Forbes has released its latest list of the 400 richest Americans—the famous Forbes 400. It takes $2.1 billion even to make this year’s list (up from $100 million when the list debuted in 1982) and the average net worth rose 3 percent from last year to $7.4 billion. What’s more, the aggregate wealth of these 400 souls increased 2 percent from last year to an astonishing $2.96 trillion.
Starting last year, Forbes now gives each billionaire a “philanthropy score.” Analyzing public filings, tax forms, press reports and other information, Forbes ranks the 400 richest Americans’ lifelong giving on a scale of one to five (five being the most philanthropic). The percentage of total wealth given away, number and total dollar amount of donations pledged, how personally they are involved in charitable giving, how quickly and effectively their foundations distribute donations, and whether or not they’ve signed the Giving Pledge all factor into the rankings.
Giving Patterns at the Tippy Top
While we don’t have full visibility into Forbes’ methodology (how it calculates and weighs specific variables), we can nevertheless cull some insights from the ratings about the state of philanthropy among the ultra-wealthy.
For starters, there are way more ones on the list than fives—a discouraging finding about America’s billionaire class, but hardly a surprise, given other research reporting the same thing. There are 27 fives on the list, or about 7 percent of the total. In contrast, 70 billionaires—or 18 percent—of the 400 were ranked as ones. (Another 40—amounting to 10 percent of the total list—is classified as “N/A” because Forbes either couldn’t verify their exact giving, or, as in the case of Mackenzie Bezos, they’ve been on the list for too short a period of time.)
Another takeaway—which again, is no great surprise—is that older billionaires are more likely to have engaged in large-scale philanthropy. The fives on the list tend to skew much older in age. In fact, the only fives under 50 are Mark Zuckerberg, Dustin Moskovitz, Jan Koum and John Arnold. And there are plenty of septuagenarians and octogenarians on the list of fives, as well as a few nonagenarians, or 90+ year-olds (had to look that one up).
In contrast, there are many 30- and 40-somethings ranked as ones. The lack of major giving by these billionaires reflects a longstanding pattern in philanthropy, which is that younger business leaders tend to be deeply preoccupied with their work and are less likely to have either the interest or bandwidth to make a lot of big gifts. Newer billionaires are also less likely to be part of the civic networks that often draw business leaders into giving, especially at the local level. While some prominent young givers like Mark Zuckerberg have pushed their peers to give earlier, and we’re seeing more examples of wealthy entrepreneurs doing exactly that, Forbes’ data reveals the limits of these appeals.
Tech and Finance in the Lead
Beyond age, another factor correlated with giving is how billionaires have made their wealth. Over two-thirds of the fives on the list are from the worlds of tech and finance. These are the two industries that produce the most billionaires, so it makes sense to see them overrepresented in the major donor pool. But something else is likely going on.
As we’ve reported, both these industries have relatively strong cultures of philanthropy. In the tech world, some of Silicon Valley’s most prominent winners over the past half-century have turned to large-scale philanthropy, setting an example for their peers and shaping expectations. Top tech givers include a who’s who of industry leaders, starting with early computer pioneers Bill Hewlett and David Packard, and continuing with Bill Gates, Gordon Moore, Pierre Omidyar, and—in the latest wave—Mark Zuckerberg, Sean Parker, Jan Kuom, and many others.
Meanwhile, despite the stereotype that finance is filled with greedheads, philanthropic currents also run deep in this industry. Since its founding in the late 1980s, the Robin Hood Foundation has attracted support from a long list of Wall Street winners and has served as a training ground for various major donors who’ve emerged from finance. Many of the most generous billionaires on the Forbes list from finance have been supporters of Robin Hood, including fives like Julian Robertson and Stanley Druckenmiller, and a slew of fours.
Who Are the Laggards?
It’s harder to generalize about the ones on the Forbes list. To be sure, there are a few tech and finance billionaires here—including, from Wall Street, the three Ziff brothers who increased their inheritance through a hedge fund, and from tech, the venture investor Jim Breyer. But the list’s ones otherwise hail from a grab bag of industries.
Notable laggards on the Forbes list include some of the nation’s richest people. These are folks who you’d think would be higher up on the scale, yet are classified as ones. They include eight-figure billionaires Rob Walton (of Walmart), Jacqueline Mars (of Mars candy), Rupert Murdoch (News Corp.) and John Menard Jr. (Menards home improvement). Each is at least 75 years old, and they have all been extremely wealthy for a very long time (in Walton’s and Mars’ cases, from birth). So why the sparse track record of giving?
Answers to that question might lie in this article, where we outlined 10 possible reasons why the ultra-wealthy don’t give as much as they should. Some of the points we made may pertain to those “laggards.” Walton and Mars, for example, have the majority of their wealth tied up in stock in companies their families are keen to control, which could make becoming a major donor tricky, to say the least. That said, with net worths of $51 billion and $30 billion, respectively, one would think they could each find a way to cut some large checks, were they so inclined. The fact that Jim Walton, Rob’s younger brother, is rated as a four on the list, and his sister, Alice, is a three, suggests that there are other factors at play.
In some cases, the low ratings received by Forbes billionaires are easy to explain. Airbnb founders Joe Gebbia, Brian Chesky and Nathan Blecharczyk are all twos, despite having signed the Giving Pledge—which makes sense, given that their company has yet to go public.
The Stubborn Stinginess of the Ultra-Wealthy
There has been a lot of debate recently about how to spur the ultra-wealthy to give more. According to Bridgespan, the richest Americans are only giving away 1.5 percent of their wealth annually—even as their fortunes grow at a much higher percentage each year. The ultra-wealthy keep getting wealthier, despite many pledging to give away half or most (or in some cases even all) of their wealth.
Unlocking donor wealth is an ongoing challenge in the world of philanthropy. And while Forbes’ Philanthropy Score is unlikely to change that, it’s a handy way to keep tabs on the generosity—or lack thereof—of the super rich. Now, we can see with our own eyes to what extent America’s most well off are giving back.
View the full Forbes 400 list here.