Since June is the most popular month for the pledging of troths, it got me to thinking about The Giving Pledge, which is an organization of billionaires who pledge to give away 50% of their fortunes while they’re still alive.
I realized that I hadn’t really heard much about the Giving Pledge when it resurfaced in the news recently with MacKenzie Bezos’s sign-up. That could be because interest in the club seems to have waned a bit in the decade since Bill and Melinda Gates and Warren Buffet splashed out the announcement at its founding. 122 people signed on in the first four years, but only 68 have committed in the five years that have followed.
Fewer than one in six billionaires worldwide have signed on, according to a new article by Marc Gunther in a series about the Pledge in The Chronicle of Philanthropy and it’s hard to tell if the ones who have signed are actually following through on their promise. Gunther writes:
While no one questions the good intentions behind the Giving Pledge, the most frequently heard criticism is that no one holds the donors accountable. Indeed, it is not possible to do so since they need not publicly disclose their giving. While the Foundation Center (now called Candid after it merged with GuideStar) collects information about the pledgers, little is known about what difference their giving makes.
“You get the benefit of the publicity without the accountability,” says Benjamin Soskis, a historian of philanthropy.”
The initial goal of the Pledge was to encourage the world’s richest people to take action during their lifetimes on the world’s most intractable problems. The Chronicle’s series “takes a data-driven look at the progress that’s been made toward that goal. [Their] searchable interactive database provides eight years of data on how much 74 U.S. signatories have given to their foundations, along with other details.”
For Chronicle subscribers, it’s a rich resource for information on the inside world of the Giving Pledge, including analysis of pledgers’ giving interests and past philanthropy.
The Giving Pledge isn’t the only game in town, though, and it’s not even the largest club of philanthropic promisers.
The Founders Pledge
Eclipsing the Giving Pledge’s 204 members is the Founders Pledge, with over 1,500 signatories. Unlike the Giving Pledge, a donor doesn’t have to be a billionaire to be a member – just a founder or equity-holder of a company. And also unlike the Giving Pledge, the pledge is legally binding; everyone who has signed on will give at least 2% (and they say the average commitment is 7.5%) upon achieving a liquidity event for their company.
So let’s say you’re a young tech entrepreneur building a better mousetrap. You’ve gotten financial backing for your app, and market share for your company has skyrocketed. Three years ago when you were still eating ramen noodles, you decided to sign the Founders Pledge. So in six months, after your company goes public and your stock is worth $100 million, that’s when your pledge commitment goes into effect – a liquidity event that converts your pledge into commitment.
You can decide to set up a charitable machine like a foundation, donate it all in one fell swoop, or (very conveniently) set up a Donor Advised Fund (DAF) within the Founders Pledge infrastructure. They have a research department that can help advise you on the best charities to support based on your interests. And like the Giving Pledge, they have annual conferences and more frequent gatherings (dinners, seminars, mixers, etc.) where you can meet and talk about philanthropy and network with other pledgers.
Pledges aren’t just for individuals
Companies that want to get in on the act of giving now have a place to go, too. That pledge group, founded by Salesforce founder, chairman, and CEO Marc Benioff (himself a Giving Pledge signer) is called Pledge 1%.
Like the Giving Pledge, companies that sign up for Pledge 1% are on the honor system. They’re asked to give 1% of equity, time, product, or profit (or a combination of those donations) to charity. It’s especially attractive for companies whose (largely younger) workforce want to find meaningful employment – doing good while doing well.
More than 8,500 companies have signed up to Pledge 1% so far, largely in the tech industry.
So what does this mean for you and your nonprofit?
Well, it means that there is more emphasis within high net worth (HNW) circles (and HNW aspirants) on getting their philanthropy right, and there are entities springing up to help guide, advise, and encourage them in this endeavor. That’s only good news for the charitable sector.
However, even with all of these support-and-encouragement organizations, the dial hasn’t seen much movement. A 2018 report by the Bridgespan Group that focused on around 2,000 UHNW families with assets of over $500 million, showed that they donated about 1.2 percent of their assets to charity the year before.
At that rate, Giving Pledgers are amassing money far faster than they can give it away, if giving during their lifetime is the goal. If their plan is to bail out an entire struggling country in one fell swoop they may be all set, but if they truly want to give efficiently and effectively while they’re alive, it’s time to get a move-on, and we in the third sector need to figure out how to involve them meaningfully and inspire them to do so.
For further reading:
How tech founders are trying to disrupt — and replicate — the Giving Pledge by Theodore Schleifer. Vox, April 22, 2019.
Has the Giving Pledge Changed Giving? by Marc Gunther. Chronicle of Philanthropy, June 4, 2019.
Four Pathways to Greater Giving by Susan Wolf Ditkoff, Alison Powell, and Kyle Gardner. Bridgespan Group, November 23, 2018.
How to Unlock More Dollars From the Ultrawealthy for Social Change, by Susan Wolf Ditkoff and Alison Powell. Chronicle of Philanthropy, December 4, 2018.