A Window into the Hearts and Minds of Billionaire Donors

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Yves here. It is disappointing but far from surprising that this piece on billionaire giving has all the objectivity of an authorized biography. First, there’s no consideration of self interest beyond image burnishing and ego gratification. But one of the world’s most famous donors seeks explicit commercial quid pro quos from some of his potential recipients (I have this from an impeccable source but have been sworn to secrecy on the details). The article does at the end ‘fess up that some donors admit to wanting to remake the world along their preferred lines, but curiously does not consider that other may believe that being so open about their ambitions could undermine their efforts.

One must note that billionaires are keen to keep their wealth-sharing to voluntary efforts, as opposed to, say, supporting extremely high estate taxes beyond a threshold.

By Hans Peter Schmitz, Associate Professor, University of San Diego. Originally published at The Conversation

As the COVID-19 pandemic’s economic toll increases, many billionaires and their foundations are making very public efforts to pitch in.

This push to give money to support everything from food banksto vaccine research comes a decade after the Giving Pledge, a voluntary effort to give away at least half of an immense fortune during the signatory’s lifetime, first launched.

When signatories join the Giving Pledge, they can voluntarily submit a letter explaining their commitment to philanthropy that’s posted on the internet. Together with my colleagues and fellow philanthropy scholars Elena McCollim and George E. Mitchell, I analyzed these letters to better understand how billionaires make sense of their generosity.

10 Years Old

Following the Great Recession, Microsoft co-founder Bill Gates and his wife Melinda Gates teamed up with investor Warren Buffett and a few of their wealthy friends to hatch this plan to increase giving among billionaires.

By March 2020, 120 couples, 78 single men and 11 single women had signed on. The members of the Giving Pledge represent about 10% of the more than 2,000 known billionaires in the world. To be eligible to join, an individual or a couple must have a combined net worth of US$1 billion, including assets they already donated.

Five of the 10 richest men in the United States have joined the Giving Pledge. Besides Gates and Buffett, that includes Facebook co-founder Mark Zuckerberg, Oracle co-founder Larry Ellison and the entrepreneur and politician Michael Bloomberg. Taken together, the current combined wealth of those five fortunesadds up to about $385 billion. The total wealth of everyone who signed the pledge in its first decade was at least an estimated $1.14 trillion as of the end of 2019, according to Forbes Magazine.

Insight into How the Wealthy Explain Their Giving

The letters are typically fairly short and addressed to Buffett or Gates. Many describe why the donors engage in philanthropy and identify a few favorite causes. We found that 187 of the 209 signatories have submitted them.

You cannot assume that the letters contain the true motives for making this pledge, but these missives do open a window into why these billionaires believe they should give away so much of their wealth. None referred to a desire to become more famous, for example, or openly acknowledged any sense of guilt. Yet those feelings might contribute to the personal motivation these rich people have to join the Giving Pledge.

In reviewing the letters, we found 10 distinct explanations for giving. The top five appeared in at least 20% of the letters, while the remaining five were in 10% or fewer.

A desire to be seen as grateful and altruistic dominated many of these accounts, with more than a third describing a drive to make a difference.

“Helping disadvantaged groups live decent lives in the process of creating wealth has been my personal credo,” wrote Dong Fangjun, a Chinese investor who now funds efforts to clean up China’s polluted countryside.

The second most common reason was a desire to give back.

“I have so much gratitude for being a woman in America,” wrote Sara Blakely, the founder of the Spanx undergarment company and a supporter of several women’s causes. “I never lose sight that I was born in the right country, at the right time.”

The letters also highlighted the joy of giving.

“I get tremendous pleasure from helping others,” wrote Bill Ackman, an investor and hedge fund manager who funds a wide range of arts, social justice and other kinds of nonprofits. “It’s what makes my life worth living.”

The life lessons taught by parents were another common reason these major donors say they became interested in giving.

“From as far back as I can remember, my parents taught me the importance of giving back, whether we had a little or a lot,” wrote Jim Pattison, a Canadian businessman who supports a wide range of nonprofits, including hospitals.

‘Noblesse Oblige’ and Other Less Common Motives

Many of the letters conveyed a sense of “noblesse oblige,” a French term for the idea that being wealthy creates a duty to give.

“I strongly believe that those of us, who are privileged to have wealth, should contribute significantly to try and create a better world for the millions who are far less privileged,” wrote Azim Premji, a tech industry leader who has become India’s biggest philanthropist.

Among the five least common explanations our team identified were references to principles of justice, concerns about the downside of immense inheritances, having no other use for vast wealth, religious beliefs and a sense that luck played a big role in becoming rich.

Some of the younger donors described themselves as being only stewards of their wealth. In this view, principles of justice and equality demand that the wealthy share generously.

For example, Jeff Lawson, a co-founder of LinkedIn, and his wife Erica Lawson included a quote by Bryan Stevenson, the founder of the Equal Justice Initiative: “The opposite of poverty is not wealth; the opposite of poverty is justice.”

About a tenth of the letters cited concerns over the possible harm a large inheritance could do to their own kids and grandchildren.

“We all know second- and third-generation wealth where the recipients were actually born on third base but think and act like they hit a triple,” wrote John W. “Jay” Jordan II, an American investor with three children and two stepchildren and one of the biggest donors ever to the University of Notre Dame, his alma mater.

Some pledgers said they see nothing better to do with their excessive wealth. The late real estate investors Herb and Marion Sandler, whose fortune launched the investigative news outlet Pro Publica, put it this way: “How many residences, automobiles, airplanes and other luxury items can one acquire and use?”

Religion and spirituality play a surprisingly minor role, with some exceptions.

“We were both raised in the Church, and a key theme of the Bible is the importance, the necessity, of giving,” explained Paul Tudor Jones, a hedge fund manager, and his wife Sonia Jones. The couple has made education and inequality high priorities in their giving.

Finally, a few of these big donors attributed their eagerness to give away much of their money to being aware of their good fortune. “To be repeatedly in the right place at the right time, that is the mother of all luck,” wrote Mo Ibrahim, the Sudanese telecommunications entrepreneur who invests in improving African leadership and governance.

Out To Change the World

But what sets these donors truly apart from the rest of us is what we philanthropy scholars call “hyperagency” – the desire to singlehandedly change the world in accordance with their ideas and dreams.

For example, Patrick Soon-Shiong, the surgeon and entrepreneur who owns the Los Angeles Times, the San Diego Union-Tribune and the Los Angeles Lakers, and his wife Michele B. Chan, made an ambitious statement in their letter: “Our passion, our mission is to transform health and health care, in America and beyond.”

In other words, Giving Pledge letters harbor contradictions with their messages about both ambition and humility. Many of the wealthy people who embraced this campaign have seen themselves as uniquely capable of changing the world. At the same time, they would like others to see them as modest, grateful and selfless.

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44 comments

  1. Sound of the Suburbs

    Jane Mayer “Dark Money”.
    They have also been giving their money to causes that directly benefit them.

    Fossil fuel business interests knew that climate change measures would cost money and reduce profit.
    They could control politicians with campaign contributions and almost no Republican politicians recognise man made climate change. (It’s not just Trump, contrary to popular belief.)
    Now for the public.
    Business interests pay right wing think tanks to produce studies showing man made climate change is a myth.
    They look convincing.
    You should see how much they paid for them.

    I wondered what those right wing think tanks did all day.
    That explains it.

    Reply
    1. Adam Eran

      Also germane: Nancy MacClean’s Democracy in Chains which describes the Kochs’ quest for intellectual respectability, reviving pre-civil-war arguments in favor of property (and, co-incidentally, slavery)…endowing chairs in economic departments to employ the likes of James Buchanan (who also got the ‘Nobel’ in economics!). Buchanan authored “Public Choice Theory” that justifies things like school vouchers since all things publicly-run inevitably turn corrupt and toxic.

      Any sane society wants to have an educated cohort to run things, and subsidizes education to make that happen. Federal funding for higher education has declined 55% since 1972. State funding has declined even more (37% in just the last decade for Oklahoma). So now, the resulting high tuition is an extremely important part of university funding. This also leads to grade inflation since professors know flunking the incompetent might impair their institution’s financial viability.

      So…what we get is the dominance of the certificated, denial rather than unbiased information, and people writing cynical comments in NC. [sigh!] It’s a train wreck just waiting to happen.

      Reply
      1. Susan the other

        Not at all. What NC has repeatedly taught us is that neoliberal capitalism with all the trappings of the non-existent free market mirage has come to a dead end. Even the “billionaires” know this. It’s just basic human instinct.

        Reply
  2. Charles 2

    You forget the main driver of charitable giving, which is greasing the wheel of political corruption, through campaign finance and, even more efficient, through funding lucrative sinecures for those retired Politicians who served the cause well (Apparently a suitable time lag between “quid” and “quo” is enough to make the “pro” disappear…)

    Reply
    1. Yves Smith Post author

      Political giving is not charitable giving. Political donations are all about promoting favorite candidates and interests, and accordingly are not tax deductible and are also (if not via a PAC) subject to disclosure.

      And please cite examples of ex pols sitting on the boards of foundations under the control of a single billionaire where they are paid enough to made a difference. This isn’t the way the grift normally runs. It’s corporate boards and speaking gigs.

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      1. Adam Eran

        Reportedly Karl Rove managed to get his Crossroads PACs 501c3 or 4 status, so their political machinations are funded by tax-exempt donations. …and you’re right about the rewards that await our class of Judases after they’ve committed their various betrayals.

        Meanwhile the NY Times reports that the Kochs spent $889 million to influence the 2016 elections. Maybe they are not the sole billionaires directing that spending, but they have cleverly provided a soup-to-nuts organization to disburse that money. It’s hard for me to believe they’re not steering donations in one way or another.

        In a conversation with a conservative, I heard the excuse that Kochs were just defending themselves against the likes of George Soros. Never mind that Soros is a capitalist’s capitalist (a currency speculator!), and really no lefty, his political spending in 2016 was about 3% of the Kochs’ organization ($27 million).

        Reply
        1. Susan the other

          Well, there is the newly formed Quincy Institute set up by both the Kochs and Soros. They tried to gain some respectability by giving Bacevich the CEO position and posting his editorials – which are always antiwar in some aspect. Who wouldn’t? It sounds remarkable progressive and peaceful; “liberal”. It will never mention how very illiberal the distribution of wealth, money, goods, etc. in the world has become and will continue to become. The main objective of this “think tank” is preventing war. Maybe pre-empting war by other means. To preserve the relentless churn of neoliberal capitalism. And their financialized world of fees and interest rates and playing the spread the world around. They think it’s a good thing. I don’t. I think the only way out of this is nationalism which is cooperative with other nations.

          Reply
  3. griffen

    Ah the Sandlers. Sold GDW to management idiots at Wachovia. Hilarity ensues.

    Making a distinction between a good faith effort to give back or a good faith effort to avoid very large tax consequences can be a difficult task. Cant help but be a little cynical.

    Reply
    1. Off The Street

      There are rumblings about how much, and in which ways, those tax avoidance elements come into play. Did the spirit of the giving translate into the letter, or just result in dressing up the documents for private benefit and public display?

      Reply
  4. Alice X

    Anand Giridharadas in Winners Take All has a good take on the fat cats benevolence. In my world they would not even exist.

    Reply
  5. fresno dan

    https://www.vox.com/future-perfect/2018/12/11/18129580/gates-donations-charity-billionaire-philanthropy

    Bill Gates is committed to giving away his fortune — but he keeps getting richer
    Gates is now worth $100 billion. Why is it so hard to give money away?
    ….
    In December, writing for Inside Philanthropy, David Callahan looked at the numbers and pointed out that across the board, the wealthiest people in the world are sitting on $4 trillion, and accumulating money much faster than they give it away.
    ============================================================
    A cynical person (not MOI) might put forth the proposition that the charity is just a McGuffin* to distract from the hovering up of all the money in the world by the rich. But that would be cynical.

    *In fiction, a MacGuffin is an object, device, or event that is necessary to the plot and the motivation of the characters, but insignificant, unimportant, or irrelevant in itself.
    Now, a cynical person’s definition (of course, NOT MOI) definition would be: Paltry charity to disguise, deflect, and obfuscate the greed, avarice, and rapaciousness of the “philanthropist”

    Reply
    1. Colonel Smithers

      Thank you.

      Does Gates give his money away? Much of the British and some of the French aid budgets are allocated to the Gates and Clinton foundations for them to either disburse according to a mandate or as they see fit. Unitaid, the proceeds from French aviation taxes earmarked to fight AIDS in Africa, is spent by the Gates foundation.

      Reply
    2. The Rev Kev

      Billionaires want to give their money away? Then why did they agree to be given over $400 billion in the CARES Act and have their bad investments made whole by the Federal reserve and have their corporations bailed out by the Feds as well? Billionaires as a group have made out like bandits ever since the pandemic hit which you see reflected in the stock market. They could have taken a hit like everybody else in the country but instead got both parties to pass (which includes the progressives) everything that they could possible desire and more by unanimous consent.

      Reply
    3. The Historian

      Billionaires have PR people to tell them the right words to say. Sadly their behavior belies those words. I have a hard time thinking people who fight MC4A. and a livable minimum wage, and who are willing to gut companies for their own benefit, etc., have any compassion for the less fortunate.

      Reply
    4. Michael Fiorillo

      A lot of this faux-philanthropic (actually, malanthropic is a preferable term) giving is just a taxpayer-subsidized version of pursuing your own class interests: Paul Tudor Jones’ interest in “education” involves charter schools and “re-structured” public schools.

      Journalists who uncritically pass along press releases touting the establishment of a private empire for racist, anti-worker, monsters like Eva Moskowitz and her Success Academies are engaging in propaganda and malpractice.

      If these people were serious about justice and inequality, they’d insist on their captive legislators implementing capital controls, huge increases in capital gains taxes (especially for short term investments) and increases in the estate tax.

      Until they do something along those lines, I wouldn’t p*#& on them if their hearts were on fire.

      Reply
    5. Big Tap

      Bill Gates is big on charter schools. He also funds the WHO. The tax laws are set up to benefit people like Gates. If he wants to give away his fortune how about raising his taxes.

      Also the MacGuffin was one of Alfred Hitchcocks favorite devices. The MacGuffin carried the story along on the surface while the suspense beneath carried the plot. It was mainly just a misdirection. It kept the movie going forward. The term itself was coined by a screenwriter Hitchcock worked with.

      Reply
    6. fresno dan

      And what is amazing is that despite how knowledgeable, accomplished, and hard working the billionaires are, they just can’t seem to master the techniques of wealth reduction. Apparently, considering how none of them are able to do it, it must be the most difficult problem in finance…

      Reply
    7. Susan the other

      The “billionaire’s” petty cash is probably the best explanation for why there is a shortage of toilet paper.

      Reply
  6. a different chris

    > a sense of “noblesse oblige,”

    I don’t know no French, but isn’t the root “noble” not “wealthy”… that is, they think they are better than us?

    Reply
    1. apleb

      The word noble means high-born, of rank or notable. Wealth is indirectly implied through these but not the primary meaning.
      They are better than us due to their rank, not their high birth.

      Reply
  7. lyman alpha blob

    They’re going to change the world are they? I’m reminded again of an article on the failings of philanthropy that I read years ago where Warren Buffet’s son, who heads his philanthropic efforts, admitting to becoming disillusioned when in a roomful of wealthy donors he realized that the problems the rich people in one half of the room wanted to solve were created by all the rich people in the other half.

    Reply
  8. The Historian

    What these billionaires are giving away are pledges, i.e., promises – not real money. From what I can gather, the billionaires give away less than 3-4% of their yearly earnings to charity in real money, and we don’t even know if those numbers are valid since reporters on both sides have their own axes to grind.

    I used to do the telethons for the United Way and the one thing I know for sure is that it is easy to get pledges but it is a lot harder to collect on them and I think that will be the case with the billionaires. When they die, I am absolutely sure that their heirs will fight tooth and nail to keep that pledged money in the family.

    Reply
  9. rob

    The rich NOT giving away their fortunes… but pretending to has been the thing for a long time now. for tax purposes…
    Tax exempt foundations… since carnegie,ford and rockefeller and the rest… of the robber barrons.. taking examples from the peabody’s before them.. All rolling up to sheltering money.. and using it to fund symbiotic relationships to their benefit… while taking the public eyes from their doings.
    Look at Rene Wormser,
    published a book back in the fifties.
    Foundations:their power and influence
    https://www.amazon.com/Foundations-Their-Influence-Rene-Wormser/dp/0925591289
    (not a plug for amazon… their link just came up first)
    wormser was on the committee in congress looking at how foundations used their power… from back in the cold war days.. so they were looking for commies.. look at the wikipedia page for the. reece committe, in which came the “dodd report” father of the last connecticut dodd.. and institutute of pacific relations..
    So nothing new here… but it should be taught how the wealthy hide in plain sight.

    Reply
  10. Oh

    Instead of avoiding evading taxes to accumulate wealth part of which is given away to grab headlines, it would be better for “noblesse” to pay the taxes in the first place so it would help in the general welfare of all people. It appears to me that many of Bill Gates “noble” projects started by his foundation help to make more money to boost the value of Bill and Melinda’s wealth through increase in the value of Microsoft stock.
    Warren Buffett is quoted as saying that his secretary pays more taxes than he does. What if he gave her a huge raise to reverse the situation? What if he stopped bilking people through his insurance holdings?

    Reply
  11. chuck roast

    Yes, it was reported today that Michael Jordan and “the Jordan Brand” is giving $100M to causes promoting racial justice and equality. This from a man who famously said, “White people buy shoes too.” I’m guessing that he finally realized that very few of the brothers would be playing golf with him if he didn’t finally get on the bus. Virtue signaling at its finest.

    Reply
    1. SouthSideGT

      IMHO, given MJ’s competition issues, he no doubt wants to beat current NBA players at SOMETHING even it is charity. And I agree it’s good for the “Jordan Brand” like “The Last Dance” was (although TLD unsurprisingly failed to mention activist/player Craig Hodges).

      Reply
    2. JTMcPhee

      $100 million OVER TEN YEARS. It helps to read the fine print. $10 million, paid over to who, exactly?

      “ Jordan Brand had its first-ever billion-dollar quarter last December. Nike stock closed the week at $102.71 per share. ”

      Reply
    3. juno mas

      Jordan purportedly said, “Republicans buy shoes (sneakers), too.”

      The veracity of whether he did or did not say it in jest is discussed here:
      https://slate.com/culture/2016/07/did-michael-jordan-really-say-republicans-buy-sneakers-too.html

      MJ lived in a very different time than what we see today. Like Tiger Woods, he’s not a political activist. (Personally, many people speak about political issues on which they are only mildly informed; MJ has often said he’s not expert on the details.) Colin Kaepernik is informed AND a leader. Look what it got him. (A belated mea culpa from the NFL.)

      Reply
      1. Michael Fiorillo

        The key detail/context about that line, apocryphal or not, is that it was reported during the US Senate campaign in which Harvey Gantt, a politically-moderate African American, was trying to defeat uber racist Jesse Helms in 1990.

        Whether or not he actually uttered those words, it’s an inarguable fact that, though widely urged to endorse Gantt, Jordan remained silent, and Helms won re-election.

        Reply
        1. juno mas

          It seems to me both the quote and the date of it’s occurrence is vague or unknown. I don’t recall MJ endorsing any candidate anywhere, anytime. That is my point. He is decidedly, politically averse. Just like Tiger Woods. Colin Kaeperncik, however, shows more political awareness and leadership. Got himself black-balled from the NFL. It takes enormous courage/aggravation for a Black person to challenge white society.

          Reply
  12. tegnost

    MJ has a net worth of 2 billion. I’d say on percentage terms that ranks his donation pretty high. I seriously doubt Jordan has a problem filling out his foursome. As I’ve stated before I listen to the sports radio for a lack of any other decent option (I mean I like 70’s 80’s music , but…maybe something newer but how could a platform make money on that, you’d have to fund new artists, nagahappen, the state of musical artistry as a lucrative profession is on the skids and that’s where the rest of the economy is headed, too…). The racial issues IMO have been covered spectacularly on sports radio, and I applaud MJ for stepping up with a meaningful amount of cash, of course now there needs to be a process for allocating the giving which is another can of worms…
    100mil of 2 bil is x to 100 bil?
    And Jordan, whatever else you might say about him, didn’t pay off the refs to look the other way while he was working.

    Reply
  13. Synoia

    Taxes become actions done by the the state – that is the tax money is delivered by the state and theoretically governed by the will of the voters.

    The billionaires want the recognition, or grovelling, and consequent control that comes as an integral part of their so called philanthropy. I wonder if they would pay more if it was delivered through taxes.

    A set of robber barons and monopolists who actually believe in the Public Good? Pull the other leg, it’s got bells on it.

    Reply
    1. Cas

      Wonder no more: the answer is “yes”. According to David Cay Johnson’s Perfectly Legal,(subtitle: the covert campaign to rig our tax system to benefit the super rich and cheat everybody else) the billionaires’ charitable trusts are a scam to avoid paying taxes. The book is from 2003, so I’m sure additional ways to avoid paying taxes have been added to the tax code since then.

      Reply
      1. Aloha

        Perhaps the billionaires are worried that the hungry mob is going to demand that they start paying state and gov taxes again! They seem to be throwing bread crumbs to the crowds in hopes of appeasing them. Is the gig up?

        Reply
  14. T

    Remember when Ted Turner went out making public statements about billionaires (and Madonna, because this was some time ago) who didn’t so much as buy Girl Scout Cookies?

    Reply
  15. Alex Cox

    Does a surgeon and entrepreneur really own the LA Times? According to Ted Rall, a cartoonist fired by the Times for offending the cops, the LAPD pension fund is the Times’ biggest shareholder.

    Reply
  16. Chauncey Gardiner

    These are generally very smart, very secretive, albeit often very public people in terms of an engineered media narrative. They have created, contributed to, and are defending a system from which they have benefited financially and in terms of personal power from their influence over the people and structures that govern much of humanity. They are unlikely to tell you the motivations behind their monetary transfers, or the true reasons for many of their philanthropic or funding efforts, particularly those that are intended to control or roll back government policies or laws that might reduce their personal wealth and power.

    Having said that, I appreciate their funding of public health, public education, infrastructure, environmental, public media, arts, and food and nutrition initiatives and organizations, although I also believe many of those should largely be the provenance and responsibility of sovereign currency issuers. The recent purchases and extensions of loans by the Federal Reserve of financial assets owned by these individuals in order to elevate and maintain market index valuations and asset prices needs to be further explained and publicly debated in terms of public policy desirability, as well as audited by the GAO in view of the trillions of dollars of public money involved and weighed against competing uses for those funds. Much of the funding for these Fed programs appears to be made outside the traditional purview of government and quietly being made by unelected officials.

    Reply
  17. smoker

    Sorry for not being original, but:

    behind every great fortune is an even greater crime

    One can’t ‘donate’ something that they ‘attained’ amorally/criminally in the first place to the same persons it was stolen from – but in a far, far, far lesser amount than what was stolen, and, at that, with hideous strings attached to the gift™ – and expect anything but well deserved contempt and outrage.

    Reply
  18. David in Santa Cruz

    1 percent of the U.S. population controls 40 percent of the wealth.

    The United States does not “need” one single billionaire, even if the good Jesuits at U of San Diego do love their “charity”/purchase of indulgences.

    If all Americans were housed, had unlimited access to physical and mental health care, were meaningfully employed, and could vote unimpeded by the limitations of a “two-party system,” our police could get back to keeping the streets safe for 75-year olds, instead of cracking their heads on the pavement.

    Billionaire = Violence

    Reply

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