Buffett, Gates Press Billionaires to Pledge 50% to Charity
World’s Most Generous People. The world of philanthropy is buzzing today with news that Microsoft’s Bill Gates and Berkshire Hathaway’s Warren Buffett are asking American billionaires to pledge at least half of their fortunes to charity, either in life or upon death. While pledging is certainly a potentially generous step, what really matters is not what one promises to give away but what one hands over, an irrevocable gift. When we calculate the list of the Forbes 400, we don’t subtract their promised philanthropic gifts until it is out of their hands and their foundation’s hands (this is particularly important to note if they still control the foundation’s purse strings). Last summer we did an interesting piece looking at perhaps the most exclusive subset of the world’s wealthiest: those living philanthropists who had at that point given away $1 billion or more. Only 14 people in the world made the cut for this list of Billion-Dollar Donors, and only 11 of the world’s then 793 billionaires, just about 1%. The other three donors, including SAP co-founder Dietmar Hopp, had fallen out of the ranks due to their generosity. Gates led the list by almost
an order of magnitude and so it is not surprising he is leading billionaires into philanthropy, starting with his good friend Warren Buffett, who had no record of giving until a few years ago and who apparently was influenced to give during his lifetime by Gates. The Microsoft chairman also seems to be rubbing off on the world’s richest man, Carlos Slim Helu. The two just held a press conference earlier this week to announce big donations to combat poverty in Mexico and Central America. As Forbes editor William Baldwin said almost four years ago, the “rivalry in (yacht) size is giving way to rivalry in charitable endeavors.” That certainly does seem preferable but these billionaires should act as they see fit, and talk less about pledging and do more about giving. We will be publishing our newest list of world’s most generous people this summer and hope to see more than 14 names on it. Gates, Buffett Raise The Philanthropy Stakes. In “The $600 Billion Challenge” Fortune magazine’s Carol Loomis tells an interesting tale of how Bill Gates and Warren Buffett have conspired to get other billionaires to publicly pledge to give away half their wealth before they die. It’s not a new idea. Called a “sunset clause” or “sunset provision,” many donors these days are setting deadlines by which they or their immediate heirs must disburse assets directly to charity. This is in contrast to older charitable foundations that were founded to exist in perpetuity, paying out
just the 5% per year required by federal law to keep their tax status, and often losing a connection with the original donor’s intent.The Gates Foundation, which is also managing Buffett’s philanthropy, has stated that it would like to have liquidated itself by 50 years after the Gates’ deaths. The Buffett money is slated to be given away no more than 10 years after his estate is settled. The new deadline, to give away half your money before you die accelerates that trend significantly. (From reading the story, it’s not clear if it would count to give the money to a family foundation, or if the foundation itself must turn around and grant that money out to recipient groups.). If this “great givers club” that Gates and Buffett are starting takes off it could add significantly to the surprisingly small club of living people who have already cut checks for $1 billion or more for charity. (See Billion Dollar Donors). Four of the top five–Gates, Buffett, George Soros and Eli Broad–were at the kick-off dinner that Loomis describes in her story.Forbes has covered this trend of sunset philanthropy, mega-donors who are interested in leaving a mark on the world instead of a foundation. One problem is that many people declare they will give their money away quickly, but it’s hard to follow through. In “The Radical Philanthropist” Ebay founder Pierre Omidyar said in 2000 that by 2020 he would have given away all but 1% of his wealth. Since then, as his net worth kept growing, Omidyar has revised the plan or at least the timetable. In “$100 Million, Anyone?” medical
device entrepreneur Alfred Mann described his plan to give away his $2 billion fortune in $100 million chunks to universities. His motivation? He felt like his kids had already been supported enough by his wealth. He also wanted to control how the universities used the funds, which were meant to help commercialize scientific research. So far, however, few universities have accepted his terms.In Dying Broke credit card billionaire Denny Sanford, who’s based in Sioux Falls, S.D., talked about his plan to give away all his money to children’s’ causes. Sanford, whose parents died when he was young, feels that children are the most worthy cause because they can not speak for themselves. He’s already given $400 million to help build a children’s hospital in South Dakota. Another group that can’t speak for themselves? Pets. Back surgeon turned inventor Gary Michelson is another sunset philanthropist. He’d like his $2 billion fortune to support genetics research, but more colorfully: animal rights causes. (See a profile of Michelson here: Animal Nut). In the past we have also listed those whose generosity got them booted off the Forbes 400. (See They Gave Too Much.) These include bankers Herbert and Marion Sandler, mutual fund investor James Stowers and Domino’s Pizza founder Thomas Monaghan, as well as several of the heirs to the Levi Strauss jeans fortune. news from blogs.forbes.com
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