AI IPOs Could Spark a New Wave of Philanthropic Giving

A decade ago, Ryan Carrier was a failed hedge fund manager watching as AI systems began to spin out of control. Facebook’s algorithms shook US elections, a Microsoft chatbot espoused Holocaust denial, and Tesla’s Autopilot caused its first fatal crash. “There was no governance, oversight, or accountability,” Carrier says. Concerned about the future his children would inherit, he founded ForHumanity in 2016-a nonprofit organization focused on developing tools for auditing AI systems.

ForHumanity has raised only a few hundred thousand dollars since its inception and remains a minor player in the industry. However, this could change as the nonprofit joins others in preparing to benefit from what is expected to be one of the largest waves of philanthropy in decades. The catalyst? Two nearly trillion-dollar AI companies, OpenAI and Anthropic, are on the cusp of going public.

The Philanthropic Potential

Both OpenAI and Anthropic have significant employee bases that stand to become ultra-wealthy upon their respective IPOs. Some of these employees align with effective altruism, a philosophy that emphasizes making impactful donations sooner rather than later. For instance, all seven founders of Anthropic have pledged to donate 80 percent of their wealth. The company has also agreed to match employee donations with one or three shares for every share committed, depending on the employee’s tenure and up to a certain limit.

Rough estimates by a tech industry insider suggest that Anthropic's IPO, which could occur in September, might result in $15 billion in additional philanthropic giving annually. This would boost total US charitable contributions by about 2.5 percent-equivalent to adding four Bill Gateses, one of the world’s biggest donors. However, Anthropic has declined to comment on the exact amount its employees have set aside for donation or which organizations may benefit.

The potential impact is significant. Nonprofits like ForHumanity, which focus on AI governance and oversight, could see a substantial influx of funding. Other causes, from animal welfare to poverty alleviation, stand to gain as well. This surge in philanthropic giving could catalyze meaningful progress in various sectors, provided the funds are directed effectively.

Investment Implications

While the potential for increased philanthropy is promising, it comes with significant risks. The IPOs of OpenAI and Anthropic may be delayed or underperform, leaving employees holding onto their wealth rather than donating as planned. Industry observers also note that a plethora of charitable options and natural fickleness could lead to workers keeping more for themselves.

The effective altruism movement itself is not without controversy. Critics argue that it can sometimes prioritize short-term impact over long-term systemic change. There are also concerns about the concentration of wealth and influence in the hands of a few tech giants and their employees, potentially skewing philanthropic priorities.

For investors, the IPOs present both opportunities and risks. On one hand, these companies have shown remarkable growth and innovation, making them attractive investment targets. On the other hand, the volatility inherent in the tech sector means that these IPOs could face significant market challenges. Investors should carefully consider their risk tolerance and conduct thorough due diligence before investing.

While the potential for a philanthropic windfall from AI IPOs is substantial, it is not guaranteed. The success of these initiatives will depend on various factors, including market performance, employee commitment to effective altruism, and the ability of nonprofits to effectively utilize the funds they receive. Investors should remain cautious but optimistic, recognizing the transformative potential of both the companies and their philanthropic ambitions.