In the five years since Bill Gates and Warren Buffett created the Giving Pledge, 193 individuals have made the simple promise to give more than half of their fortune away in life or in death. This week, another 16 people joined the initiative, including Chobani yogurt founder Hamdi Ulukaya and Scottish oil baron Ian Wood.
Signing the pledge has brought glowing press coverage, video testimonials from Bill Gates and invitations to annual conferences in luxurious resorts with fellow billionaires such as Ray Dalio and Pierre Omidyar.
Less publicized is the fact that the crux of the pledge is subjective. Signatories are under no legal obligation to donate any of their money, and sometimes fail to give away anywhere close to half. Charity regulations and estate law can block public disclosures, and Buffett and Gates don’t ask pledge takers to prove a thing.
“It’s really thinking about how iconic figures providing inspiration and support can inspire and serve as a model for society,” said Robert Rosen, the Giving Pledge coordinator as Director of Philanthropic Partnerships for the Bill & Melinda Gates Foundation. “We aren’t looking to add any additional complexity,” said Rosen.
Public disclosures of lifetime and estate giving of the 10 deceased billionaires who signed the pledge show that fulfillment of the pledge varies widely. Only two have given away more than $1 billion, and they donated the money before the initiative was started.
Long-Term Project
The Giving Pledge emphasizes that it’s a moral pledge. This distinction has a very real legal purpose: it eliminates the ability of Giving Pledge signers to sue fellow billionaires who fail to give, according to David Scott Sloan, an attorney and national head of the estate law practice at Holland & Knight.
“When I give money to charity and I pledge to pay it over five years, I actually sign a contract,” Sloan said. “These are all people who sign lots of pledges like that and wanted, I’m sure, to make it very clear it’s a moral direction as opposed to a legal direction.”
Rosen says the Gates and Buffett effort is a long-term project to reset levels of giving.
“The conversation continues to evolve with what’s expected and what becomes the norm of generosity, both in terms of the impact and the impact it has -- that’s our true north star,” Rosen said. “People do it in different ways and at different times because it’s such a personal decision.”
‘Low Bar’
Gates and Buffett are leading by example. The two richest Americans with a combined fortune of $156 billion, according to the Bloomberg Billionaires Index, have put more than $46 billion into the Gates foundation. Michael Bloomberg and three other co- founders of Bloomberg LP, the owner of Bloomberg News, have all signed the pledge.
Gates said in a 2010 interview with Fortune that he considered giving away half one’s fortune the “low bar.” But defining what constitutes half is difficult, a point exemplified by the estate of Albert Ueltschi.
A Kentucky-born pilot of Swiss ancestry, Ueltschi became a billionaire by selling his FlightSafety International pilot- training schools to Warren Buffett’s Berkshire Hathaway for stock that was valued at almost $2 billion when he died. He also developed a close friendship with Bill Gates.
Ueltschi signed the Giving Pledge in 2012, committing the majority of his fortune to fight blindness.
“I have never seen a hearse pulling a U-Haul trailer. You can’t take it with you,” Ueltschi wrote in his Giving Pledge letter dated Sept. 18, 2012.
He died one month later at age 95.
Estate Tax
In his will, Ueltschi commanded nothing go to charity if there was no U.S. estate tax, as had been the case two years prior. Because an estate tax was in effect, it triggered a clause that one-third of his estate go to charity.
All told, in life and death the billionaire gave $260 million away. Another $200 million will come once the Internal Revenue Service issues final acceptance of the estate’s tax return, his son James said in a phone interview. Once that happens, his father will have met the Giving Pledge, the younger Ueltschi said.
“We did the calculations and that is what it was, so that is what it is,” James Ueltschi said.
While the elder Ueltschi may have built a fortune of at least $2.5 billion, according to data compiled by Bloomberg, much of the money wasn’t legally his at death, his son said.
‘Tax Planning’
“My father had various vehicles to provide for his various beneficiaries through tax planning that he did throughout his life,” Ueltschi said from the New York headquarters of HelpMeSee, a cataract-focused charity the family formed in 2010 to solve preventable blindness worldwide. “Those assets don’t belong to my father and they do not belong to his estate. The Giving Pledge is half whatever is left.”
A clouding of the lens of the eye, cataract disease causes 51 percent of all blindness worldwide. A five-minute, $50 surgery that HelpMeSee promotes reverses it.
According to tax returns, Al Ueltschi and his foundation have given $5.1 million to HelpMeSee.
To be sure, Jim Ueltschi can make sure his father’s pledge is fulfilled after his estate is settled. But how a fortune can be many billions of dollars and satisfy the Giving Pledge with what seems to be far less is a function of how death bequests are structured, said attorney Sloan. Typically, a percentage of after-tax assets is donated, rather than a fixed dollar amount.
“If you have $1 billion, you need to be sure that by the time you are done paying taxes, debts, heirs, etc., there’s $500 million to give,” he said.