Billionaires Say They Can’t Give Their Money Away Fast Enough: Here’s How

Photo: stevendepolo (CC-BY)

Philanthropy requires answering three questions: where to give, how to give, and how much to give. There has been a tremendous amount of discussion, particularly during the last two years, about the first two, “where” and “how.” It is the third question, “how much,” that underpins the Crisis Charitable Commitment (CCC) and our Charitable Standard.

The CCC was launched a year ago on July 14, 2020 (Bastille Day, appropriately), in the midst of the pandemic. It was an effort fueled by a desire to see the wealthiest among us rise to the occasion of a devastating global crisis and respond appropriately. Among the first signatories are members of the Patriotic Millionaires, including Scott Wallace of the Wallace Global Fund, Abigail Disney, and ourselves, the authors of this article.

Why did a group of wealthy, mostly white, and privileged Americans feel the need to charge at the barricades of wealth and privilege?

It’s easy enough to point out the insensitivity of many of the ostensibly elite and most privileged members of society. It is disgusting. During a global pandemic that has devastated so many, the rich have been getting richer, and they’re not shy about it. Superyachts aren’t even enough. We watch as Jeff Bezos, Elon Musk, and Richard Branson race to get into space during a time when many have struggled to put food on the table. A ProPublica investigation into the low amounts of taxes the ultra-wealthy pay has added further fuel to the fire of public resentment of those at the very top.

But what our group came to realize was that economic inequality infects so many areas of our society. It has not only poisoned our economy, but also our culture, our politics, and philanthropy itself. It exacerbates every other social ill you can think of— from the racial wealth gap, to health disparities, to our ever-growing climate crisis.

Inequality affects how we educate our children, whose children get educated, and with what quality of instruction. It affects what diseases are studied and which ones are left unstudied. It affects who gets into college and who doesn’t. It affects what art we see in museums—and whose art we see in museums. It affects how our elections are conducted. It is impossible to maintain a healthy democracy given our present level of economic inequality.

Reducing economic inequality, in short, is an imperative—and if wealthy people like ourselves keep on hoarding wealth, then all of our society will continue to suffer. 

But Aren’t the Rich Generous? What About Those Big Donations?

One dodge whenever anger is directed toward out-of-touch or tax-evading billionaires is to cite wealthy people’s good works and charitable donations. Some of the ultra-rich have given to charity, but there are tantalizingly few examples of billionaires who have given enough to make a noticeable dent in their pockets.

An example: In June 2020, Bezos gave $100 million to Feeding America. Sounds great, right? Well, it’s not as great as it appears. At the time he donated, Bezos had a net worth of $148.6 billion. (His net worth has since climbed above $200 billion). What percentage of his net worth is $100 million for Bezos? Well, at his lower June 2020 net worth value, his donation works out to be about the same as a $75 donation from a donor with a median American net worth of $97,300. As NPQ’s Steve Dubb sardonically noted at the time, “We’ll wait to read the press releases for their $75 donors.”

The poster children for billionaire philanthropy are well aware of this math. There’s an almost comedic element in the protestations we hear that, “I just can’t give my money away fast enough.” In 2006, Warren Buffett pledged he would give his Berkshire Hathaway shares to philanthropy. Recently, he announced he was halfway there, having distributed 50 percent of his shares. However, Buffett is now more than twice as rich as he was in 2006, even with his charitable giving.

Our financial system is designed so that wealth creates wealth at a dizzying pace—particularly within our current tax system, which is manipulated with incredible finesse by our ultra-wealthy fellow citizens, as the ProPublica report showed and as Chuck Collins recently wrote about in The Wealth Hoarders. It means that very generous sounding gifts from the ultra-rich are often only momentary depletions of their wealth, soon replenished.

However, there is a solution to this problem. If you’re a billionaire, or anyone who has more money than you know what to do with, you can indeed overcome the monumental challenge of being too wealthy to give it all away.

Giving Away Excessive Wealth: What Not to Do

The ProPublica revelations about Buffett and his reaction to his taxes becoming public drip with irony. Recall that it is Buffett who has famously called for higher taxes on the wealthy, stating that his secretary should not be paying a higher tax rate than he is. And yet, among all the billionaires profiled in the ProPublica report, he has paid the absolutely lowest rate of taxes, combining low tax rates with a business model designed to minimize taxes. One might wonder if when he said that tax rates should be higher for the wealthy, he didn’t expect to actually pay those taxes.

His statement in response to the ProPublica investigation makes it clear that he sees his philanthropy as being better than paying taxes: “I believe the money will be of more use to society if disbursed philanthropically than if it is used to slightly reduce an ever-increasing US debt.” In other words, maybe other billionaires should pay higher taxes, but not Buffett. This is obfuscation. It rationalizes tax avoidance and hoarding wealth. And, of course, the debt that he refers to itself is a product of policies designed to minimize taxes for Buffett and his billionaire colleagues.

It also reflects a dangerous attitude that rich people are better at deciding how to spend taxpayer money than are taxpayers themselves. As former US Supreme Court Justice Oliver Wendell Holmes proclaimed, “Taxes are the price we pay for a civilized society.” He did not say that philanthropic donations are the price we pay.

So, the first major takeaway from Buffett in terms of “what not to do’’ is straightforward: It should never be a question of taxes or philanthropy. The nation’s wealthy must give their fair share when it comes to both.

The second takeaway is about when to give. In Buffett’s announcement of his big recent donation, he tries to make the argument that giving money away slowly might be a better approach because you’ll have more to give away later. This go-slow attitude has harmed education and health outcomes and allowed the spread of the opioid epidemic and poverty, among other social maladies.

Warren Buffett is 90 years old, and despite pledging to give away virtually all of his wealth, he’s only one-third of the way there so far. If his giving continues at the same pace, he will likely give most of his money away after he dies through his estate and pay no taxes.

The math is simple: If you have been participating in the record-breaking runup of the stock market and other investment vehicles, don’t pay your fair share of taxes, and your wealth is growing faster than you give it away, then you’re hoarding wealth and should pay your fair share of taxes and be giving more money to charity.

How the Ultra-Wealthy Should Actually Give Away Wealth

As we noted at the outset, our decision last July 14th to (metaphorically) storm the Bastille centered on our belief that the time had come to say, “Enough is enough.” Those of us who signed on to the Charitable Crisis Commitment realize that if no one creates standards, then anything goes. And the world would go on pretending that a $100 million donation from a person with a net worth of $200 billion counts as generosity.

So, what is the appropriate formula? We decided that the answer to “how much?” is a “Charitable Standard” with an annual minimum based on a percentage of wealth. The exact annual breakdown can be seen here, but it is essentially 10 percent for private foundations and donor-advised funds (DAFs) and, for wealthy individuals, a scale of one to five percent of net worth, depending on their level of wealth (i.e., one percent of assets for those whose net worth is between $10 and $50 million, with higher percentages for those with greater wealth).

We believe it is critical for donors (and those evaluating donors) to have a specific minimum contribution in mind based on their overall assets; this avoids the issue of getting starstruck by seemingly large numbers that are actually tiny proportions when compared to overall wealth. It’s also important that the money actually go to nonprofit organizations, not get stashed away for long periods of time in private foundations or DAFs, which have low and no legal payout requirements, respectively.

The Charitable Standard provides a clear guideline for what we should be expecting of our wealthiest citizens and foundations when it comes to giving back to society. No more letting the ultra-rich off the hook because of flashy numbers a public relations firm splashes across the media. It’s time to have a higher standard we can measure our would-be philanthropists against.

The CCC now has 101 signatories, including both dozens of high-net-worth individuals and foundations that are giving at levels twice as high on average as their peers—an impressive combined $550 million. It’s an excellent start, but we need many more to ascribe to these higher standards.

No billionaires, so far, have signed on, although one, MacKenzie Scott, notably gave in 2020 at twice the minimum standard of five percent. John and Laura Arnold have pledged to contribute five percent of their net worth every year going forward, which means they will meet the 2021 Charitable Standard provided that they carry their commitment through. So, yes, it can be done! It’s both reasonable and responsible. It just requires a true willingness to disburse large sums of money to make immediate impact, rather than tying your charitable dollars to lots of strings to increase your web of influence.

Certainly, if our 101 signatories, MacKenzie Scott, and the Arnolds can meet or exceed our Charitable Standard to create a better world, so can Buffett, Bezos, and all the other multi-millionaires and billionaires out there. None of this is to discount the importance of taxation and public policy; what is critical, particularly for the overwhelming majority of readers who are neither multimillionaires nor billionaires, is to actively organize to establish the social expectation—both through public policy and philanthropy—that to those who much has been given, much more is expected. The health of our society and of our democracy depends on this.

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