The Giving Pledge Explained | August 2022
Billionaire Bill Gates won’t be one of the world’s wealthiest people for much longer. The Microsoft co-founder plans to give away nearly all of his fortune to the Bill and Melinda Gates Foundation, a nonprofit committed to fighting poverty, disease, and inequity. In 2010, 40 billionaires from the United States, led by Gates, his ex-wife Melinda, and Warren Buffet, decided to commit more than half of their wealth to charitable or philanthropic causes during their lifetimes or in their wills, creating The Giving Pledge.
Gates feels strongly that he has a duty to give back. "I have an obligation to return my resources to society in ways that have the greatest impact for reducing suffering and improving lives,” he said. “And I hope others in positions of great wealth and privilege will step up in this moment too."
When the initiative was founded, many hoped it would serve as a catalyst to increase rates of giving, creating more significant monetary donations and addressing some of society’s most pressing challenges and needs. More than 230 billionaires of all ages, including Michael Bloomberg, Mark Zuckerberg, MacKenzie Scott, and Elon Musk have signed the pledge. Pledgers are committed to many kinds of charitable causes such as poverty alleviation, autism, disaster relief, global health, homelessness, education, medical research, and more.
When making the pledge, individuals and couples write a pledge letter explaining why they have joined the effort:
Mark Zuckerberg (CEO of Meta) and Priscilla Chan (CEO of the Chan Zuckerberg Initiative): “We'll devote our resources as well as our personal time and energy. We will spend our lives working to make sure future generations have the greatest opportunities possible.”
George Lucas (Star Wars creator) and Mellody Hobson (co-CEO of Ariel Investments): “My pledge is to the process; as long as I have the resources at my disposal, I will seek to raise the bar for future generations of students of all ages. I am dedicating the majority of my wealth to improving education.”
Sara Blakely (CEO of Spanx): “I am committed to the belief that we would all be in a much better place if half the human race (women) were empowered to prosper, invent, be educated, start their own businesses, run for office—essentially be given the chance to soar! I pledge to invest in women because I believe it offers one of the greatest returns on investment.”
Many wonder why more billionaires have not joined the pledge or many any public commitment to giving away their wealth. Some critics of the initiative say there is a lack of accountability built into the pledge. Others wonder if pledgers are more focused on gaining publicity than supporting environmental and social causes. On the other hand, others believe billionaires have no moral obligation to give away their hard-earned wealth.
One thing is clear: mega-gifts are on the rise. About 5 percent of overall individual giving in the United States in 2021 can be attributed to 10 donors who gave a total of about $15 billion. This group of mega-donors includes Elon Musk of Tesla and SpaceX who gave $5.74 billion. Musk has been a member of The Giving Pledge since 2012. His funds were given to a donor-advised fund (DAF) that allows donors to engage in charitable giving and enjoy tax benefits without having to immediately decide where to allocate the funds. DAF donors can decide what causes to support later and distribute funds over time.
In the Classroom
This article can be used to discuss philanthropy (Chapter 2: Business Ethics and Social Responsibility).
What is the Giving Pledge?
In your opinion, should billionaires be expected to give away their wealth? Why or why not? If you were a billionaire, would you sign The Giving Pledge?
What is a donor-advised fund? What are its advantages? Disadvantages?
This article was developed with the support of Kelsey Reddick for and under the direction of O.C. Ferrell, Linda Ferrell, and Geoff Hirt.
Fang Block, "Elon Musk and 9 Others Who Gave Away $15 Billion in Just One Year," Barron’s, June 22, 2022, https://www.barrons.com/articles/fun-family-home-among-the-trees-in-los-angeles-lists-for-nearly-16-million-01658762226
Lucy Brewster, "Warren Buffett Pledged to Give Away His $96 Billion Fortune. What Will His Three Children Get?," Fortune, July 9, 2022, https://fortune.com/2022/07/09/warren-buffett-pledged-to-give-away-his-96-billion-fortune-what-will-his-three-children-get/
Scott Gleeson, "Bill Gates Says Pledge To Give Away ‘Virtually All’ of His Money Will Erase Him From World’s Wealthiest List," USA Today, July 14, 2022, https://www.usatoday.com/story/money/2022/07/14/bill-gates-giving-away-billions-wealth-charity/10056441002/
The Giving Pledge, https://givingpledge.org