So much for that “Giving Pledge.” Turns out that the group challenge very publicly launched in 2010 by a small army of extremely press-savvy billionaires—the likes of Bill Gates and Mark Zuckerberg among them—with the stated goal of shrinking their massive fortunes by the time they each expired isn’t quite as charitable as it was cracked up to be.
In fact, according to a recent report by Business Insider’s Mattathias Schwartz, it’s something of an inversion of what its creators made it out to be, in that the people who stand to benefit the most are, thanks in part to the gymnastic leveraging of tax loopholes, just those same billionaire benefactors.
Here, Schwartz describes the plan’s most basic terms:
Death was the Giving Pledge deadline. You could give half your money away beforehand, or you could leave it to charity in your will. Zuckerberg, who at age 26 was among the second group of Giving Pledge signers, made clear that he did not intend to wait nearly that long.
“People wait until late in their career to give back,” Zuckerberg said in a Giving Pledge press release. “But why wait when there is so much to be done?”
In the decade since Bill and Melinda Gates joined forces with Warren Buffett as the original pledge-funders, and since their ranks swelled to include some 40 mega-rich families, much has indeed been done to set up and lay down foundations—but also to shore up participants’ prodigious resources and gain fame through on-brand displays of largesse while using their plan as a cover. This, as their time to complete their shared mission runs shorter and the income inequality gap yawns wider.
Take, once again, the Zuckerbergs as an example, per Schwartz’ analysis:
During its first five years, the Chan Zuckerberg Initiative handed out a total of $2.7 billion in grants — roughly 6% of their wealth at the time they made their pledge. By contrast, traditional private foundations are required by law to spend 5% of their assets each year. At their current rate of giving, the couple would make good on their promise only if they live past the age of 110. And that math doesn’t account for the skyrocketing price of Facebook’s stock, which nearly tripled during the initiative’s first five years.
Zuckerberg, of course, could decide to accelerate his philanthropy later in life and still live up to his commitment. But the Giving Pledge’s slow charitable roll is encouraged by the US tax system, which perversely rewards rich donors for their procrastination. By placing the money they’ve earmarked for charity into a variety of financial vehicles, Zuckerberg and other billionaires can warehouse the bulk of their wealth for years, use it to benefit their own interests, pass control of the vehicles to their children, and in some cases never have to give a dime to charity, all while enjoying a huge tax deduction.
That’s just one of many activating vignettes that make the machinations of those whose names wind up on buildings more intelligible to those who wind up working for them. Thematically speaking, this kind of thing has been going on for ages, with wealth-management pioneers such as Andrew Carnegie setting the mold for his successors. These days, one option for pulling off a colossal hustle in the name of philanthropy takes the form of the popular Donor-Advised Fund or DAF, a device that, as Schwartz notes, takes “only a few minutes to set up” and allows the ultra-flush to tuck away “hundreds of millions of dollars” that may or may not be used as intended. Or if it is, we may not find out in this lifetime.
The whole piece is worth a read on Business Insider—that is, if you can get past the paywall.