Thursday, June 17, 2010

The Gates-Buffett Billionaire Challenge

So Bill and Melinda Gates, along with Warren Buffett, are going to challenge America’s billionaires to contribute half of their net worth to charity, either in their lifetimes or in a bequest.

Two things come to mind. First, congratulations to the Gates’ and Mr. Buffett for such an ambitious plan, which they call The Giving Pledge. If they pull this off, or are even a quarter successful, the face of philanthropy will change dramatically. After all, as the article above notes, we’re talking, at a minimum, $600 billion if everyone on the Forbes 400 Richest List participates. Given that estimates of annual U.S. giving are currently at the $300 billion range, we’re talking about a seismic shift in giving. And if it’s successful, we might as well give Bill the unofficial title of Best Philanthropist Ever, because he’ll have reached charitable heights NO ONE has ever dreamed of, and not just in total giving either.

Two, this challenge underscores (and validates, though I’m not sure the profession really needs anymore validation) the principles we use every day in fundraising. Challenging donors to give more than they had ever imagined before. Using giving clubs to encourage donations—and this challenge may represent the most exclusive giving club ever—because we know that sometime peer pressure works, and that donors may give more or at an equal level if they know what a friend or colleague has given. And finally, using donors and volunteers to raise funds so “the ask” comes from a trusted colleague as opposed to just another solicitation from the organization.

Part of me wants to say “it’s about time,” but really, we haven’t had the right factors to make such a challenge possible until now: immense amounts of wealth that can truly make an impact, huge needs amplified by the global recession, charismatic leaders (the Gates) and a respected convert, so to speak (Mr. Buffett), not to mention the growth of philanthropy to be able to adequately handle these huge amounts of money and technology to make the campaign work. It seems more like the next step in the logical evolution of philanthropy than a radical step.
Of course, the big question is, will it be successful? Ultimately, I think it will be, though perhaps not as quickly as we might hope. I wonder if having the challenge in public (where we know what the level of giving is and who is being asked) changes the dynamics of “the ask.” Will there be resentment by some potential donors knowing that people might be able to check on whether they’ve given or not?

But I’m buoyed by the reports I’m hearing about the one-on-one conversations that are taking place. Because as we know, it’s often in these kinds of personal discussions where the light bulb suddenly turns on, and the donor identifies what he or she truly wants to do and realizes that the gift is possible. If the Gates’, Mr. Buffett and others can continue to have close, personal conversations with these donors, an extraordinary amount of giving is possible over the next few years and well into the future.

7 comments:

  1. There is a downside to the Gates "Pledge" that no one in philanthropy wants to talk about: The Gates Foundation has become the 800-pound gorilla in the room. Just as huge concentrations of wealth give industrialists the power to control economic policy, huge concentrations of wealth in philanthropy have given the Gates Foundation the power to control the direction of education, health care, and other areas in which they invest. Do we really want to hand over control of what we do and how we do it to the billionaires of the world?

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  2. On one hand, this seems truly promising for those that work in non-profit. However, like with most corporations, consideration is favorably given to those non-profits that are well known. The chances of any of that money filtering down to local non-profits is not good. I've heard of many charities that have crumbled during these challenging economic times, and there will be more. If Bill and Melinda Gates, and Warren Buffett can influence the billionaires to give, I would hope that they look beyond the large organizations to give to and ask that they help support those that are smaller that fill in the gaps of service that the larger non-profits don't provide. Just my two cents!

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  3. @ 6:39 PM,

    For years now, Bill Gates has devoted large sums of money to help eradicate diseases like AIDS, particularly in Africa. I respectfully challenge you with this question: What makes you think that billionaires will want to "control" education, health care, etc. through their philanthropic giving? Aren't these billionaires already in a position to exert "control" in those areas if they truly wanted to?

    @ 11:09 AM,

    I understand your concern, and my guess is that money will (as you've alluded to) be directed to larger NPOs that are global in scope since the need for urgent aid is greatest in the developing parts of the world.

    The good news is that perhaps people of more modest wealth will direct funds to smaller groups as a result.

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  4. I'm encouraged by the example Gates and Buffet are setting. As a planned giving officer, I am often troubled by the guilt older donors have in leaving anything in their estates to charity. They say "I can't take from my kids." Gates and Buffet are showing that making room for both charity and children is possible and desirable in your estate plans. A great lesson for us all to learn.

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  5. This reminds me of the $41 trillion the Center on Wealth & Philanthropy announced in 1999 would fall into the hands of nonprofits like manna. A multitude of factors was overlooked, such as "in 20 to 30 years, maybe" and the number was downsized to $6 trillion. So, don't you think that large numbers of billionaires - a fairly new phenomenon - would leave most of their wealth to charities anyway, i.e. even if Bill, Melinda and Warren were not working the media with thier so-called Giving Pledges? And even if a best case scenario comes to pass, how far down the road would this alleged influx take place - 5, 10, 20, 30 years after these billionaires (then their wives, then their heirs) pass away?

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  6. Since I do not have his personal email, here is my open acceptance to Warren Buffett to be the first Hedge Fund Manager in Chicago to pledge 50% of our performance fees and 50% of my personal net worth to charity!!
    Larry Pitcher
    Managing Partner, Quantitative Algorithms Capital Partners

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  7. Please look up Norman Dodd on YouTube and remember what other billionaires have actually done to the American education system...these are simply new members to that already controlling club.
    cmoore

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