Letting Go
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Letting Go

Graphics by Renee Shuey

Excerpt: The Legacy of the Giving Pledge

The secretive announcement shook up philanthropy. A dozen years later, we have to ask: was it for the better?

In May 2009, in the midst of the Great Recession, Bill Gates and Warren Buffett invited Oprah Winfrey, Michael Bloomberg and several dozen other wealthy peers to a private dinner in New York City for a frank talk about philanthropy and the role of the rich in society.

The world was in the middle of an upheaval. The global financial crisis was still in full swing, and just a few weeks earlier, Congress had passed a $787 billion stimulus bill that was already being criticized for not doing enough to address the growing threat of rising economic inequality.

The meeting was described by the press as “clandestine” and “unprecedented.” The point of the dinner, it soon emerged, was for Gates and Buffett to pitch a challenge to their peers: Join us in pledging to give half your fortune to charity during your lifetime.

This would be a major shift for the field of philanthropy. The old model, pioneered by barons like Dale Carnegie and John Rockefeller, involved setting up a charitable foundation near the end of your life; critics referred to this rather colorfully as the influence of “dead hands” over the affairs of future generations. Gates and Buffett were suggesting a more urgent and ambitious approach. They called their new commitment “the Giving Pledge.” The press dubbed it “giving while living.” Several dozen billionaires signed on to the pledge in the first year.

Everyone knows that the Giving Pledge fundamentally reshaped philanthropy, by bringing it front and center in the public conversation in a way it never had been before. But a dozen years later, it’s becoming apparent that this influx of philanthropic capital had both pros and cons for the state of the nonprofit sector.

What happened could have been predicted: as the rich started to give a greater total proportion of charitable dollars, they started to remake philanthropy in their own self-image, skewing it toward their interests and toward elite institutions. In 2018, the Chronicle of Philanthropy put out a study on the winners and losers in philanthropy in the decade following the Great Recession. They found that the organizations with the biggest increases in revenue were the so-called “eds and meds” — hospitals and universities like the Mayo Clinic and Harvard. These are the large institutions that have the resources to wine and dine high-dollar donors and the capacity to quickly take on grants in the millions of dollars as Giving Pledgers ramped up their new foundations.

The winners were the “eds and meds” — large institutions like hospitals and universities that have the resources to wine and dine high-dollar donors and the capacity to quickly take on grants in the millions of dollars as Giving Pledgers ramped up their new foundations.

The losers, meanwhile, were “blue-collar nonprofits” that rely on small-dollar and grassroots donations. The United Way and the American Cancer Society both lost nearly a third of their revenue since the introduction of the Giving Pledge. This trend inspired Vox’s Dylan Matthews to write a piece in 2015 titled, “For the love of God, rich people, stop giving Ivy League colleges money.”

Still, perhaps the biggest consequence of the Giving Pledge was how it has changed the business of grantmaking–by turning it into more of a business. The Pledge ushered in a new era of private-sector leaders who suddenly found themselves responsible for getting rid of tens or hundreds of millions of dollars in a fast and ethical way. They naturally took lessons from their former lives. Philanthropist Liesel Pritzker Simmons told us that many of her peers have taken the “move fast and break things” mentality they learned in Silicon Valley and applied it to their giving.

“Imagine you’re a tech CEO,” she says. “You grew your company to a global scale, and you’re a billionaire by the age of 40. Now you see your next job as saving the world. And you’re going to approach that new job in a very similar way to how you approached the old one.”

The Never-Ending Pledge

There’s a funny phenomenon with Giving Pledgers: They can’t seem to stop getting richer, no matter how hard they try.

The world’s richest people continue to see their net worth grow at a rapid pace, despite the increasing amounts that they give away. By all indications, the coronavirus pandemic exacerbated this trend. In the first four months of the pandemic, the top one hundred living Giving Pledgers saw their combined wealth increase by twenty-eight percent. In a September 2020 blog post, Anand Giridharadas calculated that if Jeff Bezos gave all eight hundred seventy-six thousand Amazon employees a $105,000 bonus, he’d be left with exactly as much money as he had at the start of the pandemic.

That means that philanthropy is only going to get bigger and more influential. In 2020, several major foundations took out bonds totaling $1 billion as the pandemic spread, signaling a new era of mega-giving by traditional conservative institutions. The impact investing market is expected to hit $1 trillion in assets under management in the next few years, and it could very well overtake philanthropic spending soon.

Philanthropy has changed dramatically in the past two decades, and it will change again; the only question is how. While there’s no doubt that a lot of good has come out of the era of billionaire philanthropy, it’s also clear that the direction of the social sector is become more and more top down; and that good intentions cannot make up for disproportionate power. As wealth continues to concentrate at the top, fewer and fewer people will decide the direction of our collective future.

Letting Go is written by Ben Wrobel and Meg Massey. You can read more excerpts, learn more about participatory funding, and order a copy of the book at lettinggobook.org. Click below to learn more.



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