
Andreessen Horowitz to give half their earnings to charity - jsm386
http://finance.fortune.cnn.com/2012/04/25/andreessen-horowitz-to-give-half-their-earnings-to-charity/
======
paul
It's sad to see so much misplaced cynicism here. If the partners had decided
to keep 100% of their carry (as is typical) and used it to buy a bigger house
or jet or something, nobody would comment or care. Instead, they've pledged to
give half to some of their favorite charities, and some of you are acting as
if it's a crime against humanity. Put away your Ayn Rand books (or whatever it
is that drives you to such opinions) and go make some money of your own.
Perhaps you'll discover that Andreessen and friends aren't as foolish as you
imagine.

~~~
daenz
> Put away your Ayn Rand books ... and go make some money of your own.

Does Ayn Rand have similar opinions? I'm trying to figure out what you mean by
that.

~~~
mlinsey
Yes. Rand does not just think that forced redistribution by the state is
immoral, but also that private charity is at best morally neutral, and often
wrong depending on the nature of the charity (particularly if it is
"sacrificial", or is given in response to the needs or shortcomings of the
recipient, which in my opinion describes most of the charity in the world
today). Her fictional works perhaps lend themselves to a bit of interpretation
on this point, but her non-fiction work is quite unambiguous.

I know many libertarians are in favor of private charity and consider it a
virtue, and many of these same people are also fans of Rand, but they should
realize that she disagrees with them on this point.

~~~
WalterBright
Libertarianism is about people being free to choose what to do with their
money. If they choose to give to charity, light cigars with banknotes, spend
it on blackjack & hookers, invest in space flight, etc., it's all their right
to make that choice.

It isn't about the relative virtue of doing this or that.

~~~
olalonde
Ayn Rand was a harsh critic of libertarianism. That's a bit funny considering
how close her philosophy is to libertarianism.

~~~
xanados
I unfortunately can't find a reference (but I'm hoping someone else can!), but
my understanding is that group conflict is often greater between those who
have similar ideologies than between those of very different ideologies. For
example, Emacs vs. Vi rather than Emacs/Vi vs. Visual Studio or Lisp vs.
Scheme rather than Lisp/Scheme vs. everything else.

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rjshade
This is great. Something people often disregard, but which is hugely
important, is charity effectiveness. This boils down to measuring the impact
that you can make with a given donation: it turns out some charities are
literally thousands of times more effective than others.

A lot of people don't realise how much good they can do with modest donations
to the right charities -- until a year ago I really had no idea myself. There
are a couple of groups which I know of which do analysis of charity
effectiveness:

* Giving What We Can (<http://www.givingwhatwecan.org/>) are an Oxford, UK based organisation who estimate that you can save a life for ~£300.

* GiveWell (<http://givewell.org/>) are a US group who do similar research

They both publish lists of the most effective charities they've researched,
and Giving What We Can have a calculator which shows you how much you can
achieve by donating 10% of your income each year:

[http://www.givingwhatwecan.org/resources/what-you-can-
achiev...](http://www.givingwhatwecan.org/resources/what-you-can-achieve.php)

I think these stats are astonishing and it's really changed my approach to
charity. Worth checking out if you're interested at all in philanthropy!

~~~
hprhpr
Agreed about the importance of making sure you donate to the right charities,
which is why I was disappointed to read this: "And, to begin, they have
sprinkled $1 million on Silicon Valley nonprofits that focus on everything
from urban forestry to homeless families."

Another good essay about this stuff is here:
[http://lesswrong.com/lw/3gj/efficient_charity_do_unto_others...](http://lesswrong.com/lw/3gj/efficient_charity_do_unto_others/)

~~~
pmarca
For what it's worth, those six nonprofits weren't just chosen randomly. Each
GP picked one he and his family had direct experience with.

For my part, I don't know as much about this as some people, but my wife
teaches philanthropy at Stanford and has studied, written about, and taught
the topic of effective giving for her whole career, so that works out nicely
for me. (Can't resist plugging her recent book "Giving 2.0" for people
interested in the topic.)

~~~
zmitri
Hey Marc, speaking of giving 2.0, do you think there's some value in making it
easier for companies to promote positive initiatives like this? Or do you
think the action is more of a means in itself?

For example, if a16z said "Hey users of instagram (or users of a16z product
that just sold), we're going to let you decide which cause some of this money
goes to," would that create a delta in value from the original proposition?

~~~
pmarca
I'm not an expert (and don't want to comment on any particular company or
product), but it's an intriguing idea. I think Marc Benioff was an early
innovator in this area. It will be interesting to see what new ideas
entrepreneurs -- or their investors -- come up with along these lines.

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sethbannon
A stellar example of living your values. I hope this swings more deals their
way (it would certainly affect our choice of VC) and creates pressure for the
entire industry to adopt similar pledges.

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lukifer
This is why wealthy individuals are better for society than shareholder-owned
corporations. If the latter made a move like this, the entire board would be
fired immediately.

~~~
gwern
If 90+% of the shareholders voted to distribute that quarter's profits to
charity - the equivalent scenario to the general partners so voting, no? - who
would be firing the board?

~~~
lukifer
Has this ever happened, ever? On the scale of 50% of a very large sum?

Altruism is a kind of positive irrationality; the more stake-holders are
involved, the more exponentially unlikely such irrationality becomes.

~~~
netrus
I don't see how altruism is more irrational than luxory consumption. Doing
charity will make you happy and fulfilled - quite a smart move to do so ;)

(yes, I know that charity != altruism. But this is a very theoretical
discussion)

~~~
lukifer
I mean "rational" in terms of being able to justify it to others, and have it
be rational to them too. I can convince the board why a moderate donation to
Charity X is good PR, or why funding Product Y is a sound investment. It's
much harder to justify why the company should give away half its profit with
no direct return.

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Blocks8
Giving is great. I wonder if down the road they will consider helping incubate
these non-profits to make the return on their charitable investment even
greater. They have the expertise of helping companies grow, why not give the
money and brain power to help the charities too.

A side question, any idea if the contributions are from the firm or the
individual partners? I'm curious about the tax break breakdown. If the company
is the vehicle for donation, there is a larger ability for a full tax break on
the money donated. However, it seems that for an individual, there is a
maximum: "Only if you contribute more than 20% of your adjusted gross income
to charity is it necessary to be concerned about donation limits. If the
contribution is made to a public charity, the deduction is limited to 50% of
your contribution base." -
[http://www.charitynavigator.org/index.cfm?bay=content.view&#...</a><p>So, if
100,000 was donated by the company, the tax break would be 100,000. $100,000
goest to the charity and the company has no tax on that income. But for the
individual, if the maximum tax break is 50%, then $100,000 goes to the charity
but $50,000 was taxed at the individual's income tax bracket (likely 35%+ for
these guys) so the 'cost' was really $117,500 to give $100,000. Check my math
here, I'm not a tax expert but curious about they are looking at maximizing
their contribution at the lowest cost.

~~~
pmarca
> A side question, any idea if the contributions are from the firm or the
> individual partners?

From the individual General Partners.

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davemel37
According to the Talmud, "The highest form of charity is helping people earn a
livelihood."

So, regardless of motivation, these guys are good folks.

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rdl
It's interesting to note that Sequoia's LPs are themselves largely charities,
so money Sequoia makes goes to charitable causes, too. (and I find it unlikely
GPs at other top-tier VCs, like Sequoia, don't donate a lot of wealth
already...probably not 50% of income, but a lot of famous investors have
endowed huge foundations).

~~~
pmarca
Yes, and that's also true of us, and at least several of the other top venture
firms. And it's worth noting that Mike Moritz is already a signatory to the
Giving Pledge.

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mrgn
This makes me (even more) happy to work for an a16z portfolio company. Though
in a long-term and indirect way, more of the product of my work will go toward
a great cause.

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bootload
_"... This seems to be the first time that venture capitalists have made such
a pledge ..."_

The way Andreessen disrupts continually surprises me.

------
poorpointofview
The emotions of man are stirred more quickly than man’s intelligence; and, as
I pointed out some time ago in an article on the function of criticism, it is
much more easy to have sympathy with suffering than it is to have sympathy
with thought. Accordingly, with admirable, though misdirected intentions, they
very seriously and very sentimentally set themselves to the task of remedying
the evils that they see. But their remedies do not cure the disease: they
merely prolong it. Indeed, their remedies are part of the disease.

They try to solve the problem of poverty, for instance, by keeping the poor
alive; or, in the case of a very advanced school, by amusing the poor.

But this is not a solution: it is an aggravation of the difficulty. The proper
aim is to try and reconstruct society on such a basis that poverty will be
impossible. And the altruistic virtues have really prevented the carrying out
of this aim. Just as the worst slave-owners were those who were kind to their
slaves, and so prevented the horror of the system being realised by those who
suffered from it, and understood by those who contemplated it, so, in the
present state of things in England, the people who do most harm are the people
who try to do most good; and at last we have had the spectacle of men who have
really studied the problem and know the life – educated men who live in the
East End – coming forward and imploring the community to restrain its
altruistic impulses of charity, benevolence, and the like. They do so on the
ground that such charity degrades and demoralises. They are perfectly right.
Charity creates a multitude of sins.

There is also this to be said. It is immoral to use private property in order
to alleviate the horrible evils that result from the institution of private
property. It is both immoral and unfair.

~ Oscar Wilde

You would think smart men as these would want to cure the disease instead of
curing the symptoms.

~~~
creamyhorror
This is a subtle comment, with the key statement being "The proper aim is to
try and reconstruct society on such a basis that poverty will be impossible."

I'm not so sure socialism is the answer there, but it's definitely a goal to
have for the long term.

~~~
pmarca
The only part I don't like about the idea of trying to reconstruct society on
a basis that poverty will be impossible is that previous attempts to do that
tended to result in millions of people being killed. Funny how that works :-).

------
scottilee
This is great news. Another idea would be to put aside funds for philanthropic
startups.

------
mlinsey
This is fantastic! Many investors donate heavily to charity already, but
making this the policy of the firm sends a very strong message.

------
igorsyl
Should there be a charity helping struggling entrepreneurs?

~~~
scottilee
I hope this is a joke.

------
mukaiji
BRAVO!

------
daenz
Though I'm not religious, there's a specific set of bible verses I think of
when I see news of someone being publicly charitable:

1 Take heed that you do not do your charitable deeds before men, to be seen by
them. Otherwise you have no reward from your Father in heaven. 2 Therefore,
when you do a charitable deed, do not sound a trumpet before you as the
hypocrites do in the synagogues and in the streets, that they may have glory
from men. Assuredly, I say to you, they have their reward. 3 But when you do a
charitable deed, do not let your left hand know what your right hand is doing,
4 that your charitable deed may be in secret; and your Father who sees in
secret will Himself reward you openly.

\--Matthew 6:1-4

I think it means that the spirit of charity is purest when it is anonymous.

~~~
aaronbrethorst
Of course, there are also tons of verses exhorting you to lead by example:
<http://www.openbible.info/topics/lead_by_example>

~~~
daenz
If your goal is to increase the amount of donations to a charity, then by all
means, do it publicly...inspire and/or pressure others to do the same. If your
goal is a personal exercise in selflessness and giving, then do it
anonymously.

~~~
gjm11
And which is the more selfless-and-giving of the two goals? The one that's
about maximizing the benefit to a charitable organization, or the one that's
about maximizing one's personal selflessness?

~~~
daenz
Depends, one is a short term investment and the other is a long term
investment. Which is more giving and selfless: giving a man a fish, or
investing time in learning how to be a great fishing teacher, then teaching
men to fish?

------
jcampbell1
I am frankly a bit saddened by this. These guys are some of the best in the
world at deploying capital. Humanity would be better served if they continued
to invest their own money. Now these guys half-work for some charity, and when
the charity doesn't deliver great results, they will feel like they are half-
working for little results.

It is a mistake for the best capital allocators to pledge future earnings.
They should pledge their future wealth, not earnings. This way, the harder
they work and the more earnings they successfully redeploy, the greater the
contribution to charity.

~~~
zmitri
It's unbelievable how much genius is wasted in poverty.

What if those charitable dollars helped someone in an absolute destitute
situation, who later turned out to be a success?

Let me give you an example. In New York there is a non profit called "East New
York Farms." If you aren't aware, East New York is one the roughest places you
can come across in Brooklyn. They provide kids with the chance to run an
organic garden from both the operational/agricultural side and the business
side of things. And on top of that, they sell it in the local neighborhood. I
talked to a girl who didn't know what broccoli was before she did this
program. Her parents just gave her honeybuns from the corner store for dinner.
Now they have Whole Foods quality vegetables in the middle of a destitute area
for cheap, and it services the community.
<https://goodkarmaapp.com/np/enyfarms>

Think of the marginal increase a dollar creates there vs going to a kid from a
top university.

~~~
vibrunazo
I think you've misread his post. He's talking about donating what they have
now VS donating more money after they get richer in the future. He's not
talking about donating to charities VS donating to kids from top universities.
The second would just be a consequence of the first.

~~~
_delirium
When do you stop, though? If you take the "first I'll get rich, _then_ work on
charitable causes" route, and Andreessen Horowitz aren't yet rich enough to
qualify, what level _is_ rich enough? Does it have to be $100 billion or
something before you're allowed to decide it's time to start diverting some
money to charity?

~~~
SamReidHughes
This is especially true assuming that the economy gets better over time, that
the poor of today are worse off than the poor of tomorrow will be.

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jgmmo
Bah! Entrepreneurs should reinvest their profits into more businesses. Profits
are the reward you get for serving society effectively. Society would probably
be better served if Bill Gates, etc. reinvested their cash instead of donating
to charities. If charities actually cost-effectively served society than they
would be a business instead!

~~~
yesbabyyes
How about you decide what you do with your money, and Bill Gates and Marc
Andreessen decide what they do with their money?

~~~
jgmmo
Well of course I'm not suggesting we forcibly make them do anything with their
money. I am just saying, in terms of societal net benefit, we are probably
much better off if our most successful investors continue investing in more
businesses rather than charities. Not a fan of thought experiments?

~~~
yesbabyyes
I assure you that there are lots of wealthy people who reinvest their money
into more businesses, so I'm not sure of the value of your thought experiment.
There seem to be fewer wealthy people giving half their fortune to charity.
Not a fan of real-world experiments?

