40 Billionaires Pledge to Give Most of Their Wealth to Charity
Yesterday’s announcement by Warren Buffett and Bill Gates about the Giving Pledge — their challenge to fellow billionaires to join them in giving away at least half of their fortunes to charity — certainly had dramatic impact. And it promises to give a huge boost to the world of philanthropy, to say the least. But the move may not be as surprising as it may seem, given both Buffett’s and Gates’ gravitas and deep and abiding commitment to philanthropy.
Buffett, chairman and CEO of Berkshire Hathaway, has long held that he plans to give away most of his wealth. He announced in 2006 that he’d be donating 99% of his earnings to good causes.
“I am not an enthusiast of dynastic wealth, particularly when the alternative is six billion people having that much poorer hands in life than we have, having a chance to benefit from the money,” he told the BBC at the time.
And Gates, who co-founded Microsoft with Paul Allen (another of the 40 pledgers) has devoted the last decade to running the Bill & Melinda Gates Foundation in concert with his wife. With an endowment of some $33.5 billion, it’s arguably the largest and most powerful private foundation in the world.
So far, after soft-peddling the Giving Pledge in the rarified world of great wealth, 38 American billionaires — about half the number they’ve asked to date — have already signed up.
“At its core, the Giving Pledge is about asking wealthy families to have important conversations about their wealth and how it will be used,” Buffett said during the announcement. “We’re delighted that so many people are doing just that — and that so many have decided to not only take this pledge but also to commit to sums far greater than the 50% minimum level.”
Buffett and Gates, two of the richest men in the world, launched the Giving Pledge six weeks ago. It’s been in the works for over a year though, following a series of secret dinners and meetings Gates and Buffett convened with fellow philanthropists.
Their timing couldn’t be better. The world of philanthropy is just beginning to recover from the fallout of the recession and credit crunch, which has hit charities hard these past few years, despite the fact that according to Forbes, “the US outdoes all other countries in philanthropic generosity.” In 2009 alone, giving to non-profits fell 3.6%, from $315 billion to $303.6 billion according to a report published by the Giving USA Foundation, worse than the 2% drop in 2008 to $307.7 billion.
To get the Giving Pledge going, Buffett said that he, and Bill and Melinda Gates took the Forbes 400 list of wealthiest Americans and started dialing. (Gates ranks first and Buffett second on the list, in case you were wondering). In addition to Buffett and Gates, the list ranges from headline names, to those not as well known beyond financial circles. It includes Michael Bloomberg, George Lucas, Ted Turner, T. Boone Pickens, Ron Perelman, Larry Ellison, David Rockefeller, and Barry Diller and Diane von Furstenberg. Next up, Buffett and Gates are asking their co-pledgers to start making their own calls, as well as hold small gatherings across the country to encourage more people to sign up.
A perusal of the Giving Pledge website shows the depth and diversity of the pledges, and many share Buffett’s view that the fortunes these billionaires have amassed should not be passed down to their children simply because, as Michael Bloomberg quipped, they are “members of the lucky sperm club.”
The website includes letters each wrote explaining what’s motivating them to give. Here are a few excerpts:
- Michael Bloomberg, Mayor of New York, and founder of Bloomberg LP: “If you want to do something for your children and show how much you love them, the single best thing – by far – is to support organizations that will create a better world for them and their children. And by giving, we inspire others to give of themselves, whether their money or their time.”
- Hedge-funder John Arnold and his wife Laura : “We view our wealth in this light — not as an end in itself, but as an instrument to effect positive and transformative change.”
- Eli Broad, founder of KB Home, and SunAmerica Inc., and his wife Edythe: “Those who have been blessed with extraordinary wealth have an opportunity, some would say a responsibility — we consider it a privilege — to give back to their communities, be they local, national or global.”
- Hedge-funder Tom Steyer and his wife Kat Taylor, founder of OneCalifornia Bank: “We want to leave our kids a different kind of inheritance, an example of at least trying to lead a worthy life… We do plan to give the vast bulk of our money to charitable pursuits, not to our descendents, but we expect every minute of the ride will be exciting and engaging. That doesn’t compare in our minds with the sacrifices that other Americans have made in terms of effort, danger, and life itself on behalf of their country and fellow citizens. But we relish the opportunity to do our part and leave our collective campsite cleaner and better tended than we found it.”
Over time, the total could amount to well in the hundreds of billions of dollars, given that the pledgers so far have a combined net worth of over $200 billion. The question is how it will be spent. Each donor is free to disperse his or her money as he or she sees fit.
Traditionally, big, established “old money” has sunk its donations into big, established foundations, and the reasons for giving indeed do range from the altruistic to the mercenary. To stave off the cynics, Buffett claims tax breaks are not the reason people are taking the pledge.
“Of the 20 or so people I have talked to that have signed, not one of them has talked to me about taxes,” Buffett said yesterday. “It may be a consideration but I think the motivation goes far, far beyond taxes.”
Think about this, too: the Giving Pledge group includes a good number of visionaries with new ideas and “new money” — and they’ve been backing social entrepreneurship and causes ranging from education and health care with a vengeance.
But, as Tom Tierney, head of the Bridgespan Group, which advises non-profits, told NPR yesterday, it will be some time before it’s known how the pledges impact specific charities. “There’s no question 40 wealthy, prominent individuals and families stepping forward this way is an extraordinary event,” he said. “And it begins to force people to wrestle with the question: ‘Well should I do that?’”
Which is exactly what Buffett had in mind all along: “It will be more philanthropy. And smarter philanthropy in the future is the goal.”
It’s an elite bunch to be sure. The question is will the Giving Pledge now become the elitist of the elite — the club every billionaire feels the need to join? How great would that be?
photo credit: thanks to Ethan Bloch via flickr