Online Extra: A Talk with Pierre Omidyar

Long-term sustainable change occurs by helping people to discover their own power, says the eBay founder of his philanthropic approach

Old-school philanthropy was all about leaving your money to a foundation that would parcel it out for you after your death. Then a new generation of superphilanthropists -- such as Bill and Melinda Gates and Michael and Susan Dell -- forged a new school of giving while living. This carpe diem philanthropy involves donors handing out vast chunks, if not virtually all of their wealth during their lifetimes. It also focuses on the philanthropists applying the same brilliance with which they built their businesses to solving social problems.

Now, eBay (EBAY ) founder Pierre Omidyar is pioneering a third way: One that's fanatically bottom-up. Omidyar and his wife Pam co-founded The Omidyar Foundation. BusinessWeek Associate Editor Michelle Conlin recently spoke with Pierre Omidyar about this new way of philanthropy. Edited excerpts of their conversation follow:

Q: What inspired you to do something different?


For starters, we didn't set out to do something that was necessarily different. The primary inspiration I had was my experience at eBay, watching people discover their own power and form rich connections. I don't want anyone to interpret what we do as a value judgment on the way other people do things. What Gates does is fantastic. It's a tremendous organization as are so many others. We thought we ought to find our own way.

Q: How is your approach different?


It's not the kind of approach that's top-down or centrally directed. We want to be in service to the community. Our success is based on their success. Long-term sustainable change happens if people discover their own power.

Q: How exactly do you do this?


The key is moving the center of gravity in the decision making, moving it closer to people in the community, in the field, and so forth -- and away from a centrally directed, top-down approach.

Q: So this wouldn't be possible without the Internet?


Finally, for the first time in human history, technology is enabling people to really maintain those rich connections with much larger numbers of people than ever before.

Q: Why do you think the traditional philanthropic sector isn't working as efficiently as it could?


I think it starts with the false dichotomy issue. It fundamentally limits the impact of the sector. Unfortunately, the measuring side, the feedback mechanisms as to how well you are doing, those types of measurements are hard to do. The sector overall has been working on these issues for a while, but it hasn't come up with a good way to measure how effective they are.

The fact that this engine isn't working at peak efficiency is really too bad because it's a huge engine and if you increased the efficiency, everyone would be thrilled.

Q: Do you think it's inevitable that Internet-enabled technologies will disrupt philanthropy in the same way so many other industries have been disrupted?


I think it's an inevitable trend. There's a fundamental shift in power happening, toward people and small groups and away from large organizations who want to impose a top-down policy.

Q: Where does your philanthropic impulse come from? Where you parents big givers?


My parents made me believe I could do anything I wanted to do. They were really into empowering me.

In terms of my belief that one individual can make a difference -- that belief comes from my parents. Also, the value of connections. My dad was a physician. As a kid, I remember driving around with him on weekends so he could do his rounds at the hospital and talk to patients. We'd spend time in the car talking about what was going on with them, their stories. And what he communicated to me was the rich human component there. What was important about his work was his connection with his patients, not just in the operating room but connecting with them as human beings.

Q: Where you uncomfortable becoming so rich, so fast?


It happened so fast, and on such a large scale, that it was actually overwhelming. Pam and I, our reaction was that it was a sense of responsibility to put it to good use. I didn't feel like, boy, I'm entitled to this fortune because of all the work I did. EBay's success is based on the eBay community's success.

Q: Were you worried your wealth would change you?


Absolutely. I've got two little kids and I worry about the impact on them so much more than on us. On one level, we are so clearly blessed. It's not conceivable that we could ever have a material need. We're always going to have a house, the food we need.

At the same time, it gets you looking at the world in a different way. You can actually acquire any object so the acquisition of that object doesn't become as important to you any more. It starts to make you think about things differently. We can't seek pleasure in finally being able to afford a vacation or a house. It's with our philanthropy that we have a unique opportunity in the world.

Q: You now live outside Las Vegas. Why did you leave Silicon Valley?


The public servants can't live in the communities they serve there because it's too expensive. It didn't feel like a healthy dynamic. So when we came back from France, we decided to find another place.

Q: Do you allow yourself any splurges?


Pam finally bought a Porsche a few years ago, and I was really, really proud of her. We have a house in a gated suburban community. But we're building a new one that's pretty big a few miles from there. Probably our biggest splurge is a private aircraft. As I've told anyone who has enormous wealth, if you want to do one thing that significantly improves the quality of your life, that's it.

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