Bill Ackman shares Jeff Bezos's opinion: the most effective way to assist the world is by creating something that functions well.

      Bill Ackman claims that capitalism is more effective than philanthropy in addressing issues, a sentiment also expressed by Jeff Bezos. Ackman’s new Brain Research Institute utilizes nonprofit funding to create for-profit companies that provide equity to their employees. Over the past twenty years, Ackman has invested nearly $1 billion in philanthropy but has determined that capitalism is more efficient in resolving problems. He stated, “My experience in philanthropy has shown that it is significantly less effective than capitalism,” emphasizing that capitalism generates more jobs than philanthropy. Bezos echoed this view in May, suggesting that the societal value created by his for-profit ventures surpasses the benefits of his charitable contributions.

      While this perspective isn’t new, the collaboration between Ackman and Bezos is noteworthy. They reflect a growing group of influential investors who view corporate achievements as superior contributions to society. Ackman critiques nonprofits for their lack of equity incentives and market pressures, noting that they can become political instruments rather than adhering to their initial goals. Concurrently, Bezos is funding a $10 billion AI lab while committing to donate a large portion of his wealth through a $10 billion climate initiative, illustrating the real tension between manufacturing wealth and charitable giving.

      What makes Ackman's approach intriguing is that he isn’t abandoning philanthropy but rather transforming it. His Brain Research Rehabilitation Institute, funded with nonprofit resources, is designed to develop for-profit companies and solutions for brain injury and stroke patients, with equity interests shared with staff. This model resembles that used by Pershing Square in its compensation approach. The institute addresses a specific funding shortfall: basic scientific research that is either too distant from generating revenue to attract venture capital or too specialized for federal grant competitions.

      The initiative has personal significance for Ackman, as his daughter Lucy experienced a brain hemorrhage in February, shifting his philanthropic focus towards neuroscience. The nonprofit setup allows him to collaborate with researchers and organizations that prefer not to engage with for-profit companies, while the for-profit startups bring in the market discipline he believes is essential to prevent mission drift. Ackman finalized the deed for the institute's Manhattan facility on the same day he asserted that capitalism is superior to philanthropy, believing that the building will exemplify his argument.