Over the past year, a series of efforts have emerged to encourage, pressure or even force the world’s deepest-pocketed philanthropists and foundations to give more.
Most cite the damage wreaked by COVID-19 as their foremost motivation, but the steps also come amid a host of other pressures and factors, from new attention to racial equity and accelerating climate change to concern over inequality and talk of a wealth tax, to name just a few.
This Monday, Laura and John Arnold signed onto the latest such drive, becoming the first billionaires to do so. The couple, whose fortune Forbes estimates at $3.3 billion, are now part of Global Citizen’s Give While You Live campaign, which asks billionaires to commit to giving 5% of their wealth to philanthropic causes each year.
The pledge is only the most recent step by the Arnolds to push their peers to give more. Late last year, the Houston-based couple joined with major grantmakers—including the Ford, Kresge, William and Flora Hewlett and W.K. Kellogg foundations—to launch the Initiative to Accelerate Charitable Giving. Global Citizen is also part of that campaign.
Legislative proposals, peer pressure and the Giving Pledge
Another recent effort is the Emergency Charity Stimulus, a campaign led by the Patriotic Millionaires, Wallace Global Fund, Institute for Policy Studies, Solidaire Network and others. It asks Congress to require foundations to double their minimum payout to 10% for the next three years, and institute the same minimum level for donor-advised funds, among other changes.
Outside of pledges and legislative tweaks, funders have made moves with an eye on influencing their colleagues. Last summer, five of the nation’s largest grantmakers—the Ford, MacArthur, W.K. Kellogg, Andrew W. Mellon and Doris Duke Charitable foundations—jointly announced plans to temporarily expand their giving by nearly $1.7 billion. Three took the rare step of issuing bonds to finance those pledges. The California Endowment and a few others later did the same.
That big announcement followed decisions by at least a half-dozen smaller foundations to significantly ramp up their giving, with several doubling or even quadrupling their payout. One of those, the Wallace Global Fund, also partnered last year with Global Citizen’s Give While You Live campaign.
Despite all of these recent campaigns, the best-known effort to expand billionaire philanthropy remains the Giving Pledge, launched in 2010 by Bill and Melinda Gates and Warren Buffet. The Giving Pledge has become a benchmark for gauging billionaire generosity, asking the ultra-wealthy to publicly commit to giving the majority of their wealth away during their lifetime or in their wills. In fact, the Gates Foundation has given, by one estimate, around $18 million simply to encourage more billionaire giving.
Many of the most well-known philanthropists have signed onto the Giving Pledge, making it by far the most prominent campaign to spur billionaire donations. As of this year, signatories total 220 individuals from 25 countries. Yet it remains a niche commitment. Given an estimated 2,755 billionaires worldwide, according to Forbes, the pledge only accounts for about 8% of the people commanding ten-figure fortunes. Last year alone, 660 new billionaires were minted. And there are plenty of critiques of the pledge’s value.
Policy reform uncertain as billionaire wealth skyrockets
Amid all these efforts to increase giving by the wealthiest, political progressives continue their push to build support for a wealth tax. Sen. Elizabeth Warren, who made such a tax a central component of her presidential campaign, introduced a proposal on March 1 that would institute a 2% annual tax on households and trusts with a net worth between $50 million and $1 billion, and an additional 1% on wealth above $1 billion.
So far, President Joe Biden appears to prefer other measures, such as the recently introduced corporate tax reforms. It’s an open question whether either proposal can win enough support to pass through the Senate under the Democrats’ razor-thin majority.
These developments coincide with an ongoing lesson in big-donor philanthropy—and the degree to which great wealth compounds itself. Over just six months in 2020, MacKenzie Scott gave away a mind-boggling $6 billion—nearly twice the Arnolds’ fortune and more than the Gates Foundation, the nation’s largest grantmaker, gave in 2019—and still ended the year richer than before.
Scott’s groundbreaking giving spree sets her apart, but the returns on her wealth are not unique. The world’s billionaires are $4 trillion richer than they were before the pandemic, a 54% increase, according to the Institute for Policy Studies. And those gains are not exclusive to the COVID era. Another Institute for Policy Studies report found that the original signers of the Giving Pledge saw their collective wealth nearly double over the last decade.
Will another pledge campaign work?
For the Arnolds, the Give While You Live campaign appears mostly to be about reaching other top-level donors. “Right now, many charities are in danger of not surviving the pandemic. Yet, more than $1 trillion promised to them remains warehoused in tax-free investment accounts,” John Arnold said in the announcement. “America’s charities cannot afford to wait for some larger crisis to arise. Business as usual is simply not good enough.”
The couple, who transitioned their giving from a foundation model to a limited-liability corporation called Arnold Ventures in 2019, appear already to be giving away substantial chunks of their wealth every year. Forbes estimated that, as a percentage of 2020 net worth, the Arnolds had given away 36.4% of their wealth between 2014 and 2018. While they’re only the 925th-wealthiest billionaires in the world, the magazine ranked the couple among the “25 philanthropists in America making the biggest donations.”
If Give While You Live does encourage more billionaires to give like the Arnolds—or rather like Chuck Feeney, the billionaire founder of Atlantic Philanthropies, who advocated for a “giving while living” ethic and famously fulfilled his wish of “dying broke”—it could have significant impact on the donor landscape. As philanthropy scholar Benjamin Soskis observed on Twitter, whether the campaign gains traction remains to be seen, but its emphasis on immediate giving would mark a significant break with the Giving Pledge, under which signatories can fulfill the terms through their wills.
The reality is that Give While You Live has a number of factors working against it. John Arnold, who made his fortune as a hedge fund manager, retired at 38 and has ample time for philanthropy. That remains a rarity. Many philanthropists, like Bill Gates, only begin their giving in earnest after stepping away from the day-to-day work that made their wealth. And for certain billionaires, particularly in tech, wealth can be wrapped up in corporate stock, making it more difficult to immediately extricate and give away. Another point: Barring some very prominent additions to this campaign, it’s unlikely to command a fraction of the attention of Buffett and Gates’s partnership on the Giving Pledge.
Though different in their details, all of these efforts are united in their concern that the wealth of the richest is not being put to use for those in need. Yet peer pressure and voluntary pledges seem unlikely to meaningfully shift that balance. That’s no knock on the Arnolds—the majority of the ultra-rich give far less than they do. In the end, such pledges are just one tool, and the Arnolds have gone beyond pledges and actually backed legislative changes via the Initiative to Accelerate Charitable Giving—though some call those proposals far from sufficient. The bigger question for philanthropy is whether mounting pressures will lead to some type of sector-wide reform effort that sticks.