The Giving Pledge Initiative
A hamburger always tastes the same, no matter how much money you have in your bank account, as Bill Gates famously said. But what to do with a fortune worth millions or billions?
One option is to give money away. Many wealthy people decide to do this. They invest in foundations or donate to charitable organisations. Many do – but by no means all of them and often only a small part of their assets.
Bill Gates and Melinda French Gates, among others, have been following a different path for decades. They contributed the vast majority of their wealth to their joint foundation, and decided to persuade others to do the same. Together with Warren Buffet, they launched the philanthropic campaign “Giving Pledge” in 2010.
With their campaign, they want to persuade wealthy people to donate at least half of their assets to charitable causes; preferably during their lifetime, but at the latest in their will. The aim is to donate more generously, more promptly and more intelligently in order to effectively tackle the most pressing challenges of our time. By the end of 2022, 236 committed individuals had already signed the Giving Pledge.
Unique combination of wealth and transparency
Giving Pledge is the world’s largest public pledge initiative. The total value of the pledged wealth is estimated to be up to USD 600 billion. On the Giving Pledge website, you can read who has already signed and what their motivations were.
Helping to shape the world, making a difference, gratitude for one’s own life and the desire to give something back; these are the most frequently cited motives. Giving Pledge is therefore a unique combination of wealth and transparency from wealthy people around the world who want to make a difference to society.
The German entrepreneur Hasso Plattner was one of the first signatories of the Giving Pledge, with the declared aim of setting an example for other wealthy people.
Lack of control and accountability in the details
The public commitment under the Giving Pledge is not legally binding and signatories do not commit to disclosing their actual or planned donations. Although significant assets have been given away over the past decade, few people have donated half of their wealth or more, or at least publicly announced that they have written their wills to that effect.
In many cases, donations are barely keeping pace with asset growth. In fact, the assets of 62 US signatories have almost doubled in the last ten years – rising from USD 376 billion in 2010 to USD 734 billion in 2020.
A pledge with plenty of room for manoeuvre
The Giving Pledge has become very popular in recent years. After 57 memberships in the founding year, including the 40 first-time signatories, the number of “Pledgers” has now more than quadrupled.
However, how the signatories fulfil their voluntary commitment is up to them. Critics point out that most Giving Pledge donations flow either into family foundations or donor advised funds, i.e. donation vehicles in which the donors retain control over distributions and the use of funds.
While foundations in the USA must use at least five percent of their assets for charitable purposes due to tax regulations, donor advised funds are not subject to any statutory distribution obligation. It is therefore not clear when the donated funds actually reach non-profit organisations in the sector.
Giving Pledge as a source of inspiration or questionable role model
The signatories serve as role models for other billionaires who have not yet made any social pledge. So far, ten per cent of the world’s billionaires have signed the Giving Pledge. At the same time, the number of billionaires is growing continuously and has more than doubled from 2010 to 2022 alone, from 1,011 to 2,668. This creates a growing target group that can make a pledge for the good of society.
However, there are critics who do not fully regard the signatories as role models. On the one hand, the origin of the assets is often ethically questionable and the signatories should first focus on creating better working conditions in the companies they own. On the other hand, philanthropic activities often treat symptoms rather than causes.
In addition, the structural social conditions, such as growing economic inequality, tax policy or gender and racial imbalances, which cause the actual problems, are not scrutinised. In short, the wealthy are often the cause and driver of the problems of our time, but at the same time present themselves as saviours and helpers in times of need.
Pledgers are not necessarily the most generous
Every year, the business magazine Forbes publishes the “philanthropy score”, which analyses the generosity of the 400 richest Americans. Most of them receive a score of 1 or 2 with a maximum score of 5, which means that they have donated less than five per cent of their wealth to date.
74 signatories of the Giving Pledge were included in the Forbes ranking, achieving an average score of 3.6. Only a few, such as Bill Gates, Melinda French Gates, MacKenzie Scott and Warren Buffett, achieve a score of 5 because they have already donated more than 20 per cent of their wealth.
Predominantly white, male and American
After the initiative initially mainly accepted members from the USA, the number of international supporters has grown steadily since 2013. Nevertheless, the majority of members are white, male and American. Two thirds are men, with only ten women having signed.
Two thirds of the signatories come from the USA, the others from 27 different countries. In terms of the global distribution of billionaires, Asia and Europe should be better represented.
The Giving Pledge also presents itself in some respects as a global money elite: access is reserved exclusively for billionaires, although there are millions of multi-millionaires worldwide whose wealth could also make a contribution.
A supplement vs. replacement of the state
When one per cent of the world’s population owns half of the global wealth, this raises important questions about responsibility and democratic legitimacy. It is certainly to be welcomed when wealthy people support charitable organisations with their donations and fill gaps that the state systems cannot close.
Concurrently, there is a danger that wealthy individuals and their foundations will support causes that are primarily characterised by their own agenda and are not open to democratic participation. The more strategic their foundations are in setting agendas and influencing existing structures, the more likely it is that the interests and convictions of individuals will take the place of democratic majority decisions.
An example illustrates this potential conflict. The Bill and Melinda Gates Foundation is one of the largest donors to the World Health Organisation (WHO). On the one hand, this strengthens the WHO’s ability to fight disease. On the other, however, there is the risk of a private foundation exerting massive influence on the policy of an intergovernmental organisation.
Conclusion
The number of millionaires and billionaires is increasing worldwide, while the list of global problems is not getting any shorter. This gives the wealthy, in particular, the opportunity to help shape and improve the world.
With the Giving Pledge and the invitation to publicly commit to using a large part of one’s own wealth for the good of society, its initiators are taking a bold step forward and have already reached several hundred billionaires.
That said, the assets of many super-wealthy people are growing faster than their actual donations. The legally non-binding nature of the Giving Pledge leaves its signatories with the responsibility to do good with their wealth as they see fit.
When all is said and done, the Giving Pledge offers the opportunity to take the discussion about the value and social responsibility of individual wealth to a new level through greater transparency and dialogue.
