Harvard Business Review December 14, 2010, 11:57AM EST

Four Strategic Generosity Lessons

In the age of the magnanimity of Zuckerberg, Gates, and Buffet, givers need to ensure their gifts have the intended effect, says Rosabeth Moss Kanter

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By Rosabeth Moss Kanter

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Posted on Harvard Business Review: December 13, 2010 11:33 AM

On December 9, Facebook CEO Mark Zuckerberg joined Microsoft founder Bill Gates and wealthy investor Warren Buffet in signing the Gates-Buffet Giving Pledge, which commits them to donate at least half of their wealth over time. Other less-well-known holders of 10-figure U.S. dollar fortunes have also followed suit.

What do those gazillionaires' grand gestures have to do with the rest of us? And are they role models? Yes, but not in the obvious ways. My conclusion is decidedly not that people of lesser means should give away half of what they have — even though a family in Atlanta did just that and wrote a book about it (The Power of Half by Kevin and Hannah Salwen). But regardless of the size or type of gift, and whether it is a company or an individual gesture, there are four lessons to be derived about the nature of gifts and how to ensure that they have the intended impact.

Authenticity matters. You can't gift your way out of controversy or into favorable situations. Generosity is not always well-received. Just ask companies that offer a strategic business case for getting involved with communities in emerging markets. Sometimes community leaders look suspiciously on the company's motives and refuse generous gestures. Advice to beware of outsiders bearing gifts is as old as the Trojan horse thousands of years ago.

But even if the gift horse is looked in the mouth, and it isn't full of Greek invaders, other suspicions remain. Perhaps the gift-giver is using the community or the charity to deceive others as to his or her true nature, as in the recently-hatched term "greenwashing," for companies pretending to be greener than they are through a few easy environmental gestures. And generosity is sometimes resented, as a display of conspicuous philanthropy, showing that you have more than someone else to begin with, which is a matter not to be discussed in polite company. Even if you have it, don't flaunt it.

Timing is everything. Gifts have the most positive impact when unsolicited, before you're asked, and certainly before it appears that you're shamed into it. Gates and Buffet had already pledged to give away half before anyone asked them to do it (although Gates preceded Buffet and brought him along). The rest look like they are joining a parade.

Zuckerberg's $100 million gift to Newark coincided with the release of an unflattering film portrait led to some concern that the announcement would be viewed as a publicity stunt. Reportedly Mayor Corey Booker encouraged Zuckerberg to go public. But the timing added a taint to the gift all the same, with consequences still unknown.

For some wealthy executives, and ex-executives, it might be too late. Numerous fired CEOs have been pilloried for walking away with gargantuan severance packages while their companies slid downhill. Had they been known for generous gifts before the exit settlements, perhaps the payment would have been viewed differently. There are numerous Wall Street bankers whose contrition and generosity months or years after the crash would be roundly criticized, not appreciated.

A gift is not generous when it is expected, or when it is forced out of the giver.

Activism is more important than altruism; advocacy can be as important as cash. Michael Milken, the junk bond trader who served two years of a 10 year sentence for violating securities laws, rehabilitated his reputation not through check-writing giveaways but through activism. He created the Milken Institute and became involved in promoting medical research, leading to a citation by Fortune magazine for his positive impact.

The power and reputation of the Gates Foundation comes from its dedication to a few clear areas of focus in which it can make a big difference, whether U.S. high schools or malaria and HIV-AIDS in Africa. Bill and Melinda are not passive givers; they are willing to put in their personal time and credibility to advocate for strategic contributions in high places, getting government funds to add to theirs. Their personal commitment encouraged Warren Buffet to make his enormous donations through the Gates Foundation, thus multiplying the potential impact.

Some gifts get returned. Others bring returns. Knowing the difference is important to make generosity a strategic skill.