Billionaires Are Giving Away Their Money. Here’s Where It’s Going
What You Need To Know
The breakups of two of the most powerful couples in the world have sparked conversations and concerns about their philanthropy, at a time when it seems billionaires can’t give their money away fast enough.
The impending divorce of Bill and Melinda Gates may already be affecting their $50 billion foundation, one of the most influential in history. After her divorce in 2019, MacKenzie Scott gave away almost $6 billion to hundreds of charitable groups, while her ex, Jeff Bezos, pledged $10 billion for an “Earth Fund” to fight climate change — by far the largest amounts given or pledged by either of them. (Bezos has only committed a fraction of the money.) Still, Bezos and Scott’s enormous fortunes have only grown, outpacing their donations.
Relatively new billionaires are even giving away astonishing amounts of money. One of the creators of cryptocurrency Ethereum donated Shiba Inu coins — a meta-meme cryptocurrency — worth, at the time, about $1 billion to a Covid aid fund for India.
Meanwhile, the gulf between the ultra rich and the not-so-rich deepened dramatically during the Covid-19 pandemic, fueling the debate about the role of philanthropy in society. “Philanthropists get far too much positive attention in ways that deserve more scrutiny right now,” said Linsey McGoey, director of the Center for Research in Economic Sociology and Innovation at the University of Essex. “We’re starting to suspect that the people who have billions of dollars don’t have a true interest in solving these problems.”
The Gates couple, along with pal Warren Buffett, transformed the public’s expectations of billionaires with the creation of their “Giving Pledge” in 2010. They promised to give away the majority of their fortune, either while they are alive or after their death, and enticed hundreds more of the world’s wealthiest to do so as well. The Pledge, however, has no enforcement mechanism. It’s a moral and public pledge, and the people who sign up can change their mind at any time, with or without telling anyone.
By The Numbers
- $10 billion Amount Jeff Bezos pledged to give away in 2020 for "Earth Fund"
- $76.9 billion Increase in Jeff Bezos's net worth in 2020
- $309.66 billion U.S. charitable giving by individuals in 2019
Why It Matters
Scott has taken a different approach than some, spreading out her money among hundreds of smaller charities and institutions often overlooked by large donors. She said she was going to be thoughtful in her giving and yet “won’t wait” to empty her safe.
Many give money to their own foundations, and then use that vehicle to figure out how to distribute the money. Indian tech billionaire Azim Premji in 2019 pledged to transfer about $7.5 billion in shares of his company to his foundation. Last year, Nike co-founder Phil Knight gave $900 million to his own foundation. Knight just gave $500 million to his alma mater, in addition to previous multi-million dollar gifts in the past few years, while former Google CEO Eric Schmidt and his wife Wendy gave $150 million this year toward the study of biology and machine learning.
Some choose to use structures, called donor-advised funds, that allow them to park money and get the immediate tax benefits of giving, and decide later where to send the gifts.
What is certain is that billionaires will continue to try to varnish their reputations through their philanthropic deeds. Bill Gates’ charitable giving helped overhaul his reputation from the ruthless CEO of a company whose products dominated the marketplace to a geeky dad-philanthropist eager to solve the world’s problems.
The question of how much to redistribute is tangled up with what determines individual economic success.