Giving up making millions to give back

Thomas Tierney was head of a successful firm when he threw it all in to help nonprofit groups, writes KARLIN LILLINGTON

THOMAS TIERNEY is in the business of not making a profit. The former chief executive of consultancy giant Bain walked away from his high-profile, well-paid job in 2000 to create a new consultancy, Bridgespan – a nonprofit focused on providing services to nonprofits.

“It’s not just something that happened one day – it is how I was raised,” says the cheerful Irish American, in Dublin last week to give the annual Ray Murphy lecture for Philanthropy.ie. “I was taught growing up that it isn’t what you have that matters, it’s who you are. To live a useful life.”

The result has been a groundbreaking organisation, one of the first to take an entrepreneurial mindset to the nonprofit sector.

Tierney happily admits he’s still surprised by his career path following an economics degree at the University of California, Davis and a Harvard MBA.

He joined Bain in 1979 as a summer intern. “I didn’t have a suit and I didn’t even know what CEO stood for,” he says. When he was offered a paying job there, he thought he would stay for two years but three years later he had become a partner and was running the San Francisco office.

When the company hit the rocks in 1990, he was involved in a management buyout. “We bought it for $1 and took on $200 million of debt,” he says.

A key figure who helped to restructure Bain – and the man who asked Tierney to return to Boston and become Bain’s chief executive – was one Mitt Romney, current Republican contender for presidency in the US, who had been running finance spinoff Bain Capital since 1984.

Under Tierney’s leadership, the company recovered and grew sixfold in the next decade. But he was thinking about what he wanted to do next, and a public service career appealed.

He says he began nurturing the idea of a nonprofit spin out from Bain that could help improve the performance of other nonprofits. He’d cautiously mentioned the idea to a few people when, out of the blue, he got a call from Joel Fleishman, president of the Atlantic Funds (founded by Chuck Feeney, the major donor to Irish causes and organisations).

Fleishman told him that Atlantic would support his idea. “That conversation led to three years of work with Atlantic. They provided capital, and helped raise money from other foundations,” Tierney says.

And at that point, he made the “major life decision to step down as CEO” of Bain and found Bridgespan. His successor at Bain was John Donahoe, currently the chief executive of eBay (who succeeded HP’s Meg Whitman – who also worked for Tierney at Bain). Tierney himself joined the board of eBay in 2003, when Whitman headed the company.

“Let’s just say there’s a strong network of friends,” he laughs. He took on his eBay role because he likes how the company has always had both an entrepreneurial and a philanthropical corporate culture.

His last month at Bain was March 2000 – the very peak of the dotcom market – and many people thought he was crazy to be leaving for an uncertain future at no pay at a nonprofit.

But he talked to his wife and decided “let’s do what’s right. And, in hindsight, that’s the best career decision I’ve ever made. It’s been a real blessing and I do feel my life is more significant now.”

Which basically has meant inventing a new kind of nonprofit, one that would serve other nonprofits. The organisation has gone from three employees to 200 and offers consultancy, advice, executive search, and education programmes.

Figuring out how to run such an organisation has been a mix of trial and error: “I would say about 60 per cent of our original business plan for Bridgespan worked out as we anticipated, and the rest did not. We knew there was a need for our services, but not necessarily a demand – and they’re different.”

They found out that many nonprofits couldn’t pay, and even if they could, it was better to have major donors fund Bridgespan’s services, he says. They also learned that decision-making needed to be more consensual and they found it was surprisingly easy to find people who wanted to work at a much smaller salary than they would make in private industry – they get about 200 applicants with consultancy expertise for every position.

“And driving to results in the nonprofit sector is quite different,” he says. “If you’re succeeding or failing in business, you know. In philanthropy, how do you know if you’re doing well? After all, you’re giving money away.”

And what did they learn? “That it’s harder to change the life of a child than to make a widget. It really took us a few years at Bridgespan to understand this.”

But he loves his work and is passionate about philanthropy.

Bridgespan’s most recent initiative has been to set up Givesmart.org, an effort to help donors give more effectively and achieve more with their philanthropy. Developed in tandem with a book entitled Give Smart, written by Tierney and Fleishman (whom Tierney describes as one of the leading thinkers on foundations in the world), the site provides case studies, effective practices, how-to guides and other resources to those thinking about ways of giving away their wealth.

He says there’s never before been such a focus on philanthropy as there is now in the US. He pinpoints the 1990s as an “inflection point in philanthropy”, in part due to the vast wealth created out of Silicon Valley, coupled with the fact that many of the founders of such companies were baby boomers who grew up with a social conscience.

He points to figures like Bill Gates and eBay founder Pierre Omidyar, as well as Apple’s Steve Jobs, who over his life had been “a very quiet philanthropist”. Baby boomers reach their 40s, 50s, and 60s and start to think what they can do for the world, Tierney notes.

He’s pleased to see that philanthropy is kicking in at a much younger age to the technology sector, which for a long time was criticised for creating great wealth but doing little philanthropically. He points to Facebook founder Mark Zuckerberg’s donation to the New Jersey school system as just one example of how tech entrepreneurs are thinking early on of giving.

“Now, I think the technology industry is hitting philanthropical critical mass.”