Why are tech billionaires so generous?

When, in 2000, Bill Gates stepped down as CEO of Microsoft, the computing behemoth he had started 25 years previously, many people expected him to retire to enjoy the spoils of his incredible success. For a company that had perhaps placed financial profit over quality of product, the announcement that its former leader would dedicate the remainder of his life to philanthropy shocked many.

However, that is exactly what Gates did when he launched the Bill & Melinda Gates Foundation in 2000, dedicated towards a number of worthy healthcare and poverty alleviation causes – the most high-profile of which has been eradicating malaria. By the end of 2013, the foundation was reportedly valued at $34.6bn. Last November, it reached $42.3bn after Gates gave yet more of his Microsoft stock to the foundation.

The foundation was not the first philanthropic act of Gates, however. In 1994, he had established the William H Gates Foundation, after studying the careers of two of the US’ most successful businessmen and philanthropists, John D Rockefeller and Andrew Carnegie. In an interview with The Telegraph in 2013, Gates spoke of the reasons for giving away his fortune: “Money has no utility to me beyond a certain point. Its utility is entirely in building an organisation and getting the resources out to the poorest in the world.”

Culture of philanthropy
Gates is not the only tech leader to have philanthropic aims. According to a report published in February, the tech industry is the biggest donor to charity in the US, with $9.8bn given to charity during 2014. This amounted to 47 percent of the total figure, and made the industry more charitable than the financial services sector.

According to The Chronicle of Philanthropy, the country’s 50 biggest donors increased their charitable donations by almost a third last year. This included a number of tech entrepreneurs, including WhatsApp founder Jan Koum, who donated more than $500m. Napster co-founder and tech entrepreneur Sean Parker gave $550m to charitable causes, while GoPro founder Nicholas Woodman donated $500m to the Silicon Valley Community Foundation. Google’s Sergey Brin reportedly donated just under $400m to charities as well.

Having amounted a staggering fortune of $33.1bn from his creation of Facebook, Mark Zuckerberg has done a considerable amount of good in the few years since coming to prominence. Especially focused on improving educational opportunities in the US, he established his own Startup:Education foundation in 2010, and in the same year was said to have donated $100m to Newark Public Schools in New Jersey (though some critics suggested he did so to distract from his unsympathetic portrayal in the Oscar-nominated film The Social Network).

Zuckerberg’s Facebook co-founder Chris Hughes has also been praised for his philanthropic actions. Last year, Hughes and Dropbox founder Drew Houston announced their GiveDirectly charity, which enables people to donate money to individual struggling families in Kenya and Uganda. A different approach to the paternalistic style of philanthropy many high-minded wealthy people practice, the idea of making charity easier and more direct is something that might appeal to many people who want greater control over their donations.

While the financial services industry has been home to some of the world’s biggest charitable donors, it is unsurprising considering the high wages and tax breaks that come from being seen to be philanthropic. These days, it seems the industry is no longer one where its leading lights have grand ideals of making the world a better place, but instead want to line their own pockets.

One person who bucks this trend, however, is billionaire investor Warren Buffett. He has given vast amounts of his money to a number of causes over many years, and has encouraged others to do the same too. Alongside Gates, Buffet unveiled the Giving Pledge in 2010, which asked the world’s richest people to commit to donating at least half of their fortunes to charity. So far, it has secured 128 billionaires from across the world to its cause. Buffett himself gave the Bill & Melinda Gates Foundation almost all of his $73.8bn fortune.

Not all of tech’s leading lights have been big givers, however. Apple founder Steve Jobs refused to be part of the Giving Pledge. When he returned to Apple in 1997, he scrapped all the company’s philanthropic programmes, with reports that he believed expanding Apple would have a more positive effect on society than merely giving away cash. However, under Jobs, the company did help to popularise the Project Red brand that has helped to fight HIV and AIDS in Africa. The company has since become that charity’s largest contributor.

Fresh thinking
It is encouraging to see some of the world’s most innovative minds being so generous. Many of these figures are dedicating their considerable talents and money towards causes that have been poorly served by governments.

According to Michael Moody, a professor at Grand Valley State University’s Johnson Center for Philanthropy, these young, tech savvy minds are looking to apply fresh thinking to long-term societal problems. “They’re always looking for a better mousetrap. For a lot of them, that’s how they made their significant wealth”, he told Philanthropy.com.

Una Osil, a research director at Indiana University’s Lilly Family School of Philanthropy, told the website: “Younger donors know talent matters. They’ve seen that in their work life, and now they’re applying it to philanthropy. They’re bringing together talent to spur innovation.”

Gates told The Telegraph that he felt he and his wife were well placed to use their experience as innovators for good causes: “My wife and I had a long dialogue about how we were going to take the wealth that we’re lucky enough to have and give it back in a way that’s most impactful to the world. Both of us worked at Microsoft and saw that, if you take innovation and smart people, the ability to measure what’s working, that you can pull together some pretty dramatic things.”

While all these generous donations to good causes are to be praised, some cynics might say they are little more than publicity stunts for already vastly wealthy business people. Perhaps more than any other industry, tech companies rely on charismatic, publicity-seeking leaders epitomised by Jobs. Zuckerberg’s reputation as being a cold and calculating leader was made worse by his portrayal in The Social Network, so any charitable acts might raise suspicions of reputation salvaging. Gates, however, is no longer Microsoft’s CEO, so it would seem unfair to tarnish him with accusations of trying to boost his company’s reputation.

And even if they are publicity stunts, is that such a bad thing? The money is still going towards improving society and helping the needy, while tech leaders are applying fresh thinking to some of the world’s biggest problems.