Giving Pledge

by William Lavin

Definition

The Giving Pledge is a moral pledge signed by billionaires, who commit to giving away more than half of their entire wealth to help address our most serious problems in society (The Giving Pledge). Billionaires signing the Giving Pledge may donate to charities, private foundations, and philanthropic organizations of their choice. They pledge to give throughout their lifetimes and through their wills when they die (The Giving Pledge).

Historic Roots

The Giving Pledge is a recent phenomenon, but the idea of a moral commitment to donating wealth is deeply rooted in American history. In the late 1800s, steel industrialist, Andrew Carnegie retired as the richest man in the world. Throughout his retirement, he donated construction funds to establish thousands of public libraries in the United States and across the world. (America’s Library).  In 1889, Carnegie’s “Wealth,” describes the ideal philanthropist donating “year by year for the general good,” (Carnegie 1889). Carnegie’s writing served as a guide for high net-worth individuals and a challenge based on his own personal example and that of others.

Bill Gates, the founder of Microsoft, and Warren Buffett, the Chairman and CEO of Berkshire Hathaway are two of the richest people in the world today. They became friends by dedicating themselves to addressing major problems in society. Gates formed the Bill and Melinda Gates Foundation and Buffet donated much of his own wealth to it. Even with the world’s largest private foundation, reducing extreme poverty and disease require resources far greater than what they have as well as ideas and approaches beyond their own. Gates and Buffett began actively talking to other billionaires (The Chronicle of Philanthropy).  In 2010, Gates and Buffet established the Giving Pledge for billionaires as a platform for donating, learning, and inspiring generosity in others. The Giving Pledge hosted learning sessions for signers of the pledge to meet each other and learn from each other’s experiences with philanthropy.  Pierre Omidyar, the founder of eBay, presented on impact investing, a relatively new form of philanthropy that can include microfinance, a bank for people, mostly small businesswomen in the developing world, who do not qualify for loans from commercial banks (The Chronicle of Philanthropy).

The Giving Pledge expanded internationally with billionaires from India and China joining the pledge as well as younger billionaires, including Sara Blankley, the founder of Spanx, Mark Zuckerberg, the founder and CEO of Facebook and his wife, Priscilla Chan, and Joe Gebbia and Brian Chesky, the co-founders of AirBnB. Today, the estimated net worth of more 150 signers is $780 billion (Glass Pockets).

Importance

The Giving Pledge is important for a couple reasons. The wealth of individual billionaires throughout the world is enormous. Among the Forbes 400, a list of the richest people in the world, the total net worth was valued at $2.4 trillion (Forbes). If every listed billionaire signed the pledge, approximately $1.2 trillion would be donated, which would be as much the gross domestic product of Russia or Australia.

The Giving Pledge is also important because it serves to establish a modern-day example of “increased philanthropy at all levels of capacity,” (Denver Post). It provides a new set of expectations for the wealthy to give away at least half of what they own. Robert Rosen, director of philanthropic partnerships at the Bill and Melinda Gates Foundation shows that a pledge of this kind means “you’re more likely to be proactive—deciding what your philanthropy budget is, exploring what causes you feel passionate about, and researching which organizations can ensure that your donations have the greatest impact” (Denver Post).

Ties to the Philanthropic Sector

Young billionaires who have signed the pledge are giving away wealth very early in their careers. For example, Mark Zuckerberg and Priscilla Chan donated $500 million to the Silicon Valley Community Foundation. Zuckerberg stated: “People wait until late in their careers to give back. But why wait when there is so much to be done?” (Huffington Post).

In contrast, Robert W. Wilson, a hedge fund founder, who donated 70 percent of his total wealth, believed that “when rich people reach 50 and are beginning to slow down,” it is only then appropriate to begin philanthropy (Buzzfeed). Wilson passed away at the age of 87 and spent the latter part of his life engaged with environmental organizations, including the Nature Conservancy.   

The Giving Pledge recognized the importance of diversity and international outreach. One signer is Kiran Mazumdar-Shaw, founder, chair and managing director of Biocon, considered the richest woman in India.  Mazumdar-Shaw favors compassionate capitalism over philanthropy. With compassionate capitalism, she finds that “innovation and commerce are as powerful for driving technological advancement as they are for creating social progress,” (Philanthropy News Digest).

The Giving Pledge has influenced others, such as former presidential candidate and consumer advocate, Ralph Nader, who established a program for people born between the years, 1924 and 1944 to help bridge the divide of political discourse and focus on justice rather than charity. Nader suggests that “a society that has more justice needs less charity” (Chronicle of Philanthropy).

Key Related Ideas

Pledge: There many types of pledges, including moral pledges and legal pledges. The Giving Pledge uses moral pledges, like a promise made between friends. As a moral pledge, signers may not sue one another for failing to donate as much as they said they would (Bloomberg). Moral pledges are different from legal pledges. If, for instance, a philanthropist agrees to give money to a non-profit school to build a playground, he or she signs a legal pledge to ensure that the school can pay the bank and builders the money that is required for construction.

Impact Investing: Pierre Omidyar and other Giving Pledge signers favor impact investing. Impact investors give money to startups or non-profit organizations with an expectation of a return on their initial investment and a positive social impact in society. The return on investment may be financial earnings or a social benefit, such as increased access to the internet in rural areas of Latin America.

Compassionate Capitalism: Giving Pledge signer, Kiran Mazumdar-Shaw, champions compassionate capitalism over philanthropy as a way of empowering poor people, which she believes is more effective than traditional forms of direct charitable aid.

Philanthropy: Improving the overall condition or quality of life of people, society or the environment by volunteering time or service, talent or expertise, and financial contributions usually to a non-profit organization.

Charity: Volunteering time or service, talent or expertise, and financial contribution to relieve immediate human needs.

Important People Related to the Topic

• Warren Buffett
• Andrew Carnegie
• Bill and Melinda Gates
• Pierre and Pamela Omidyar
• Sheryl Sandberg
• Mark Zuckerberg and Priscilla Chan

Related Nonprofit Organizations

Forbes: Magazine publicizing Forbes 400 lists the world’s top billionaires and other relevant data. (http://www.forbes.com/)

The Giving Pledge: The official website outlining the pledge and listing signers of the pledge. (https://givingpledge.org/index.html)

Glass Pockets: A service of the Foundation Center, promoting greater transparency with the Giving Pledge. (http://glasspockets.org/)

Global Philanthropy Forum: Organization promoting ideas associated with impact investment, compassionate capitalism and philanthropy among the signers of the Giving Pledge. (https://www.philanthropyforum.org/)

Reflection Question - If you were a billionaire, how would you make an impact on the world? Would you invest in new ideas or more traditional ideas? With either option, explain why. Would you donate like Mark Zuckerberg, who is still running his company or would you wait to donate when you are older and retired?

Bibliography and Internet Sources

• America’s Library. Andrew Carnegie, Philanthropist. http://www.americaslibrary.gov/aa/carnegie/aa_carnegie_phil_1.html
• Bloomberg. Pledge Aside, Dead Billionaires Don't Have to Give Away Half Their Fortune.  http://www.bloomberg.com/news/articles/2015-06-04/as-billionaires-bask-in-glow-of-pledge- giving-half-is-optional
• Buzzfeed. Exclusive: Emails Reveal Deceased Hedge Fund Manager Refused To Join Bill Gates’ "Worthless" Giving Pledge. https://www.buzzfeed.com/rosiegray/exclusive-emails-reveal-deceased-hedge-fund-manager- refused?utm_term=.joZDwJ3e0#.laQm5dBgo
• Carnegie, Andrew. Wealth. The North American Review, Vol. 148, No. 391. 1889. Pp. 653-664.
• Chronicle of Philanthropy. Signers of the Giving Pledge. https://www.philanthropy.com/article/Signers-of-the-Giving-Pledge/153621
• Chronicle of Philanthropy. A Giving Pledge, Ralph Nader Style. https://www.philanthropy.com/article/A-Giving-Pledge-Ralph-Nader/152437
• Denver Post. On Philanthropy: The giving pledge for the rest of us.  http://www.denverpost.com/2016/10/09/philanthropy-bruce-deboskey/
• Forbes. Annual Forbes 400 Ranking.  http://www.forbes.com/sites/forbespr/2016/10/04/forbes-releases-35th-annual-forbes-400- ranking-of-the-richest-americans/#3f2c122c594a
• The Giving Pledge. The Giving Pledge Frequently Asked Questions. https://givingpledge.org/faq.aspx#faq1
• Glass Pockets. Eye on the Giving Pledge. http://glasspockets.org/philanthropy-in-focus/eye-on-the-giving-pledge
• Huffington Post. The Changing Face of Philanthropy. http://www.huffingtonpost.com/jereme-bivins/the-changing-face-of- philanthropy_b_2341202.html
• Philanthropy News Digest. Kiran Mazumdar-Shaw, Herbert and Nicole Wertheim Join Giving Pledge. http://philanthropynewsdigest.org/news/kiran-mazumdar-shaw-herbert-and-nicole-wertheim- join-giving-pledge