The Philanthropy Handbook by Tej Kohli (Chapter Three - Building An Eponymous Foundation)
A Serialisation Of 'Rebuilding You: The Philanthropy Handbook' by Tej Kohli
One of the decisions that you may wish to make early is what kind of organisation that you intend to use as a vehicle for your philanthropy?
What Kind Of Entity?
If your intentions are simply to donate money, then the most efficient structure may be to remain an individual and make your donations in your capacity as a private citizen.
Certainly, this is the most time efficient way to engage in philanthropy, especially if you are going to donate to causes where the outcome of your donation is easily visible or monitored by third party organisations.
When I started my philanthropy career by supporting disabled children and setting up free canteens to feed and nourish children in Costa Rica, it was in a private as an individual. It was only much later that these projects became part of the back story, and later the responsibility of, the more ‘official’ Tej Kohli Foundation.
Today the not-for-profit Tej Kohli Foundation operates through a Donor Advised Fund, which makes it significantly more efficient to operate simultaneously in multiple territories without getting caught up in the endless bureaucracy involved in managing a charity.
So why might you evolve from private giving into launching and becoming a standalone foundation?
A foundation becomes useful once that you have decided to evolve your philanthropy beyond just giving money. It will also decouple your philanthropic activities from you as an individual to ensure that decisions can be made, and activities can take place, without your continual input. Your Foundation can also hold assets and may even be needed as a vehicle to hold intellectual property.
One of the ways in which my Tej Kohli Foundation has benefited from its status as a standalone entity is in what is today our ‘Applied Research’ division. As I have outlined in a prior chapter, India needs 100,000 donor corneas annually, but only 17,000 are procured each year. Corneal transplant surgery to cure blindness is also far too expensive for most communities in India.
With a view to solving this problem, many years ago I tasked two of the world’s leading ophthalmologists to posit how we might attain a ‘universal treatment’ for corneal blindness that was not reliant on donor cornea or transplantation, and which would cost less than $500.
After some initial failures, they devised a new regenerative biosynthetic technology that could be deployed instead of transplantation surgery in large percentage of cases of corneal blindness. The biosynthetic ‘glue filler’ can be administered from a syringe by an ophthalmologist in a 30-minute procedure without an operating theatre.
Moreover, the reliance on the regeneration of the patients’ own corneal tissue means that rejection is low compared to grafting on a donor cornea. Laboratory studies on 100% thickness corneal wounds have already shown great promise for the biosynthetic, which suggests that in a few years it could indeed become a ‘universal’ treatment costing just a couple of hundred dollars.
This new technology was developed as the result of years of collaborative research that engaged ophthalmology departments in Montreal, Canada; Hyderabad in India, and London’s Moorfields Eye Hospital and the UCL Institute of Ophthalmology. Earlier research using solid implants made from recombinant human collagen were successfully tested in patients at the Tej Kohli Cornea Institute in Hyderabad and in Odessa, Ukraine.
The culmination of all of this research resulted in new intellectual property, which is owned by the Tej Kohli Foundation, which continues to support the development of the biosynthetic through clinical trials.
However, taking a new medical device to market, and making it ubiquitous such that its cost falls to levels that become affordable in low-income countries, is a huge undertaking. It would be daunting for even a biotech company. It may therefore mean that the Tej Kohli Foundation will need to ‘out licence’ the intellectual property to a specialist commercial provider in order to bring it to market at the scale that can reduce the cost.
This may seem counter intuitive, but is an example of the different thinking that is required when operating from a philanthropic perspective. Despite the good intentions of any foundation, it is commercial specialists who are more likely to get medical device approved and available worldwide. Yes, they may profit from it when you do not, but the objective of a foundation is not ownership, but to make solutions a practical reality as quickly as possible.
Moreover, if the medical device does enter the global marketplace, the foundation would be the beneficiary for ongoing licencing and royalty payments, which can be deployed back into other activities to alleviate and cure poverty driven blindness around the world.
And so it is examples like this that start to support the case in favour of launching a standalone foundation – but only if it makes sense for the shape of your giving.
Delineating Your Activities
A standalone foundation is also a good way to create a clear delineation between your commercial activities and your philanthropic ones, especially if, like me, you are also engaged in impact investment which is simultaneously humanitarian whilst also being commercial.
In early 2020 my foundation made a worldwide call out for technological projects with a clear path to alleviating or curing corneal blindness in poor communities by 2035, to nominate themselves for incubation within the foundation. Had this ‘call out’ been from me as an individual rather than my foundation, it would have been unclear whether we were looking to invest, or to donate.
If you do create a foundation as the vehicle for your philanthropy, then there are also some pitfalls that you must be careful to avoid.
X-inefficiency is rife within the charitable and giving sector and could all-too-easily easily pervade your charitable or not-for-profit organization too. X-inefficiency is the divergence of an organisation’s behaviour, influenced by a lack of commercial or competitive pressure, away from the efficient behaviours assumed and implied by economic theory.
Your foundation will essentially be a cost centre without any in-built incentives to ensure cost efficiency in your operations or in the way that money is allocated to causes and projects. The obvious moral hazard is for your team to spend inefficiently because, after all, it’s all in the name of a ‘good cause’ and helping other people.
Except this financial largesse has an opportunity cost, in the form of those people who do not receive help because of your foundation’s sub optimal efficiency.
You will therefore need to establish appropriate checks and balances to continually monitor your spending to ensure that it remains aligned with your foundation’s objectives. Which is another reason that to begin with, you might refrain from starting a foundation.
As I have outlined in the introduction, it was many years into my own philanthropy journey that I first discovered my ‘calling’ and launched my mission to eliminate poverty-driven blindness by 2035. Once that this mission was defined, it became easier to set the values and define the playbook for my foundation to ensure clear goals and that our objectives were not too dispersed.
If you do launch a foundation, then your foundation must also avoid the ‘black box’ hazard. It is my firm belief that directly supporting causes at the grassroots level is by far the best way to achieve efficiency from whatever portion of your wealth that you will commit to philanthropy.
In my experience, most large charities have decoupled their income from their activities and impact in a way that means that as a donor, you are putting money into a ‘black box’ and seeing outcomes only on the other side with little visibility as to the impact of your own money or the efficiency of that outcome.
You must therefore be sure that your own foundation does not uncouple outcomes from efficiency. Monitoring your activities and ensuring that your organisational structure does not become bloated and expensive in a way that inefficiently diverts funds away from those in need, is thus extremely important. In your commercial life there are, by design, commercial levers that dissuade empire building. But in the absence of these controls, you must ensure that your Foundation does not become an unwieldly empire that fails to do its best for others.
My experience is that the best way to mitigate against x-inefficiency is to get your employees based in commercial businesses to become heavily involved in your foundation, and to draw upon your existing supplier relationships and reserves of intellectual capital.
Whilst on the surface this may seem like a substitution of vital resources away from wealth creation and into philanthropy, you will find that your people attain great satisfaction from helping others, and that this will yield dividends in terms of morale, efficiency and retention.
Eponymous?
Another question that you must ask yourself before launching your Foundation is whether it should be eponymous? Should your foundation carry your name or the name of your family?
This is by no means a contemporary trope, since eponymous organisations with a mission to help others go back many centuries, with their current forms originating from the long list of great social reformers that emerged during the industrial revolution.
There should be no shame in being proud about attaching your name to your philanthropic foundation, especially if your name might also denote kudos and lend your foundation legitimacy and credibility. But there are also good reasons not to make your foundation eponymous.
First and foremost, when your name is on your foundation, you leave yourself open to criticism about self-promotion. You might reasonably expect that the media will be even handed when it comes to your philanthropy, but that is misguided. You must never underestimate those parts of the cynical media who will seek to diminish your achievements and contrive to suggest that they are all part of some elaborate ‘ruse’ or darker purpose. An eponymous foundation will inextricably link your respective reputations. Your successes become its successes and its failures will become your failures and vice versa. And you should not underestimate the capacity for things to go wrong.
In 2015 the Bill and Melinda Gates Foundation was heavily criticised in a book by author Linsey McGoey for its predilection for “eponymously stamping their mark” onto the many projects that it supports.
What no doubt seemed like a harmless habit by an organisation that has overwhelmingly done so much good for the world suddenly became something for which they were being heavily criticised. If it can happen to them, then it can happen to anyone, including you.
Yet as I have discovered and will cover in later chapters, the chain reaction of rapid technological development across science and technology, and the scope for new ‘combination technologies’ to derive human betterment, means that cross-border and interdisciplinary cooperation is absolutely vital to developing new and novel solutions. And the only way to surface and unlock this potential it to share your stories regularly and widely, a view which is clearly shared by the Bill and Melinda Gates Foundation when they ‘label’ their projects.
For me the answer to whether you should put your name onto your foundation comes down to a simple ‘skin in the game’ scenario. It is human nature for people to look for leaders to follow, and if your name is on your foundation, then you should be wholly willing to make it your main preoccupation and to spend your time developing its projects and relationships. Put simply, if your name is on it, then you shouldn’t be delegating the big decisions.
Whether a foundation is right for you overall will depend on the shape and colour of your philanthropy. Given the potential pitfalls, I would advise starting out as an individual philanthropist and seek the support of a Donor Advised Fund. If you later find yourself with the need for a vehicle to house your activities, then firstly check that you are not in avertedly building an inefficient black box, and then consider launching a ‘formal’ foundation.