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The Gang of 40: How More Important Than Who

 

What do you think of the efforts of Bill and Melinda Gates and Warren Buffett to urge their fellow billionaires to donate more to charity? So far, about 40 billionaires have responded positively, and I’ve seen one estimate that the amount pledged so far is approximately $600 billion.

I had several reporters call me last week, and I told them that I think this campaign is a big plus for the nonprofit sector. First, it increases public attention of the vital work the nonprofit sector provides and the need for financial support. More media attention about the importance of giving to charity should help heighten people’s awareness about their own giving habits. Warren Buffett was quoted as saying, “At its core, the Giving Pledge is about asking wealthy families to have important conversations about their wealth and how it will be used.” Mayor Bloomberg said, “By giving, we inspire others to give of themselves, whether their money or their time.”

Second, although many of these signatories are already major philanthropists, this effort should result in more money going to charitable causes. That’s a good thing, too.

I wish more attention had been paid to giving wisely. The Bill & Melinda Gates Foundation has earned a well-deserved reputation for strategic thinking, deep due diligence, and careful monitoring of results and impact. When Warren Buffett announced several years ago that he was asking the Gates Foundation to manage his charitable giving, he said it was harder to give away money wisely with impact than to earn it. We haven’t heard much yet about making sure this increase in donations ends up sending more money to high-performing organizations that are carefully measuring what they do and how they do it. Maybe that will come later.

What type of activity the billionaires support isn’t as important to me as making sure the money is carefully spent and leveraged as much as possible. I hope we’ll see some instances of pooling of money to increase the impact even more. Some of the billionaires on the list are already major philanthropists and regularly make huge gifts to important institutions. Not every one likes that: Pablo Eisenberg commented in the Chronicle of Philanthropy, “Very wealthy individuals have [an] unbalanced record when it comes to philanthropy. They give their biggest donations almost exclusively to universities and colleges, hospitals and medical centers, and arts institutions. They rarely make large gifts to social-service groups, grass-roots organizations, or nonprofit groups that focus on the poor or minorities.”

Finally, Steven Pearlstein had a very thought-provoking column in last Friday’s Washington Post. He says the pledges remind him of the “hollowing out” of the middle class in America. He points out, “The latest data from the Congressional Budget Office show that in 2007, the top ‘quintile’—the 20 percent of the households at the top of the income ladder—took home 52 percent of the nation’s after-tax income, with the top 1 percent of households earning 17 percent. The Center on Budget and Policy Priorities calculates that from 1979 to 2007, the average after-tax, inflation-adjusted income of households in the middle of the ladder increased 25 percent; for the top 1 percent, it rose 281 percent.”

Pearlstein urges us to reconsider our public policies that help all Americans improve their economic status. “With its ‘giving pledge,’ the Gang of 40 has taken an important step in revitalizing America’s philanthropic institutions, but it will take much more to revive the virtuous cycle by which wealth begets opportunity which in turn begets more wealth. Whether at an individual company or in the country at large, it is the feeling that we are all in it together that creates the basis for a truly vibrant economy and just society. Trickle-down alone won’t cut it.”

Although I’m thrilled that the Giving Pledge has billionaires making strides towards significant philanthropy, I encourage these individuals—and all donors—to give wisely. Research and evaluate the organizations that support your beloved causes. Ask nonprofits about their performance and their results. Ultimately, make sure your dollars are making a real and sustained difference. It is this kind of due diligence that can ensure the billions being donated are maximizing impact.

Topics: Giving Wisely