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Bill Ackman has spent roughly two decades and close to $1 billion on philanthropy. His verdict: capitalism can often make a stronger societal impact.<\/p>\n
\u201cI\u2019ve spent a fair amount of time on philanthropy, and it\u2019s vastly less efficient at solving problems than capitalism,\u201d the Pershing Square Capital Management founder and CEO told Fortune editor-in-chief Alyson Shontell in an interview for the Fortune 500: Titans and Disruptors of Industry series. \u201cYou create far more jobs through capitalism than through philanthropy.\u201d<\/p>\n
Nonprofits, Ackman argued, lack the equity incentives and market pressure that keep enterprises sharp \u2014 and can be \u201ctaken over\u201d and turned into \u201cpolitical vehicles instead of sticking to their original mission.\u201d<\/p>\n
The argument puts him alongside Jeff Bezos, who made a similar case on CNBC\u2019s Squawk Box in May: \u201cIf I do my job right, the value to society and civilization from my for-profit companies will be much, much larger than the good that I do with my charitable giving,\u201d the Amazon founder said. The two comments express a shared conviction that has become a talking point among elite capital allocators: that operating a great company, not writing checks, is the more impactful measure of social contribution.<\/p>\n
What makes Ackman\u2019s version interesting is that he isn\u2019t abandoning giving. He\u2019s trying to redesign it. \u201cI\u2019ve learned a lot over 20 years of philanthropy about what works and what doesn\u2019t,\u201d he said. \u201cAnd I\u2019m sure there\u2019s more to learn. The goal is to focus on gaps in the capital markets.\u201d<\/p>\n
His newest venture, the Brain Research Rehabilitation Institute, is seeded with nonprofit capital but structured to spin out for-profit companies \u2014 devices, molecules, and treatments for brain injury and stroke patients \u2014 with equity shared among the institute\u2019s staff, mirroring the compensation structure he built at Pershing Square. \u201cThe goal is to use philanthropic capital to build something sustainable using for-profit, capitalist principles,\u201d Ackman said.<\/p>\n
The institute\u2019s focus is, in part, personal. As Ackman revealed to Fortune<\/em>\u2018s Jeff John Roberts, his daughter Lucy suffered a brain hemorrhage in February, an experience that he said reoriented his philanthropic priorities toward neuroscience. Ackman described the model as capturing \u201cthe best of the nonprofit\u201d \u2014 access to institutions and researchers who won\u2019t partner with for-profit entities \u2014 while injecting the market discipline he says keeps organizations from drifting. <\/p>\n The structural logic targets a specific gap. Venture capital funds healthcare startups. Government funds basic research. The space in between \u2014 basic science too far from revenue to attract VC money, too specialized to compete for federal grants \u2014 goes largely unfunded. \u201cThere\u2019s venture money for healthcare startups,\u201d Ackman said, \u201cbut a lot of basic science research is too far from revenue or a company to attract venture funding. So it has to be government-funded or philanthropic.\u201d He wants the latter, with market discipline bolted on.<\/p>\n He also needs something only a nonprofit can get: access. \u201cThere are things you can achieve as a nonprofit, like hiring certain people or partnering with institutions that will only work with nonprofits, that would be harder as a for-profit.\u201d Nonprofits, in other words, are more efficient than capitalism in exactly one dimension \u2014 and that dimension is the one he needs.<\/p>\n Ackman\u2019s earlier giving through the Pershing Square Foundation had been deliberately broad \u2014 \u201cBuffett says diversification is protection against ignorance,\u201d Ackman explained, and the foundation was \u201cextremely diversified in its earlier years.\u201d That\u2019s changed. The interview took place on the day he closed on the building that will house the institute.<\/p>\n Ackman\u2019s case for capitalism arrived alongside a more combative argument about what happens when governments try to substitute for markets. His target was New York City, where Mayor Zohran Mamdani\u2019s rent-freeze plans have made Ackman one of his most prominent critics. The diagnosis is specific: roughly half of New York City apartments are rent-stabilized, which forces landlords to raise rents on the other half to cover costs. About 60,000 units have been pulled off the market entirely because renovation costs can\u2019t be recovered under rent regulations, while getting a pipeline approved in New York State takes 15 years \u2014\u00a0both figures that broadly check out. \u201cWatch what happens to New York City if Mamdani succeeds in implementing these plans,\u201d Ackman warned.<\/p>\n His counter-model points to places that have gotten out of the way: Austin, where rents have fallen because it\u2019s easy to build; Florida, \u201can incredibly well-managed state\u201d that recently voted to eliminate real estate taxes. <\/p>\n The structural answer he\u2019s advocating isn\u2019t charity \u2014 it\u2019s market participation. \u201cWages cannot compound as quickly as stocks,\u201d he said, \u201cso everyone needs to participate in the stock market in order to believe in capitalism.\u201d <\/p>\n The Bezos-Ackman framing draws a structural critique: treating corporate success as a public good lets the ultrawealthy claim credit for employment, innovation, and consumer convenience as social contributions without accounting for market dynamics \u2014 on labor, housing, and concentration \u2014 that their own companies helped shape. Bezos\u2019s philanthropy record has been cited as a test: Bezos told CNN in 2022 that he would give away most of his fortune, and he is in the midst of giving away $10 billion to combat climate change, spearheaded by his wife, Lauren Sanchez Bezos. They recently partnered with Leonardo DiCaprio to try to rescue 100 of the most endangered species in the world.<\/p>\n Ackman\u2019s own argument contains a version of the same tension: his case that capitalism beats philanthropy was followed, the same morning, by signing the deed on a nonprofit building. His answer is that the building is designed to prove capitalism wins even through nonprofit structure. <\/p>\n Listen to Fortune\u2019s full interview with Bill Ackman, here.<\/p>\n<\/div>\nThe political backdrop<\/h2>\n