The giving moment: what turns people into philanthropists?

Explaining what first spurred his philanthropy, US billionaire Michael Novogratz uses Wall Street terminology. “There’s kind of a macro overlay, and then there are micro things that got me focused on where my money went,” says the former Goldman Sachs partner and founder of cryptocurrency group Galaxy Digital.

“The macro was growing up in a Catholic family where there was that message of, you’re given so much, you need to give back. So when I started making money, it felt like an obligation, part of my DNA.”

While Novogratz is not a practising Catholic, some philanthropists cite religion or spirituality as impulses for their giving. Novogratz’s entry into philanthropy, however, was arguably more preordained. A sibling, Jacqueline Novogratz, founded the non-profit Acumen Fund — which he has supported since its early years — that focuses on alleviating poverty and social injustice.

His second philanthropic venture was starting Beat the Streets, a wrestling charity, 19 years ago. Now active in 17 cities, it helps get roughly 10,000 kids a year to take part in wrestling. “The idea was teaching life skills through this sport that creates leaders,” says Novogratz, a New York resident and former Princeton University wrestler.

Donor advisers say that centring philanthropy around an interest is wise. It plays to the donor’s knowledge, and their interest is more likely to be sustained and the charity to succeed. “It’s about finding the thing that makes your heart beat a little faster,” says Whitney Webb, head of family governance at Cresset Capital, a Chicago-based family office and wealth management group.

Novogratz says that Beat the Streets has brought him unforeseen rewards — such as the Laureus Foundation’s Nelson Mandela Sport for Humanity Award.

Yet he is not resting on his philanthropic laurels. Instead, Novogratz has expanded his giving. One reason for the change was the cajoling of a friend: the investor and philanthropist John Arnold. Another was realising that he was not giving enough away.

“If you had asked me, before 2017, to rate my generosity, I’d have given myself an A-minus or B-plus. Then I did the numbers. What’s my total income? What do I pay in tax? What did I actually give away that year? And it was kind of embarrassingly low. It was probably higher than the average of most people, but it was certainly less than 1 per cent a year of my net worth,” says Novogratz.

Novogratz’s epiphany matches what Jo Ensor, founder and chief executive of Pi, a London-based philanthropy advisory business, observes in others: “People tend to start giving at an inflection point — they sell a company or come into wealth — and it’s not about the amount of wealth, but a perception of whether they’ve got enough wealth. And that varies very differently between people.”

The most effective philanthropists are those who bring their time and their talent

Fortunately for one non-profit, Novogratz’s reappraisal of his giving capacity coincided with a liquidity event. “I had just made a shack-load of money on a cryptocurrency called Ethereum, and I had never bought a jet before,” he says. He decided he should “contribute to something ‘greater’” as well as buying a jet. “I made an equal pledge to a thing called The Bail Project. And I did it because I heard a pitch.”

Robin Steinberg, an American lawyer and social justice advocate, was speaking at Audacious, a TED philanthropic initiative that gathers wealthy individuals annually to hear pitches from charities seeking collective donations. Steinberg’s stories about The Bail Project, an organisation she founded that provides free bail assistance, captivated the crypto trader.

“It hit a button in me around fairness,” says Novogratz, who has since donated more than $50mn to prison and bail reform charities, including The Bail Project and Reform Alliance. Submerging himself in the criminal justice ecosystem — meeting prisoners, prison workers and activists — has exacerbated his frustration at the system’s failings and inequities, and added to his knowledge.

According to Ensor, Novogratz’s response is not uncommon. “People are often motivated by something they are angry about, something they are excited about . . . and it’s when the head kicks in that people start to give more strategically,” she says.

Righting perceived wrongs has also been a driver for British entrepreneur Joanna Jensen’s philanthropy. In her case, it is the paucity of funding for women entrepreneurs. But like Novogratz, it was a childhood connection that started her philanthropy. 

Jensen founded Childs Farm, a children’s skincare and bath products brand, which she and co-investors sold to consumer goods group PZ Cussons for £37mn in 2022. An equestrian herself since early childhood, for several years she gave 10 per cent of her company’s profits to Riding for the Disabled (RDA), culminating in a lump sum to help the charity build new headquarters in 2019.

Jensen’s RDA work introduced her to disabled dressage competitor Natasha Baker, who was seeking funding for a horse to compete in the 2020 Tokyo Paralympics. “I paid for half of it, and that horse went on to win two silvers and a gold medal,” she says. Two bronzes followed in Paris this year. Baker, in turn, introduced Jensen to Paralympics GB and its new Parallel Club. 

Jensen describes the Parallel Club as an opportunity for wealthy individuals to fill the gap left by insufficient corporate sponsorship and government funding. One aim is to enable para athletes to meet and train every day. Having seen the benefits of horseriding for disabled people, Jensen committed £10,000 a year for four years. Before the four years ended, she became chair. 

Jensen says she is motivated by insufficient awareness of the challenges faced by the world’s 1bn disabled people. But raising money for Paralympians is “not easy because the perception is that the international headline sponsors pay — which they don’t,” says Jensen. “My role as chair is to raise awareness and to invite other people — friends, people I meet on the street, people I stalk on LinkedIn — to be part of this amazing community; to really get to know the athletes and be a part of their four-year journey to [the next Paralympics in] LA.” 

The Childs Farm sale has freed time for her other philanthropy, where Jensen is focusing on areas she knows a lot about. “I want to be more meaningful with what I do, and money is not always the right answer. Help, guidance and mentorship is often a more suitable gift to give . . . and I think the chapter I’m on now is ‘giving back’.

“I help a lot of female entrepreneurs. I’m involved in By Women Built, a community supporting consumer brands, which is my sweet spot: I can tell someone in six minutes what it took me six months to learn.” 

Jensen also wants to rectify the disparity in the financing of men and women-owned start-ups, which she encountered in the early days of Childs Farm. This “lived experience” approach to philanthropy is what Cresset’s Webb says often stirs people to act — using personal knowledge and experience to smooth the path for others, “whether it’s supporting a school or just giving young people opportunities”.

Also embodying the mould is Roy Vagelos. He and his wife, Diana, became philanthropists after a thought-provoking visit to Rahway High School in New Jersey, his childhood alma mater, when he led US pharmaceutical Merck’s science and research arm.

“I gave a talk at the high school graduation in 1975, and noted that the best students were attending rather mediocre colleges and universities,” says Vagelos. “It was disappointing . . . their families couldn’t afford it. So, we started a programme based on the need of students who could gain entry into one of the top 25 colleges or universities, and then we would pay a portion of their costs. That was our first foray.”

Buoyed by stock options that vested when Vagelos retired as chief executive of Merck in 1994, and the rewards from 28 years as chair of biotech Regeneron, the couple’s arsenal grew. So, too, did their ambitions.

They began supporting people whose studies and research would bring societal benefits. The Vageloses’ motivation was a desire to “give back to those institutions that were responsible for our being educated to the point where we could do the things that we did in our careers”.

The couple — both scholarship students — widened their largesse, funding scholarships for those studying Stem subjects, and associated buildings and professorships. Another beneficiary was Columbia University’s medical school, where Vagelos studied medicine: in 2017, the couple gave $250mn to help fund scholarships for needy medical students; in August, they added another $400mn, to support bench science and biomedical research.

Vagelos keeps ties with the institutions, serving on boards and in advisory roles. Ensor, the donor adviser, believes it is an important trait for budding philanthropists.

She says: “The most effective philanthropists are not those who just bring their financial resources, but those who bring their time and their talent . . . those who are most strategic about how they give. If they have expertise in science or education, or in healthcare, they are going to have a stronger understanding of what success looks like, of what needs changing.”

Expert contributions aside, Vagelos’s summary of his family’s philanthropic journey embraces the triggers that commonly prompt others to donate: making a positive impact, connections to a cause, legacy building and enjoyment.

“We have spent a lot of time building programmes, and it has been a lot of fun,’’ says Vagelos. ‘‘We meet the faculty and we meet the students. And some of these students call us to visit or send us letters decades later. They are doing great things. It has been very gratifying.”

This article is part of FT Wealth, a section providing in-depth coverage of philanthropy, entrepreneurs, family offices, as well as alternative and impact investment