Last month I wrote about what was that month’s big news in philanthropy: In response to the national crises we’re facing, the MacArthur Foundation, with $8 billion in assets, announced that it would raise its annual distribution from 5% to a whopping (or pathetic, depending on your point of view) 6%. As a reminder, the Crisis Charitable Commitment calls on foundations to distribute 10%, an affordable sum that would allow a foundation to continue to give for decades (but probably not forever). It is a simple concept, rooted both in biblical teachings as well as science: it is better to give than to hoard.
Now comes along this month’s big philanthropic announcement: The Gates Foundation will close its doors in twenty years on December 31, 2045 by raising its distributions to $10 billion per year. On the face of it, this is a response to Trump’s attacks on big philanthropy, e.g., the Gates Foundation, as well as attacks on just about everything a thoughtful person cares about. This has the feel of breaking down the floodgates, philanthropically speaking.
Ten billion dollars is a big number, more than the total distributions of the next ten largest foundations. Yet, there are a number of curious things about the announcement. Three years ago, the Gates Foundation announced it would raise its payout to $9 billion per year starting in 2026, so for anyone other than the trustees of the MacArthur Foundation, this would not be considered a big increase. More importantly, as Michael Kavate points out in his Inside Philanthropy article, “Gates Sets an End Date…,” the numbers don’t add up. At presumed rates of investment returns, the foundation would have to spend nearly twice as much, $20 billion per year, to distribute $200 billion in combined wealth of Gates’ personal money, (which Gates says he’ll give away through the Foundation), and the foundation’s current assets. Importantly, it would also require a $20 billion distribution to meet the CCC requirement.
One could imagine a 69-year-old Bill Gates looking at his life expectancy of less than 20 years and wanting to give it all he’s got to cement his legacy. Maximizing a great public relations moment, as he’s done, certainly helps. In reading Bill Gates’ full explanation of his plans, my curiosity was piqued by the sentence, “I will give away virtually all my wealth through the Gates Foundation…” When one is a centibillionaire, the gap between “virtually all” and “all” can be billions of dollars. Does it mean he’s giving to charity outside of the Gates Foundation? Or will we soon be adding three more billionaires (his children) to the Forbes List?
No doubt, whether the Foundation spends $10 billion per year or $20 billion, this money can–and is likely to– do a lot of good. The stated objectives are “no mom, child or baby dies of a preventable cause….a world without deadly infectious diseases….hundreds of millions of people break free from poverty.” Of course, as I’ve frequently written, giving early and especially investing in protecting democracy, would have been a smart, leveraged use of the Foundation’s resources to achieve these ends. Inside Philanthropy founder David Callahan writes, “Gates Embraces ‘Giving While Living.’ Now He Needs to Pay More Attention to Power.” Hopefully, it is not too late.
The bigger issue that seems to get lost amidst all the billionaire-philanthropy-whitewashing, is whether we’re better off having centibillionaires deciding if, when and how to give their money away, rather than making it difficult for anyone to accumulate billions of dollars in the first place. Instead, shouldn’t we tax billionaires and let government, chosen within a functioning democracy, make those decisions?
No doubt, those of us who are so critical of billionaire philanthropy may hesitate a bit in answering that question because of who currently is in power. But that just reinforces the critical importance of addressing the interrelated challenges of restoring a functioning democracy and curbing extreme wealth.