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McKinsey on Society


Voices How We Give

Big Ticket Philanthropy in Emerging Markets

The rapid economic transformation of the developing world has spawned significant wealth creation and the emergence of a vibrant local philanthropy sector. Voices on Society interviewed three creative philanthropists who are applying their ingenuity and capital to make a difference in the fast-changing societies of Sub-Saharan Africa, India and greater China.

Manoj BhargavaCEO
5-hour ENERGY®

Age: 60
Residence: Farmington Hills, Michigan
Source of Wealth: Serial entrepreneur
Philanthropic Focus: Medical research, poverty alleviation in India

Manoj Bhargava moved to the United States from his native India at 14, dropped out of Princeton after his freshman year, and spent 12 years pursuing spiritual enlightenment at an Indian ashram. He launched a business career in his thirties and has since built
several successful companies, most notably Living Essentials, maker of the dietary supplement 5-hour ENERGY®. Bhargava’s stake in Living Essentials is currently valued at more than $3 billion. He has already committed $1 billion to Knowledge Medical Research Charitable Trust and Rural India Supporting Trust, two personal foundations that fund medical research in the United States and more than 400 charities in India. Much of Bhargava’s giving supports hospitals for the poor and education for disadvantaged women in rural areas.

A billionaire monk’s pledge to charity

The TakeawayPhilanthropists should learn from the business world by taking a customer-focused approach to determining their giving strategies, according to 5-hour ENERGY® founder Manoj Bhargava.

Voices: You’ve publicly pledged to give 90 percent of your wealth to charity. Why?

Manoj Bhargava: Some people have hobbies that involve large personal consumption. I don’t have expensive hobbies. People ask me why I don’t own a second house, and I tell them I have enough problems with my first house. Why would I take on more headaches? So I really only have two choices. I can either do something for others, or I can wreck my son’s life. That doesn’t seem like much of a choice.

Voices: You lived on an ashram as a young man, and you’ve devoted many years of your life to meditation and other spiritual practices. How has this background shaped your approach to philanthropy?

Manoj Bhargava: On the personal side, my spiritual training taught me that excessive consumption can only harm you. The simpler your life is, the better off you are. The business and the work side is a lot more complicated. But I believe that if you have wealth, then you have a duty to go out and use it for the benefit of others. That probably also comes from my training.

Voices: What made you decide to become a businessman rather than a monk?

Manoj Bhargava: I still continue the same spiritual practice, so life hasn’t changed incredibly for me because the discipline is pretty much the same. And I found out I’m pretty good at business. For me, doing business and then giving money away is not so different from being a monk, because in both cases you’re working for others.

Voices: How did you figure out what you wanted to focus on as a philanthropist?

Manoj Bhargava: The most common mistake philanthropists make is failing to understand that it’s not about you. It’s about the customer. That’s pretty obvious in business: You have to look at the needs out there rather than sitting behind a desk and saying this is what we’re going to give them. Incredibly, a huge chunk of philanthropy isn’t about that. For example, Princeton University called me up and asked for money. I told them: “Look, I don’t want to waste your time but I don’t give money to the rich.” Putting my name on buildings is not my definition of philanthropy. I focus on human suffering, and you know suffering when you see it.

“If a guy is starving you don’t give him an education. First he has to eat otherwise he’s going to be dead.”

That’s how we do philanthropy, by going out into the field and finding out what people need. If a guy’s starving you don’t give him an education. First he has to eat; otherwise he’s going to be dead. Yet so much philanthropy is driven by fashion. Today’s fashion is sustainability. Who made that rule? It really is about customer need. If the guy needs food he needs food now. Whatever he needs, that’s what the goal should be, not sustainability.

Voices: How do you identify the projects that you fund?

Manoj Bhargava: The bottleneck is recruiting. Our approach is to adopt people who are doing a great job. Currently we’ve adopted between 350 and 400 charities. Through them, we affect the lives of about 400,000 people a year. Right now we’re building four hospitals in India. We’re funding school lunch programs, because in India there are tens of thousands of kids who only go to school because there’s a free lunch. We also fund programs that teach women how to take care of themselves in business.

Voices: The word “adopt” suggests a long-term commitment. Once you adopt these charities, are you tied to them for life?

Manoj Bhargava: It’s very simple. We check out each charity to see if they’re doing a good job. Then we adopt them or fund them. And then we check every year to make sure they’re not stealing the money. If they’re doing a decent job, we keep funding them. Three or four years from now we expect to have adopted about 800 charities.

Voices: What are some mistakes that you’ve made in philanthropy and what did they teach you?

Manoj Bhargava: Most of the mistakes that I’ve made in business and philanthropy have to do with hiring the wrong people. We’re charity wholesalers, so we need to find retailers who can go into the trenches and actually do the work. Sometimes we hire people who turn out to be about themselves, not the poor. Sometimes they turn out to be incompetent. I don’t know if I’m ever going to learn from those mistakes, because hiring is not a science. It’s still art. So the more people I meet, the more I’m going to mess up.

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