Dinner invitations from Bill Gates now come with a main course of philanthropy, at least if you are one of America’s billionaires. Mr. Gates, his wife, Melinda, and their good friend Warren Buffett plan to host many of America’s richest people, as part of an effort to persuade fellow billionaires to sign a public statement committing at least half their fortune to charity.
The effort, known as the Giving Pledge, has nonprofit officials hoping it could create a new standard for giving and unlock tens of billions of dollars in extra philanthropy each year.
While that money would help charities expand their work to fight poverty, disease, and other social and environmental ills, the infusion of donations might also lead to more scrutiny and regulation of philanthropy, some nonprofit observers say.
Mr. Gates describes the campaign more modestly than some people in the nonprofit world, saying it’s a way to encourage rich people to contemplate giving at a younger age by sharing stories about philanthropy and its effect on the donor and the beneficiary.
“It’s not a hard sell,” he told The Chronicle in an interview last week. “But I do think increasing the visibility of philanthropy, where people talk about the impact and how they enjoy it, has a positive effect.”
A Major Challenge
However hard or soft the trio’s sell, a Chronicle analysis of giving patterns by the wealthy shows just what a major task awaits them as they seek to persuade the nation’s billionaires to give more.
Over the past decade, no more than 29 people on the Forbes 400 list have ever donated enough in any given year to make The Chronicle’s cut of the 50 most-generous Americans.
In 2007, the year that 29 Forbes 400 newsmakers landed on The Chronicle’s list, a philanthropist needed to give away at least $39-million to qualify. And in 2001, when there were only 15 people from the list on the Philanthropy 50 ranking of the most generous Americans, one needed to have given at least $15-million to charity.
Taking the Pledge
But if the Giving Pledge effort is successful, some charities might have a new stream of revenue. The total net worth of those on the Forbes list was $1.2-trillion in 2009, according to the magazine’s calculations. So, as Fortune magazine reported in an article that broke news about the Giving Pledge, if everyone on the list gave half their money, that would mean an extra $600-billion for charity—twice what Americans gave last year. Spent over a generation, that would be at least $20-billion a year.
That extra giving could persuade lawmakers to take a harder look at where all those donations from the wealthy go. For example, wealthy people tend to support universities they have attended and large arts institutions. An increase in such giving might fuel calls for Congress to change the tax code in a way that creates more-generous tax breaks for gifts to antipoverty groups, says Roger Colinvaux, a former Congressional aide and associate professor at Catholic University of America’s Columbus School of Law.
And if many more billionaires create foundations, which are only required to spend 5 percent of their assets each year, that might prompt lawmakers to consider asking all grant makers to give more, says Mr. Colinvaux, especially if Congress believes that the federal treasury has lost tax revenue because of an increase in charitable giving among the very wealthy.
“There could be more government scrutiny,” he says, adding: “And maybe there should be.”
Signing a public statement might turn off some donors, something Mr. Gates readily acknowledges. He says that while he is pleased with the reactions he has received, some people have said they like the idea but are not ready to sign the pledge. (Read an interview with Mr. Gates about the Giving Pledge.)
Glen Macdonald, president of the Wealth and Giving Forum, which advises people on philanthropy, says the effort is inspiring and will probably be a good thing in the long term.
But Mr. Macdonald wonders if people will feel uncomfortable and worry about being forced into decisions and timelines.
“The more they can do in private, the better,” he says. “I don’t think a public pledge is a meaningful way to give.”
Some wealthy donors echo that view.
Donald Rubin, who made hundreds of millions in the health industry and says he plans to give half his money away, applauds the Gateses and Mr. Buffett for the effort, which he says is consistent with his values. But the idea of vowing publicly to give it away doesn’t appeal: “I don’t need to make a pledge and join anybody.”
T. Boone Pickens, the billionaire energy magnate, seemed unimpressed with the notion. Through a spokesman, he said that giving away half his net worth is something he’s already done.
“It’s up to others to decide what they want to do,” he says.
But those who have signed the pledge emphasize, like Mr. Gates, that the intent is not to coerce other people into being more philanthropic, but to share lessons about what works in philanthropy and help people overcome hesitations about giving.
“You have a lot of people who have done very well, and they are besieged by charities, and a lot of them have a bunker mentality,” says Eli Broad, who, with his wife, pledged to give away 75 percent of their roughly $5.4-billion fortune.
“If they see what we’re doing in education, scientific and medical research, the arts, and they see what the Gates are doing in others, they may want to emulate that in those or other areas,” Mr. Broad says.
Peter G. Peterson, a former financier who plans to give more than half his net worth of an estimated $2-billion, says of the pledge idea: “It’s an established principle that there’s something called leadership by example.”
‘Laureates’ of Giving
The idea for the Giving Pledge was cooked up at a dinner of philanthropy A-listers last May orchestrated by the Gateses and Mr. Buffett—dubbed “Nobel Laureates of philanthropy” by one fund raiser—and hosted by David Rockefeller Sr. Word of the dinner leaked out to the news media, but two other dinners, shrouded in secrecy, followed.
At each event, the megadonors went around the table and talked about how their thinking on philanthropy has evolved. Sometimes the conversations were personal and moving, say people involved. Mr. Buffett has joked that the dinners made him feel a little like “a psychologist.”
Those who’ve been moved to sign the Giving Pledge so far include Mr. Broad and his wife, Edythe; L. John Doerr, a venture capitalist, and his wife, Ann; John and Tashia Morgridge, whose fortune comes from Cisco Systems; H.F. (Gerry) and Marguerite Lenfest, of cable-television wealth; and Mr. Peterson and his wife, Joan Ganz Cooney.
Those so-called “Great Givers” will post a brief statement about their giving on the Web site http://givingpledge.org.
Mr. Buffett’s pledge, the only one now online, talks about how his commitment to give away 99 percent of his money won’t affect his way of life or that of his children.
Mr. Gates says he and his wife will give at least 90 percent of their money.
Dinners like those will be a main way Mr. Gates and philanthropists who have joined him in the effort hope to persuade others, he says. They first thought about crafting a letter to many of America’s richest people, he says, but then decided that face-to-face meetings worked best. They have contacted about two dozen billionaires so far and, in the next month or two, will release an updated list of people who have signed the pledge.
The Gateses and Mr. Buffett have also spoken with wealthy people in China, England, India, and other countries about ways to encourage greater giving abroad. More talks will follow, says Mr. Gates, with philanthropists in those countries leading the efforts to adapt the pledge concept to their countries.
Jane Wales, founder of the Global Philanthropy Forum, an annual gathering of affluent people who give to international causes, says those efforts could potentially bring about greater change by creating a new class of philanthropists in other countries.
Advising Donors
While Mr. Gates and others who have signed the pledge say they will not provide specific advice about where to give, other philanthropy experts are already suggesting ways increased giving by billionaires could make the biggest difference.
Nathaniel Whittemore, founder of Assetmap, a business that builds online tools for nonprofit groups, says that traditional philanthropy isn’t the way to do that. Writing on his blog about social entrepreneurship shortly after the Giving Pledge was unveiled, he called the effort a “fundamentally good thing” but said the conversations about it felt “a little social change 1.0.”
Instead of simply following the “20th century wealth narrative” of making money and then giving it away, America’s richest people ought to find new ways to create social change that could be potentially more transformative, Mr. Whittemore said. He suggested that they create a social-venture fund that would provide money to help businesses that create social change.
Some other experts have questioned whether charities would be able to make good use of an infusion of giving.
Robert Carter, vice president of Changing Our World, a group that provides fund-raising and philanthropy consulting services, cites the challenges the Salvation Army faced in staying true to its mission and making the most of a $1.5-billion bequest from McDonald’s heiress Joan B. Kroc.
But “if it’s over a generation,” he says, “I have no doubt charities will be able to make preparations to be able to deliver services.” Savvy nonprofit officials, he says, will be thinking about how to capture that money.
‘A Happy Virus’
Fund raisers say they are elated that many of America’s wealthiest philanthropists are trying to create a new standard for supporting institutions like theirs. The pledge could be a conversation starter with big donors, they say.
“People are going to be very interested in talking about it,” says Scott Nichols, vice president of development and alumni relations at Boston University. “This is a very happy virus they are spreading.”
The U.S. Fund for Unicef has not decided how it might talk about the Giving Pledge with potential donors, but Michele Rattien, director of leadership gifts, says she anticipates it will come up as the charity pursues big gifts.
Richard Stearns, president of World Vision, says he will probably leave it to the Gateses and Mr. Buffett to bring up talks of the Giving Pledge, but he is glad that he is not the only one asking wealthy people to dig deep.
“It’s not something I’m going to go on the stump about. It’s better for them to have that conversation.” He adds: “I think wealthy people will listen and pay attention.”
