Billionaires to the Rescue: Can the Giving Pledge Truly Go Global?
In the 1930s, Winston Churchill famously observed that “we make a living by what we get, but we make a life by what we give.” Two of America’s wealthiest billionaires – Bill Gates and Warren Buffet – are attempting to put these words into action on a global scale through an ambitious philanthropic endeavor called the Giving Pledge.
The effort, which was publicly launched in the summer of 2010, seeks to harness the good will and giving spirit of the wealthiest individuals and families in America to commit to giving over 50 percent of their wealth to the philanthropic causes and charitable organizations of their choice either during their lifetime or after their death.
“Great wealth brings incredible, enormous responsibility” to give back to society, Melinda Gates, wife of Bill Gates and co-chair of the Gates Foundation, told ABC News in November. Buffett, chairman and chief executive officer of Berkshire Hathaway has pledged to give away 99 percent of his current $45 billion fortune, and the Gateses have pledged to donate the “vast majority” of their $54 billion net worth.
The founders of the Giving Pledge are quick to point out that the initiative is a moral commitment to philanthropy and not a legal contract to donate a particular sum to a set of causes or organizations. But what started as a series of secret meetings and consultations between some of America’s most iconic figures – the first gathering was hosted by David Rockefeller at the President’s House at Rockefeller University in New York City and was attended by New York Mayor Michael Bloomberg, Oprah, George Soros and Ted Turner among others – has materialized into a vehicle for tremendous global impact.
As of December 2010, 57 billionaires have signed onto the campaign. Forbes magazine estimates the charitable contributions already committed will amount to $600 billion. To put this number in perspective, in 2009, the whole of the United States government gave a total of $28.67 billion in development assistance. The potential for a small number of individuals to alleviate some of the world’s greatest ills is both inspiring and mindboggling.
There is little doubt that the generosity of the Giving Pledge signatories will provide life saving benefits to diverse and disparate peoples around the world: after all, the causes and recipient organizations are determined by the individual donors and many, such as Ted Turner, have committed their wealth to fighting disease in other countries such as Africa.
But can the Giving Pledge truly go global in the sense of attracting non-American, international billionaires to its charitable commitment?
Bill Gates and Warren Buffet are betting that it can. In September, the two visited China in an effort to initiate a dialogue about philanthropy with the ever-growing cadre of Chinese billionaires – second only to the United States in their numbers.
Reviews of the trip were mixed. Some, like Chinese businessman Chen Guangbiao whose fortune is estimated in the hundreds of millions of dollars, have embraced the Buffett and Gates appeal for philanthropy. Guangbiao has convinced 100 other wealthy Chinese to join him in donating the bulk of their fortunes to charity, according to China’s official Xinhua news agency.
But some of China’s super-rich are skeptical about Gates’ and Buffett’s approach: China’s wealthy don’t have to “copy the U.S. charity mode,” billionaire Guo Jinshu told Xinhua. “In China, an entrepreneur’s top responsibility is to keep his own business sound, to fulfill taxation payments, and create jobs. This is also out of a philanthropist heart.”
Buffett has said that he was amazed at the similarities in experience that he found in the wealthy Chinese he met: “These people talked about their children. They talked about their businesses. They talked about the different role of government there in terms of philanthropy.” Gates said the Chinese are at an earlier stage of philanthropy than Americans, and the Chinese “will put their own imprint on it.”
Gates’ comments in particular are interesting. Philanthropy is not a distinctly American notion; however, American-style philanthropy may not necessarily be compatible, at least at this historical juncture, with societal norms, institutional maturity, or governmental structures in other countries. Americans as a whole gave about $304 billion to charity in 2009, according to the Giving USA Foundation and the Center on Philanthropy at Indiana University – well more than any other county in the world.
But what does this say about the super-rich around the world? Do Americans adhere to fundamentally different giving philosophies, does the United States operate within a vastly divergent social, economic and taxation structure, or is it something else? The answer, it would appear, is a little bit of each of these factors, and more.
As one example, Mexican magnate Carlos Slim Helu, currently the world’s richest man, has said that he believes creating jobs, not charitable giving, is the best way to eradicate poverty.
Harry Bruinius recently addressed the larger socio-political question in the Christian Science Monitor: “should [] billionaires have the power to pick and choose whom to help? Or is it the government’s role to ensure a more equitable distribution of such enormous wealth?” It is this tension that has caused many Europeans to question the wisdom of Gates’ and Buffets’ undertaking. Referring to the Giving Pledge, Peter Krämer, a Hamburg philanthropist, told the German magazine Der Spiegel, “[i]n this case, 40 superwealthy people want to decide what their money will be used for…That runs counter to the democratically legitimate state. In the end, the billionaires are indulging in hobbies that might be in the common good, but are very personal.”
Indeed, Michal Ann Strahilevitz, a marketing professor and philanthropy expert at Golden Gate University in San Francisco interviewed Europeans and Americans and noted recently in the Christian Science Monitor: “Europeans will say philanthropy is an American thing, Americans write big checks…So Europeans don’t write the checks, they don’t need that ego part…They just vote in a way that encourages a system in which the poor aren’t so poor.”
But in part, Gates and Buffett are simply tapping into proven fundraising techniques. Ms. Strahilevitz studies have shown that when people know that other people are aware of their giving, their donations rise as much as fourfold:
Others have suggested that the generosity of Americans relative to others in the international community is animated by the federal and state governments which make monetary gifts to public charities tax deductible. The Internal Revenue Service estimated that in 2002, individuals donated and deducted $142.4 billion in monetary and in-kind gifts. But Arthur C. Brooks writing for the American Enterprise Institute has argued that tax deductibility is actually irrelevant for most people: IRS records show that only about a third of people who file tax returns itemize their deductions—which means that most Americans (particularly middle- and lower-income citizens) don’t even claim the deductions to which they are entitled. Furthermore, Brooks notes that research has suggested that virtually no one is motivated meaningfully to give only because of our tax system.
Carol Loomis described in Fortune some of the numerous challenges of “raising the philanthropic bar” in foreign countries: “Dynastic wealth is widely taken for granted; tax laws do not commonly allow deductions for gifts to charity; a paucity of institutions and organizations ready for gifts makes knowing whom to give to just not that obvious.”
At bottom, the idea of altruism and the notion of contributing to the common good can be very idiosyncratic. Some billionaires choose to help humanity by employing the greatest number of individuals as a form of poverty alleviation, others – many of whom may live in countries with higher marginal tax rates – insist that the wealth redistributive power of government is the most effective – and democratic – form of philanthropy, while still others lack faith in the institutional capacity of the countries in which they live and prefer to take a wait-and-see approach to doling out dollars.
Whatever the obstacles, Gates and Buffet are not deterred. The pair has plans to visit India in 2011 and meet with wealthy people to talk about philanthropy. Let’s hope they are successful because even a modest increase in the number of super-rich who give, or in the amount they donate, could have a transformational impact on some of the biggest problems in the world today.
Robert Friedman is the Managing Editor of Foreign Policy Digest, a non-resident Fellow at the Georgetown Center on National Security and the Law and a Principal in the Truman National Security Project.
