America’s wealthiest have been getting a lot of unsolicited advice lately about their philanthropy, especially since the pandemic inflated the fortunes of the top 0.1% while devastating the broader economy.
Their critics’ loudest complaint: You should be giving your money away much faster.
Since splitting from the world’s richest man in 2019, MacKenzie Scott has shown how it might be done. The ex-wife of Amazon.com Inc. founder Jeff Bezos has donated $8.5 billion in about 12 months, distributing the cash among hundreds of small organizations typically overlooked by big donors.
“It’s really kind of stunning what’s she’s done and how different an approach she’s taken,” said John Arnold, a billionaire hedge fund manager who retired in 2012 to devote himself full-time to philanthropy. “I’m hopeful that more people will follow that model.”
Scott’s strategy—probably the fastest philanthropic spree in history—is still no match against the forces lifting billionaire wealth, particularly the rapid ascent of tech valuations. In 2019, she joined the Giving Pledge—a promise by very wealthy people, not legally binding, to give away the majority of their fortunes in their lifetimes. Since then, the rising price of Amazon stock means Scott’s net worth has jumped from about $37 billion to $62 billion, according to the Bloomberg Billionaires Index.
Warren Buffett, who helped create the Giving Pledge and has promised to give away almost all his wealth to charity, offers an even starker example. Over 16 years, despite giving up half his stake in Berkshire Hathaway Inc., his wealth has more than doubled to $104 billion.
“We’re living in the second golden age of philanthropy because we’re living in the second golden age of inequality,” said Jason Franklin, principal of Ktisis Capital, a boutique philanthropic advisory firm based in Grand Rapids, Michigan.
Buffett responded to the raging debate on Wednesday. In a statement that also announced his resignation as a trustee for the Bill and Melinda Gates Foundation, the world’s eighth-richest man offered a partial defense of the go-it-slow approach to giving.
Buffett’s first wife, Susan, had argued for “giving away large sums when we were young—when our net worth was a tiny fraction of its eventual size,” he wrote. “I held out for later, remaining charmed by the results of compounding.”
In 2006, a couple of years after his wife died, Buffett, then 75, “stepped on the accelerator” in his giving.
The value of the shares he’s given away—$41 billion—would be worth $100 billion to the recipient foundations if he’d waited until now.
“Would society ultimately have benefitted more if I had waited longer to distribute the shares?” he asked.
Trillions of dollars depend on how the members of the 0.1% answer this question. Many of the very richest Americans have also signed onto the Giving Pledge. This includes Michael Bloomberg, the founder and majority owner of Bloomberg LP, the parent company of Bloomberg News.
There are now 222 signatories globally, but only a small fraction of the money has actually gone to charity, and many of today’s newly minted billionaires can expect to live for decades longer.
Mark Zuckerberg, the 37-year-old co-founder of Facebook Inc., signed the pledge along with his wife, Priscilla Chan, in 2015, when he was worth $45 billion. And, while the couple’s Chan Zuckerberg Initiative says it gave $2.7 billion in grants from 2015 to October 2020, Zuckerberg today is worth $126.8 billion.