Meta CEO Mark Zuckerberg and Square CEO Jack Dorsey.
Manuel Orbegozo | Handout | Reuters
A version of this article first appeared in CNBC’s Inside Wealth newsletter with Robert Frank, a weekly guide to the high-net-worth investor and consumer. Sign up to receive future editions, straight to your inbox.
Even as tax changes may reduce giving by the wealthy, a leading investment firm is pioneering a new model of philanthropy that could spur big donors to act now.
Iconiq Capital, which started in Silicon Valley with clients like Mark Zuckerberg and Jack Dorsey, has created collaborative philanthropy funds to jump-start giving. These so-called co-labs pool clients’ capital to make multiyear grants to a group of nonprofits focused on causes like climate equity and economic mobility.
The most recent co-lab targets youth mental health and has raised $112 million from 10 families, with a goal of $200 million by the end of the year. Iconiq Impact, the firm’s charitable giving arm, has advised on nearly $900 million in grants over six years, mostly through the co-labs.
Iconiq Impact head Matti Navellou joined the San Francisco-based firm from UNICEF six years ago. She built the co-lab program after hearing that clients wanted to learn about philanthropy from their peers.
“It is a really lonely journey, and it’s hard to find peers at the same wealth level who are struggling with the same type of challenges,” she said. “How do you navigate the amount of people constantly pitching you? And how do you know where to focus?”
The nonprofit sector’s woes are compounded by President Donald Trump’s tax bill, which reduces tax incentives for wealthy donors and makes steep cuts to social safety net programs. Nonprofit groups, including the 30,000-member strong National Council of Nonprofits, said charities will have fewer dollars at their disposal while their services are more needed.
Navellou said charitable giving is more crucial than ever due to slashed federal funding.
“There are so many areas where, truly, philanthropy can move the needle right now, and so this structure that has been set up is problematic because it doesn’t actually incentivize accountability for spending that money for what it is designed for, which is funding nonprofits,” said Navellou. “We aim to influence the faster movement of dollars out the door.”
Time is of the essence, but most Iconiq clients are busy founders who have little time to focus on philanthropy and have yet to build foundations, Navellou said. Foundations aren’t necessarily built for speed either, she said, as they are only required to donate 5% a year. Donor-advised funds are a popular low-effort option, but they aren’t obligated to disburse funds to charity.
The co-labs allow clients to direct funds to charities quicker and with less effort. Iconiq develops a “portfolio” of charities in concert with clients after a series of in-person and Zoom gatherings with fellow funders and outside experts on causes of interest. After weeks of conversations, Iconiq develops the “portfolio” with the funders’ blessing and takes care of the rest.
“What this does is it enables them to just move money much faster when they are in that time period of their life running companies,” Navellou said.
Matti Navellou, head of ICONIQ Impact, speaks with donors at the Ocean Co-Lab Community Retreat in Monterey, CA.
Courtesy of Matti Navellou
Getting donors to trust not only Iconiq but also the charities, rather than micromanaging how the funds are allocated, is key to the process, she said. The multiyear, unrestricted grants allow charity leaders to focus on the work rather than the fundraising, she added.
Bill Smith, founder and CEO of grantee Inseparable, said flexible funding allows nonprofits to adapt to a volatile policy climate. Inseparable is one of 25 nonprofits in the youth mental health co-lab, receiving about $1.3 million a year for five years starting this past December.
“One of the hardest things when you’re running an organization, especially an advocacy organization, where we have changing circumstances with different administrations and what’s going on in states all over the country — the flexibility of having unrestricted money lets us go where we need to go and do what we need to do without constraints from a funder,” he said.
Looking forward, Navellou said she wants to scale Iconiq Impact’s giving, which is made easier with collaborative contributions. Donors who aren’t Iconiq clients are welcome to participate in the co-labs, but funders are generally required to donate a single-digit million sum annually over three to five years, she said.
After Iconiq’s charity portfolios are designed, they are “open source,” she said, meaning other donors can follow on with commitments of as little as $250,000 a year. It’s convenient for younger entrepreneurs who want to dip their toes in philanthropy, she said.
The great wealth transfer may be promising for philanthropy, Navellou said. She has noticed that the young adult children of Iconiq clients are quicker to act and care more about measurable impact rather than specific causes.
“There’s certainly a young cohort that do think about philanthropy differently, and I would say, are much more impatient around changing things and leveraging that capital in different ways, including through impact investing,” she said. “And I’d say they’re also issue agnostic, which is really interesting. They often will ask questions around data and letting the data inform and guide what they do, rather than coming to the table and saying, ‘I really want to move the needle on this issue.’”
Women are expected to receive about 70% of the $124 trillion that will pass down over the next 25 years, according to Cerulli Associates. This also bodes well for charitable giving, Navellou said.
“What we’ve seen anecdotally, although there is data backing this as well, is that women tend to be more generous,” she said. “One area that’s really exciting is just a lot more female led philanthropy. We’re seeing that, and we’re really excited to build on that momentum that we’re seeing.”
