The argument for giving more now, rather than later, is that while wealth can compound over time, so can the problems that philanthropy tries to address. In the fight against climate change, a cause embraced by both Bezos and Bill Gates, time is of the essence. Education now pays big dividends over the lifetime of a child, while curing a disease could save millions of lives.
“There are investment returns to philanthropy as well,” Arnold said. Failure to address issues like intergenerational poverty today, for example, “leads to a bigger problem tomorrow.”
The debate over giving has been around for decades. But last year inspired a flurry of initiatives designed to encourage foundations and rich donors to be more generous, more quickly. Some of their creators were frustrated by the pace of wealthy Americans’ giving even as government stimulus and record-low interest rates helped boost the assets of the very rich.
Too many wealthy Americans are “hoarding” their fortunes, said Alan Davis, who runs a $150-million family foundation inherited from his parents. MacKenzie Scott “has raised the bar—I’m not sure there are that many billionaires who are willing to jump over it.”
That sentiment also inspired calls to change U.S. laws governing charitable giving, by, for example, limiting tax breaks for money that doesn’t reach the needy quickly enough. Davis started the Crisis Charitable Commitment, a campaign to boost the minimum contributions coming from foundations and the wealthy.
“Procrastination is an all-too-common problem for charitable giving as well as everything else,” said Boston College law professor Ray Madoff, who argues the U.S. needs “reasonable guardrails in place to ensure that charitable tax benefits benefit the public and not just wealthy donors and money managers.”
Madoff worked with Arnold and several other billionaires to start the Initiative to Accelerate Charitable Giving last year. Their ideas became the basis for a bill proposed this month by Iowa Senator Chuck Grassley, a Republican, and Maine Senator Angus King, an independent who caucuses with Democrats, called the “Accelerating Charitable Efforts Act.” The bill would create new time limits on donor-advised funds, or DAFs, which are increasingly popular vehicles that offer an upfront charitable tax deduction but place no deadlines on when money actually reaches working charities.
The Philanthropy Roundtable, an organization representing foundations and wealthy individuals, opposes the bill. “More mandates and regulations on giving will make it harder for all Americans to support the causes they care about,” Elise Westhoff, president and CEO of the group, said in a statement this month.
The efforts coincide with those by President Joe Biden to raise taxes on the wealthy, measures that could also indirectly boost incentives for philanthropy. Buffett has long supported higher taxes on people like him, a sentiment shared by many other voices cheerleading for faster charitable giving.
“It’s a broken system,” said Jennifer Risher, who with her husband, David—a former Microsoft Corp. and Amazon executive—last year started the #HalfMyDAF project to voluntarily encourage more giving. Rising fortunes at the top “speaks to structural and systemic problems in our whole system,” she said. “We should pay more taxes. The minimum wage needs to be higher.”
Some believe the changes to the philanthropic world could end up being significant.
“We’re at a dramatic inflection point,” said Michael Moody, Frey Foundation Chair for Family Philanthropy at the Dorothy A. Johnson Center for Philanthropy at Grand Valley State University. “The previous Gilded Age” ultimately led to many of the rules and structures that govern giving now, he said, but now “we’re seeing a lot of innovation and change in how people go about deploying that wealth.”
This article was provided by Bloomberg News.