super rich has remade philanthropy in their own image. The grandfathers of modern philanthropy were the industrialists of the American Gilded Age. So you think of Andrew Carnegie or John D. Rockefeller, they made vast fortunes, and it was relatively late in life that they started giving away serious amounts of money. There was this sort of formula. You know, you got rich, you created a foundation, you slapped your name on it, you employed an army of really qualified advisors to hand out your money, and you set up this infrastructure in a way that it outlived you. Now, that model first came into question when you had the turn of the millennium and you had people like Microsoft's founder, Bill Gates, who were applying the principles of investing to their giving. So all of a sudden you had this new, very data driven, very technocratic approach to philanthropy. So donors like the Gates foundation, they spend a lot of time thinking about where will our money have the most impact? And they give to those causes, and then they spend a lot of time and money how successful each project is. Now, with the generation of tech bros we have today who are incredibly young, quite impatient, frankly, all that bureaucracy feels unbearably slow. It feels really, really stodgy.

But why, though, why does this generation feel so differently?

You know, you've got people becoming billionaires in their twenties and around the world, all tech bros really take their cue from a tiny little place, Silicon Valley. And so in a place like that, you can get a lot of peer pressure. You have all of these giving circles and educational programs that try to get people to get together and talk about philanthropy. So I interviewed with this story David Goldberg, who's the founder and CEO of Founders Pledge. It's a charity that gets founders all over the world to pledge to donate a portion of the money they make to charity. And David told me he physically walks entrepreneurs into the corner of the room at parties, sort of wielding the registration papers.

So the nature of how we start conversations with people who we don't already know means that there's some social pressure from the outset. That's good. And we appreciate social pressure. And sometimes we try to create more of it for people who have expressed a desire to get involved but haven't yet done so because life is busy, work is busy.

And for people who want to give now and they want to give quickly, there are role models today. You know, the poster child is probably Mackenzie Scott, the ex wife of Amazon's founder, Jeff Bezos. Since 2019, she's dished out over $14 billion. And the reason she could give so much so quickly is that she just cut the bureaucracy. She hired consulting firms to crunch the numbers, pick worthy recipients, and then unlike a lot of others, she just gave them gifts with no conditions and, and just trusting these charities generally to make the best use of the money. Young tech titans of today, they like that. And they're also changing the vehicles for their giving as well.

What do you mean by that?

Back in the day, if you had a lot of money, you just set up a foundation, put your name on it, maybe got a big building. But there's a couple of new sorts of vehicles that are getting popular. One is the donor advised funds, the daf. It's like a savings account. If you are a philanthropist, you put money into a daf, you, you get a tax break straight away, and you've set that money aside for charitable giving. You can decide when in the future you want to actually give that money to an operating charity. And these DAFs are getting more and more popular because they're very quick to set up. There's a lot of privacy because each individual donor doesn't have to disclose what they're doing with their money. And you still get a lot of tax breaks. One estimate I looked at said that in America, the value of assets in DAFs is up nearly 170% in the five years to 2021. The other really popular option is a limited liability corporation. You can do your for profit work through it, you can do not for profit work through it, and you can even do political advocacy through them. So you've got this real blurring of lines between charity and business.

Okay, so the speed of giving has changed with this generation and the means of giving in many ways. But what about the recipients? Are those changing too?

Yeah, because they have this sort of move fast and break things attitude to everything. Tech entrepreneurs really give differently. So they want to put money behind moonshot projects that could really change the world. So for David Goldberg, what marks out this generation is that they're fundamentally impatient. Unlike previous generations who were worried about creating a legacy, they want to have an impact that they can see within their lifetimes. And basically, the lessons that they've learned in the tech sector, they're now bringing those into the charity space.

So call that ambition if you'd like, but I think it's ambition coupled with a disruptor mindset and extreme wealth, and not just concentrated in the hands of a couple of people, as was historically the norm, but across a much wider swath of individuals, even if they all sort of come from a very similar background.

So yet again, this generation is remaking philanthropy in their own image.

And so is that in turn remaking the charities themselves in some way?

Well, absolutely, because charities are trying to lure the Silicon Valley cash. And one way to do this is sort of say you've got a grand ambition. I also spoke to Brent Hoberman, who runs Founders Forum Group. It's this organization that provides lots of services for entrepreneurs, networking events, legal advice. He spends a lot of time speaking to founders.

I think many entrepreneurs these days are super excited and energized about big moonshot goals and being able to tackle these problems differently.

His line is that charities need to talk about bigger, buzzier ideas when they're trying to get donations from the tech bros. When we chatted, he was telling me about advising a charity that works on brain cancer in the uk and his point to them was, look, you're going to draw this tech crowd if you set a more ambitious goal. If you say you're going to cure all cancer everywhere, and actually there's no harm in asking for big donations. Sometimes it's easier to give 100 million if you're one of these tech bros than 1 million.

They are absolutely looking for non profits that would reflect the way they do business. So that is, you know, dynamic, rapid, fast growth, innovative and efficient.

So it's also helpful for a charity just to be comfortable with tech culture. You know, make everything data driven. Say that you're AI enabled and there's a network effect. It's worth getting to know one tech donor because he's probably going to tell his mates all about you.

But what about those charities that are outside the network, if you like, that are not perhaps so data driven or tech savvy?

Yeah. So there are sort of modest charitable ventures that don't have those connections and they find it harder. You know, I spoke to one nonprofit group that has really important work supporting children in foster care in California. But as the founder there told me, it's not seen as sexy by the Silicon Valley crowd. It's local, it's small, it's at the individual level. And for them, you know, the only way to get on the radar is to do stuff like put tech folk on your board. You know, Help spread the word. And that's really important. I think, for the future of charity. You know, the world of philanthropy needs a shake up, and that's a good thing. But we don't need all charitable giving to go to moonshot projects. There's good charities doing good work at a local scale. It's modest, it's not sexy, but it's important. And the danger is we're just constantly trying to move fast and break things.

Ivartika, thanks very much for your time.

Thanks for having me, Jason.

Hello. This is a free call from Tomas.

An incarcerated individual at Washington Corrections Center.

This call is not private. It will be recorded and may be monitored. If you believe this should be a private call, please hang up and follow.

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You know, I'll start just by introducing myself and telling you where I am and how long I've been here. My name is Tomas, Tomas Keane, and I'm currently incarcerated in Washington state. You know, I live at a prison called the Washington Corrections Center.

Tomas Keene has been in prison for 13 years, but he's been looking for ways to make money on the outside.

At the last prison that I was at, at the Monroe Correctional Complex, I met this guy named Pete. And Pete was pretty successful guy. You know, even though he wound himself up in prison, he had built himself up a nest egg. He came from a really successful family, and he always preached the value of investing. You know, he told me, hey, Tomas, if you're going to succeed in this world, if you're going to build up wealth, if you're going to be able to pass on wealth generationally, look out for your family. You need to invest in the stock market. Me being kind of a nerd, I picked up a book and learned everything that I could about the market, tried to figure out a system for making money in the market. It was only later that I started getting interested in this day trading aspect. I saw people making 10,000% on an investment in Gamestop or, you know, making a killing in cryptocurrency proxies and things like that. People willing to take a little bit more risk were getting quite a bit more reward.

Tomas was dabbling in investing, but things really changed during COVID America's government handed most citizens stimulus checks at the height of the pandemic. Congress didn't bar prisoners from getting those checks, but the Internal Revenue Service tried to.

We ended up getting three payments from the government totaling $3,200. And now I was sitting on this money right this Free money that just landed in my lap, right? And I had to think about what I wanted to do with it. Honestly, the scarcity of resources in prison just kind of is a reality that we have to grapple with. And so it's, for me at least, it breeds this sense of frugality. I have to be very careful with what I do with my resources. And so when I got this money, I thought, well, first I thought, I'm going to put it in a savings account. But then I thought, no. You know, I've been having these conversations with Pete, looking at this market and this opportunity right now. If there's a way that I can put this in the market and try to build a return off of it. Because if we're being honest, like $3200 isn't a life changing amount of money. But at that time, I had another 10 years left to spend in prison. So if I could put it in the market and just through compounding interest, wind up with a sizable nest egg when I get out, I'm going to set myself up for success.

Money isn't just important on the outside, it's also vital on the inside. Costs that most people wouldn't worry about need to be paid for with the limited resources that prisoners have.

I think that, you know, there's this narrative out there, and I'm going to go ahead and say that it's a false narrative that prisons provide everything that prisoners need to survive, right? That's just not true. Let's just even think about hygiene. When you get a toothbrush from the prison, you know, they charge you for it even if you don't have the money for it. They just bill your account for it. And the one that they give you isn't like a full sized oral B or Colgate toothbrush. It's this stubby little 2 inch thing that you can't even scrub your back teeth with, right? And the toothpaste that they give you is like just as bad. It's this kind of soupy stuff that doesn't clean anything. So you have real expenses in prison that aren't necessarily met. So you work a job that pays you 42 cents an hour, right. And you work seven hours a day for that. But it doesn't really matter how many hours you work in a month because you're capped off at $55 for your monthly salary. So even if you worked, you know, many, many more hours than you needed, you're not going to get any kind of recognition for that extra work. And then you have to turn around and spend that on, like, these vital hygiene items, like a toothbrush costs a buck. A tube of toothpaste costs six bucks. So when you think about that in relation to what you're actually earning, your tube of toothpaste, that might last the month, more than 10% of your monthly income. So whereas somebody on the outside might spend 10% on their healthcare needs, I'm spending that on my oral care, right? That's it. You know, getting this $3,200, that was. That's a sizable amount of money for me. And so I had to try to find a way to make that money, be more than it was, right? Doing 20 years in prison, not able to work a job and a real job and save up for retirement. It's very tough to look at the time that's passing by and think that with every year, I'm not falling further and further behind. And so it's really about strategically coming up with a way to make what I do get work harder for me. And that's what I thought investing could do.

So when I first heard that the government was going to give prisoners a chunk of money, my first reaction was abject disbelief.

That's Nick Hackney. He's been incarcerated for about 22 years. Nick got involved with day trading after Tomas and a few others introduced him to it. Of course, neither of them has access to a mobile phone in prison, so they need to rely on someone on the outside to make all their trades.

My first step was to get a hold of my brother and then got him to set up an account, electronic account, so that he could make the trades. And then when the money did actually come, I just had it sent to him. I think the biggest obstacle in the whole process, anytime you're doing something like this, you're asking somebody else to give up their time. And, you know, I think we are all absolutely looking very forward to the idea of being out on the streets and having a phone with an app and just being able to make your trades on the fly, as people do. But for us, it was a pretty arduous project to get the account set up, to understand it. What we actually would do is have him print out screenshots of the instructions and then send them in. And I would sit there and read them and try to kind of understand what exactly needed to be done to set up a specific trade. But in that, I learned a lot, too.

They understood the risks of investing, but wanted to do it anyway. Nick had to learn some hard lessons.

So if you Consider the initial, like bludgeoning that I took. I'm not doing that great. But over the last, I would say nine months, I feel like I'm starting to get it figured out and move forward. A lot of the initial things that I did came in at the top of the market and then the market went down. So from that standpoint, I would say I'm probably overall down, you know, in the 40 to 50% range. But I do feel like that I've figured out a way to move forward and navigate this world now. And so for me, it was always an educational experience and I'm still getting an education.

It's an education that isn't easy to get in prison. Tomas, who we heard from earlier, said that prisoners struggle to learn how to move ahead in life.

I don't know how the rest of the world is doing with their kind of carceral systems, but I tell you that the US is doing it horribly right. We're under investing in our communities, you know, setting people up to live in a life of poverty. And at the same time, we're propelling this culture of power and violence, you know, and what comes out of that is like a lot of violent crime. And how do we respond to that? We just send people to prison and once they arrive here, there's not much programming that does any good. There's no kind of sense for what are you going to do when you get out of prison. A lot of these guys never had a bank account, never had a real job, never paid taxes. They've never had the experience of living life as a successful adult, as a successful member of the community. That just wasn't an option that was available to them. The prison system in America is entirely about punishment. It is not about rehabilitation. It is not about getting people to live a life of success after they get out. You know, it's just about kind of this retribution. Focus.

Both Tomas and Nick have lost money on their trades, but they're in it for the long haul. Nick hopes that when he's free again, it'll offer him a chance to make back some of the time they lost in prison.

I'm always looking for ways to experience freedom in a different way because I think prison makes you redefine freedom. And so for me, that was the aspect of day trading that was really exciting, was this concept of setting things up and then having your time, which is obviously for somebody that does long term incarceration. Our free time when we get out is very, very valuable to us. So having that time Available sounded really exciting to me.

Some of the most enjoyable occasions in Maya Picasso's young life were when she went to her father's studio to watch him paint.

And Rowe is the Economist's obituaries editor.

She loved the way he tackled a painting. He would approach the canvas like a dancer, get up close, put the bit of paint on, then he'd dance back again, see what it needed, smoking all the time, pivoting around and generally giving her the impression of someone who lived passionately to create and could hardly keep still for the urge to paint. They were all the more precious, these occasions of seeing her father, because he didn't live with them. Picasso's love life was extremely complicated. Maja was the daughter of his mistress, Marie Therese Walter. And at the time, Picasso was still married to a Russian dancer. He was also seeing another woman called Dora Ma, who was a photographer. So all these women were passing in and out in a shadowy way through Jan Maya's life. But the one thing she was sure of was that her father saw her as his chief joy and best companion. In some ways. He called her his little anchovy, which was a reference to Malaga, where he came from. He would pick her up from school often, and they would walk along the Seine, for they were living in Paris then, all of them. And he would pick up pebbles from the shore, make little toys for her little dolls, origami birds out of invitation cards. He was always creating something. Of course, he also painted many portraits of her. In fact, more portraits of Maya than of any of his other three children, and as many as he painted of his mistresses. There were some extraordinary works of her sitting with her dolls, catching butterflies in a net. There were also plenty of drawings of her in pencil. He was learning from her by doing these paintings as much as she was learning from him. He liked to say that it had taken four years for him to learn to paint like Raphael. But it took him a lifetime to learn to paint like a child. There were also other things that Meier gave him. One was that she made up for the loss of Picasso's sister, Maria de la Concep, who had died when he was 14. He also was an intensely superstitious man. He worried that anything connected with him might be used to cast a spell against him. And he used to give me his nail clippings and hair clippings so that nobody could get hold of them and cast an evil spell on him. He was also terrified of death, and he died in 1973, having not made a will and leaving 45,000 works that had to be sorted out and cataloged. There was an extraordinary amount to do. Maya, naturally, took charge as the elder daughter, but eventually she began to run into opposition from her half brother Claude, who began to authenticate in the 1990s. And after a bit of wrestling, he decided to set up the Picasso administration, which is now the body that authenticates the works. She had been moved aside and she felt this very passionately because after all, she and her father had spent hours painting together. There was one time, shortly after the liberation of Paris in 1944, when she went to see him in the studio and they painted together. He gave her a brush and they did watercolors, and then he hung up her works and his works together on a washing line. His and Myers, Myers and his. And she felt then their real collaboration in the work of art. And she also felt, she knew probably better than anybody, the feeling that had gone into Picasso's still lives, which were based on the sensuous curves of her mother's body, the love that had created her. And after all, she had then gone on to recreate him.

Ann Ro on Maya Vidmire Picasso, who's died aged 87. That's all for this episode of the Intelligence. The show's editors are Chris Impey and Jack Gill, and our deputy editor is John Jo Devlin and our sound engineer is Will Rowe. Our senior producers are Sam Westrin and Rory Galloway. Our creative producer is William Warren. Our producers are Alize John Batiste and Kevin Kaners and assistant producer Barclay Bram. With extra production help this week from Emily Elias and Maggie Khedifa, we'll all see you back here on Monday.

Sam.