As I was growing up my father taught me not to count other people’s money, which is somewhat odd because he was an accountant and all he did was count other people’s money. I was pretty faithful to this principle until Bastille Day, July 14, 2020 when I launched the Crisis Charitable Commitment, an effort to enlist rich people and foundations to give more than usual in response to the crises surfaced by the pandemic. Now I follow another lesson: follow the money.
The American people, or at least most of us, are a generous lot. The somewhat well-off, middle class, working class, and even the poor, will be contributing to what should be a record Giving Tuesday. The $3 billion or so raised for a variety of noble causes this week masks how stingy the ultra-rich donor class–the 0.1% of taxpayers–really is. As they do all year, the wealthy more likely will be spending Tuesday counting their money rather than giving it away. To put it in perspective: Tuesday’s projected total haul amounts to just the average monthly income of the country’s five richest men!
As this year draws to a close, we’ll see once again that the richest Americans give annually around 1% of their net worth to charity, and the richest foundations, with assets over $1 billion each, treat the legally required 5% minimum distribution as a ceiling. It’s been this way for as long as anyone can remember. But no one can remember the confluence of crises and the demand for charitable dollars that we now face. In case one thinks the crisis is over: Measurements vary, but it is fair to say that there are at least 30 million people in the U.S. living in poverty. So much for trickle-down economics, where it was believed that the rich would take care of us if we only made them richer.
Private foundations are sitting today on more than $1 trillion, earning virtually tax-free money at astounding rates. If they increased their payout to real charities by just 1% it would be more than the money raised by all Giving Tuesdays since the program began in 2012.
Billionaires, who according to an analysis by Americans for Tax Fairness and the Institute for Policy Studies that uses Forbes’ data, have made more than $1 trillion just since the pandemic began! (Even taking into account this down market, the S&P has returned an annualized rate of 10% for the last ten years!) If every one of the 700-plus billionaires met CCC’s Charitable Standard, these billionaires alone would send this year more than $100 billion to nonprofit organizations, from food banks to schools, from arts and artists to community organizing groups. To be clear: that would mean $100 billion to nonprofits and still $900 billion of pandemic profits left in their pockets!
The good news is that more than one hundred private foundations and wealthy individuals, representing nearly $1.5 billion in assets and more than $700 million in charitable donations, have signed onto the Crisis Charitable Commitment, saying they adhere to a new Charitable Standard in time of crisis. The Charitable Standard effectively doubles the average annual rate of giving. If the 80 foundations with more than a billion dollar in assets and the 150,000 ultra-rich people in the U.S. gave at the Charitable Standard, giving to nonprofits this year alone would increase by $200 billion.
While CCC’s and our partners’ efforts to move significantly greater amounts of charitable money out of the hoarding coffers of private foundations and the ultra-rich have made only limited progress over the last two years, there have been some notable developments.
MacKenzie Scott became philanthropy’s poster child by giving $14 billion to non-profits in just three years (she has $20-40 billion left). Her ex-husband Jeff Bezos promised to give “most” of his now $150 billion away during his lifetime. When and how is anybody’s guess. Bill Gates, too, promised to give “virtually all of his wealth,” now just over $100 billion, to his Gates Foundation. Yvon Chouinard gave away his “almost entire” $3 billion company, Patagonia, to a nonprofit which will support environmental efforts. Can the deeds of Scott and Chouinard and the yet to be filled promises of Bezos and Gates, if fulfilled, be the start of a trend?
Elon Musk has as much money as Bezos and Gates combined. He doesn’t say or do much about philanthropy. Right now he’s probably pre-occupied with laying off Twitter employees. (Worth noting: if Musk lost his entire $40 billion investment in Twitter he would only have $200 billion left!) Last year he made a splash when an SEC filing revealed he gave away nearly $6 billion to “charity.” Musk has kept the details secret, but it is a certain bet that the donation is parked in a donor-advised fund rather than going to the charities that could use the money. The donation is almost exactly 30% of his taxable gain from sales of Tesla stock, the maximum allowable charitable deduction of appreciated stock. Only Scrooge would call this tax-avoidance device charitable.
On Giving Tuesday 2015, Mark Zuckerberg and his wife Priscilla Chan announced that they would give away 99% of their wealth ($40 billion). They are off to a very slow start. Unless Facebook and the stock market remain at depressed prices, even If they gave $100 million every Tuesday it is unlikely that they would achieve their goal. It’s time we not just expect but demand more from America’s richest people and foundations.