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U.S. super-rich found failing in pledge to donate most of wealth

by Darnell Christie and Sonia Elks | @darnellchristie | Thomson Reuters Foundation
Thursday, 30 July 2020 09:35 GMT

ARCHIVE PHOTO: Amazon CEO Jeff Bezos and MacKenzie Scott are seen at the 2018 Vanity Fair Oscar Party in Beverly Hills, California, U.S. REUTERS/Danny Moloshok

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U.S. billionaires who pledged to give away most of their wealth are instead getting richer, a new report finds

By Darnell Christie and Sonia Elks

LONDON, July 29 (Thomson Reuters Foundation) - Super-rich individuals who pledged to give away most of their money to good causes are instead sitting on rising wealth, with many also "warehousing" donations in dedicated family foundations or funds, a new study has found.

More than three quarters of a group of U.S. billionaires who signed up to the Giving Pledge to donate most of their money saw a significant rise in wealth over the last decade, according to a report from the Institute for Policy Studies.

Many are also placing donations into private foundations or donor-advised funds that offer the mega-rich significant tax advantages, it said, and which may sit on cash for long periods instead of ensuring it reaches urgent needs.

Its co-author urged the wealthy to follow the example of MacKenzie Scott, the ex-wife of Amazon.com Inc's billionaire Chief Executive Jeff Bezos, by donating directly to charities.

"The Giving Pledgers set out in 2010 to give away half their wealth and instead their assets have doubled," said Chuck Collins, co-author of the "Gilded Giving" report.

"By giving $1.7 billion directly to 116 charities, MacKenzie Scott (Bezos) has modelled what Giving Pledge billionaires should be doing with their wealth.

"They should give it directly to working non-profit charities and not to their own perpetual family foundations or donor-advised funds."

The Giving Pledge campaign did not immediately respond to a request for comment on Wednesday.

It was set up in 2010 by U.S. business tycoon Warren Buffett together with by Microsoft Corp co-founder Bill Gates and his wife Melinda to encourage the world's super-rich to give away most of their wealth to philanthropic causes.

Eleven of the 62 U.S. billionaires analysed in the report have less money than in 2010, either because of aggressive charitable giving or market changes, while the remaining 51 saw "significant increases" in their net worth.

This is partly because many are making money so fast that it has "outstripped" their capacity to give it away, the IPS said.

The report also highlighted concerns that private foundations and donor-advised funds that may end up "warehousing" money, with management and overhead expenses cutting into the amount available.

It called for the U.S. Congress to take action with measures including cutting the tax advantages for such organisations and forcing them to pay out more to good causes.

Philanthropic foundations aimed to ensure donations were used effectively, said Jacob Harold, Executive Vice President of philanthropy data and research non-profit Candid.

"There are spaces where large institutions are able to create more impact because of economies of scale, and there are times where small grassroots organisations are able to create more impact because of their closeness to a community," he said.

The top one per cent of earners may hold 24 per cent of global wealth by 2050, according to a recent United Nations report, as global wealth inequality steadily grows.

Most people want billionaires to help more in the eradication of poverty, found an international survey carried out by anti-poverty group Global Citizen and Dutch research agency Glocalities earlier this year.

(Reporting by Darnell Christie @darnellchristie and Sonia Elks @soniaelks; Editing by Claire Cozens. Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers the lives of people around the world who struggle to live freely or fairly. Visit http://news.trust.org)

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