When the Rich Don’t Give Enough, Is “Philanthro-Shaming” the Answer?

photo:  panitanphoto/shutterstock — photo: panitanphoto/shutterstock

Not long ago, I crunched some numbers and found that the top 1 percent of U.S. households—who are collectively worth at least $30 trillion—only donated about $130 billion to charity in 2016, which is less than half of 1 percent of their total wealth.

That’s a discouraging statistic in a world where, among other things, millions of children still die every year from preventable causes. But it didn’t surprise me. I can think of myriad examples of insanely rich people who spend lavishly on private jets, multiple estates, over-the-top birthday parties, and more—while leaving little public trace of philanthropic giving.

You don’t hear much about these folks at Inside Philanthropy. We cover those who give, not those who don’t. And if you read my article on the paltry giving of the 1 percent, you’ll notice I didn’t dwell on the penuriousness of any particular billionaire. In fact, we rarely single out anyone for their failure to give. We do often urge existing philanthropists to give more, especially those who’ve signed the Giving Pledge and care about time-urgent issues like climate change. And we often express puzzlement at the timetable top donors have for disposing of their fortunes. For example, I’ve wondered aloud why Bill Gates has $90 billion sitting on the sidelines in private investments—even as he and Melinda publicly urge others to give more, arguing that greater giving can save lives right now.

Overall, though, “philanthro-shaming” is not our thing at IP.

There are several problems with publicly calling out wealthy people who don’t seem to give enough. For starters, it’s easy to be wrong—as we discovered in 2014, when we published a piece on the most and least generous people in tech. Google co-founder Larry Page was one of the billionaires on our miserly list, but we missed the full story of his giving. It seemed to us that Page was playing a shell game—contributing chunks of wealth to a private family foundation which then evaded payout limits by making gifts to donor-advised funds. There was little public record of Page making many donations to support actual charitable work even as he sheltered hundreds of millions of dollars from taxes.

In fact, though, we didn’t have a clue what was happening to the funds that Page’s foundation was giving to DAFs. Maybe Page preferred to keep his giving anonymous and/or to outsource the work of making grants. Or maybe he was just stockpiling funds for the right moment. And, indeed, six months after we published our article on tech givers, Larry Page emerged as one of the top givers to combat the spreading Ebola crisis, committing $15 million the cause.

We haven’t heard much about Page’s philanthropy since. But as of the end of 2015, he had piled up more than $2 billion in his foundation—which made $95 million in gifts to DAFs that year. Those contributions could still be sitting in accounts at Schwab and Vanguard—or long ago forwarded to nonprofits saving lives. We don’t know. One thing is clear: Larry Page is never getting back any of the vast sums of money he’s now giving to his foundation and to DAFs. He may not be the most active tech philanthropist around, but—at the age of 44—he’s already among the most generous.

The moral of the story is that with so little transparency in the upper reaches of philanthropy, it’s difficult to say for sure what the wealthy are up to these days.

A second problem with philanthro-shaming is that it’s hard to know the circumstances or plans that surround large fortunes. Here and there, for example, we’ve pointed out that the Mars family has a seemingly abysmal record when it comes to giving. Despite having a combined net worth of some $80 billion, Mars philanthropy is extremely limited.

Yet it’s hard to know why that is—or what the future holds. When corporations are controlled by families, there can be tight restrictions in place to prevent heirs from selling equity and diluting control—and that’s even more likely to be the case with privately held companies like Mars, Inc. It could be that the Mars heirs are selfish and don’t care about anyone except themselves. Or it may legally be impossible for them to get their hands on significant amounts of cash to give away. We don’t know.

Some billionaires are intent on maintaining control of their fortunes today, but plan to give away everything later. Larry Ellison is a top example. He also made our list of “least generous” tech donors in 2014. Yet it turns out that Ellison long ago committed 95 percent of his Oracle fortune to philanthropy as part of his estate planning. So even though Ellison, one of the richest men in America, has seemingly given less for charity than to build various yachts and estates, nearly all his money will someday go into a foundation.

Which brings me to a third problem with philanthro-shaming: It’s hard for an outsider to say when the rich should give away their money, or at what pace. In speculating about why Bill and Melinda Gates keep so much money on the sidelines, I’ve suggested that they might not yet be confident that they’ve found the right solutions in which to invest greater sums—or feel that their foundation, which already spends $4 billion a year, can handle more money. Or maybe they’re waiting for Bill’s venture investments to mature—turning that $90 billion into $150 billion.

Remember, assets tend to appreciate over time—sometimes dramatically so. Which can mean that waiting until later makes good sense. Jeff Bezos had been under pressure to give more for years. But what’s the better scenario—Bezos giving away Amazon stock worth $600 a share? Or $1000 a share? Or $2000?

One last point: It’s not just billionaires who can give more. It’s many of us who aren’t in the 1 percent. I certainly could. But instead of giving every last spare cent I have for anti-malaria nets—with some estimates suggesting I can save one life for every $3,000 or so I give—I’d rather save more for retirement or vacation or whatever. Before criticizing others, even those with seemingly endless spare cash, we have to examine our own choices.

None of this is meant to let the wealthy off the hook. Ultimately, I agree with Peter Singer about the moral imperative of greater giving. And at Inside Philanthropy, we plan to keep up the pressure on the rich to give more. But we’ll also do so respectfully—in ways that acknowledge that everything is not always what it seems.

Even more importantly, we'll keep highlighting examples of wealthy people who do give and in ways that are making the world a better place.

more by David Callahan