Origins of Dalio Philanthropies:

Ray Dalio’s philanthropic journey was initiated by his son Matt’s experiences in China, where he witnessed the harsh conditions of orphanages. The family started contributing to operations that could save lives for as little as $500. This experience brought Dalio into the world of philanthropy, leading him to establish Dalio Philanthropies as he earned more money over time.

When to Start Giving:

Dalio suggests that the “right time” to start giving can vary for each individual. It often emerges from a sense of empathy and a realization that one has the means to make a difference. For Dalio, the direct contact with those who are suffering is crucial in evoking the impulse to give. He doesn’t advocate for a set percentage or amount but rather argues that the decision is a personal journey.

Philanthropic Giving Strategy:

Dalio has donated to a range of causes including health justice institutes, pandemic relief, and financial inclusion. His contributions to Grameen America and the Dalio Family Health Justice Institute, among others, reflect a focus on systemic and sustainable impact. He emphasizes that philanthropy should stem from passion and that direct contact with beneficiaries is key.

The Giving Pledge:

Dalio explained his decision to sign the Giving Pledge in 2011, emphasizing that he didn’t do it because of the commitment to give away a certain amount of money. Rather, he saw it as an opportunity for learning and networking with other experienced philanthropists. It provided a platform for him to glean insights from others who have similar philanthropic interests.

Principle of Triangulation:

One of Dalio’s key principles in decision-making, including in philanthropy, is the concept of “triangulation.” He believes that what one doesn’t know is often greater than what one does know. Therefore, consulting multiple experts in the field can provide the most comprehensive view of an issue. This approach is about leveraging the best thinking available, whether in philanthropy or other aspects of life.

Humility and Questioning:

Ray Dalio emphasizes the significance of humility and questioning when interacting with experts in various fields. According to him, the most successful people are humble and skilled at asking questions. This attitude allows them to quickly absorb new information and make well-informed decisions.

Triangulation Process:

Dalio describes a method he calls “triangulation,” where he consults multiple experts and compares their viewpoints. By analyzing how these experts challenge each other’s thinking, he can identify common grounds and divergences. This process aids in making informed decisions and understanding the subject matter deeply.

Quick Learning and Delegating:

Dalio claims that success comes from knowing who the best people are in any given area and learning from them. He underscores how this approach allows for rapid learning. For example, he’s able to quickly understand complex subjects by speaking to experts like Henry Kissinger, thereby also effectively delegating tasks to people who are more knowledgeable in certain aspects.

The Who vs. The What:

Dalio concludes by highlighting that the “who” is often more critical than the “what.” By choosing the right people to consult with or delegate to, one can ensure success and continuous learning. This idea reiterates the importance of human relationships and networks in achieving both personal and professional goals.

Thought Partners and Decision-Making:

Ray Dalio explains the value of having thought partners who can argue different perspectives to arrive at the best path. According to him, this creates a fruitful educational environment and enables better decision-making.

Due Diligence and Metrics:

Dalio elaborates on how he assesses people’s track records, much like a venture capital investor would. His team performs due diligence by looking at metrics, references, and other investors’ opinions. Initially, they start with a multi-year grant and evaluate performance over time, emphasizing the importance of measurable outcomes.

Meaningful Work and Relationships:

When questioned about the importance of relationships, Dalio discusses the joy derived from combining meaningful work with meaningful relationships. These relationships bring not just good outcomes but also happiness and fulfillment.

Impactful Connections:

Dalio mentions his relationship with Mohammed Yunus, Nobel Peace Prize winner and microfinance pioneer, as an example of a mutually caring relationship with a common mission. For Dalio, such relationships are not only exciting and special but also contribute to the greater good.

By emphasizing the role of careful assessment and the importance of relationships, Dalio provides a nuanced view of how to successfully navigate complex decisions and achieve lasting impact.

Redefining Holiday Giving:

Ray Dalio emphasizes the importance of meaningful gifts over material ones, specifically during the holiday season. Dalio’s initiative started back in 2004, where instead of traditional gifts, he would give charity checks to his employees and friends, allowing them to donate to a cause of their choice. This not only introduced a sense of responsibility but also encouraged thoughtful giving among recipients.

Impact on Social Media:

In a recent social media campaign, Dalio expanded this idea by giving away 30,000 gift cards of various amounts, mostly $50 or $100, for people to donate to charities. The campaign had an immediate impact, significantly boosting the total amount of support for TISBEST, a platform facilitating such giving, and prompting a flood of thankful responses from participants.

Financial Disparities in Giving:

Dalio points out that the amount of money spent on frivolous items during the holidays far exceeds the annual budgets of essential charities like the American Cancer Society, Habitat for Humanity, and the American Heart Association. This underlines the need to shift societal focus towards more meaningful giving.

Family Engagement:

For Dalio and his family, giving is not a top-down decision but a collective activity driven by individual passions. Family members, including grandchildren, are allocated funds for causes that excite them. Each family member takes the lead on a cause, preventing the imposition of one’s values onto others.

Personal Stories and Passions:

Dalio also reveals that each family member has a cause close to their heart, and these individual interests lead to collective action. He mentions that one of his sons is focused on mental health, while another is committed to educational technology in the third world. The family respects each member’s domain and collectively partakes in activities related to these causes.

By making philanthropy a personal and shared experience, Ray Dalio has not only influenced meaningful giving but also added a new layer of depth to his relationships—both professional and familial.

Sustainability as a Priority:

Ray Dalio emphasizes the importance of financial sustainability in his family’s philanthropic endeavors. Rather than simply donating money, the focus is on creating lasting impact by investing in sustainable causes or organizations.

Three-Tiered Investment Strategy:

Dalio describes a three-tiered system for their charitable investments based on the level of financial stability. The first tier involves “double bottom line investments,” which yield both a social and financial return, allowing the money to be recycled back into the foundation for future giving.

Limitation of First Tier:

Dalio mentions that the first tier, with both social and financial returns, is often hard to come by. This implies a challenge in finding ventures that align perfectly with both philanthropic goals and financial sustainability.

Second Tier Explained:

The second tier in this strategy focuses on organizations that can self-sustain through their internal mechanisms. Dalio gives the example of microfinance through Grameen America, noting that every dollar invested results in $12 of lending over the next decade. This approach makes the initial investment sustainable as the money gets returned, relent, and cycled back into the organization.

Decision-Making Calculation:

Dalio notes that when deciding where to allocate funds, he compares the social and financial returns of direct philanthropy against investment-based philanthropy. This demonstrates a strategic approach to maximize the impact of their charitable contributions.

By using this tiered approach, Dalio aims to ensure that philanthropic efforts not only provide immediate assistance but also have a lasting, cyclic impact.

Third Tier in Philanthropic Strategy:

Ray Dalio outlines a third category of philanthropic giving, which entails spending money on essential needs without expecting a financial return. As an example, he mentions buying 60,000 computers for children in Connecticut for educational purposes. Though there is no financial return, there is a social impact, and this category still forms the majority of their giving.

Encouraging Organizational Sustainability:

Dalio mentions that they try to work with organizations to challenge them into becoming sustainable. Drawing on the work of Mohammed Yunus, who won a Nobel Peace Prize for his sustainable microfinance model, Dalio argues that sustainability in philanthropy gives you “power” and ensures that resources are not depleted.

Impact of Smaller Donations:

Addressing the role of small-scale donors, Dalio emphasizes that even modest contributions can make a significant impact. He cites the example of donations through the platform DonorsChoose, where as little as $50 can provide essential classroom supplies like books or pencils. Dalio contends that such contributions are not just impactful but also bring joy to the donor.

No One-Size-Fits-All in Philanthropy:

Responding to a question about lessons learned in philanthropy, Dalio reflects that there’s no single correct approach to giving but plenty of wrong ones. Though he does not elaborate on the “wrong ways,” this statement encapsulates the need for strategic thinking and adaptability in philanthropic efforts.

Dalio’s perspectives offer a nuanced view on philanthropy, emphasizing the importance of sustainability and the significant role that even small donors can play. His multi-tiered approach to giving combines immediate needs with long-term sustainability, suggesting a thoughtful and impactful strategy for philanthropy.

Philanthropy as a Skill:

Ray Dalio highlights that doing philanthropy well is akin to excelling in any field. It’s not just about giving money away; it requires a thoughtful approach to avoid waste and ensure impact. Unlike in business, where a poor return on investment would lead to failure, philanthropy lacks such immediate, automatic feedback. Therefore, staying on top of where the money is going and how it’s being used is essential.

Avoiding Classic Mistakes:

Dalio points out a common mistake in philanthropy: donors imposing their own views without understanding the actual needs on the ground. He emphasizes the importance of learning from those who are in the positions of need. His wife, for example, focuses on understanding from those who are directly affected by the issues at hand.

Measuring Returns and Performance:

Dalio mentions the need for Key Performance Indicators (KPIs) and other metrics to measure the return on philanthropic investments. This implies that effective philanthropy, like business, should be data-driven and focused on outcomes. However, he also notes that many philanthropies may have well-intentioned, yet ineffective, individuals delivering these outcomes.

Learning and Evolution:

Concurring with the interviewer’s point about learning from mistakes, Dalio states that if one doesn’t look back and think they were naive a year or two ago, they likely haven’t learned much. In other words, the journey in philanthropy, as in life, should be marked by continuous learning and growth.

Sharing Wisdom in Later Life:

In what Dalio describes as the third stage of his life, he sees the sharing of beneficial knowledge as the most valuable thing he can offer. He expresses gratitude for the opportunity to pass on what he has learned, hoping it will bring others joy and contribute to a better world.

Dalio’s insights offer a comprehensive look at the complexities of philanthropy, emphasizing the need for strategic planning, continuous learning, and a ground-up understanding of needs to make a meaningful impact.