I've been thinking about the "Giving Pledge," a campaign championed by Bill Gates and Warren Buffett. They're asking fellow members of the uber rich to pledge 50+ percent of their fortunes to charities--more money to philanthropy and less to family. Among the billionaires who have taken the "pledge" are Larry Ellison, Michael Bloomberg, Tom Monaghan, Oprah Winfrey, George Soros and other members from the who's who of wealth.
These pledges are extraordinary acts of generosity.
Nobody is forcing Warren Buffett to give away 99 percent of his fortune. Nobody is forcing forty or so families to take the pledge. You can read their rationales on the Giving Pledge Website--it's the kind of thinking that illustrates why they were able to build great fortunes in the first place.
But how will the Giving Pledge address our country's greatest needs?
Personally, I would be happy to rename the George Washington Bridge if somebody fixes the congestion between New York and New Jersey during rush hour. I doubt George would mind either. But to my knowledge, nobody is standing in line to donate a bridge at the cost of $6 or $7 billion.
Sometimes, governments write checks that no one else will. Is there a charity that underwrites police training? Or one that buys bullets for our soldiers in Iraq and Afghanistan? Or new computers for the Pentagon?
Outright gifts to a charity, no matter how well intentioned, may not pay for what we need most. And they definitely bite into the government's tax revenues.
Fortune Magazine estimated that $600 billion will flow to charities, if every member of the Forbes 400 takes the Pledge. That's a beautiful thing, right? But what about Uncle Sam and the US deficit? If estate taxes return to, say 40 percent, that $600 billion costs our government 240 billion in tax revenues--about 6.8 percent of total spending or 1.8 percent of our national debt.
Would you prefer someone to pay down $20 billion of the US debt or donate their fortune to the humane treatment of fire ants?
I know the preceding question sounds hyperbolic. And there are many reasons to wrest control from Uncle Sam for how money is spent. Some arguments include: "Government is inefficient." "The families earned the money--they should control the disposition." "Why should anybody be forced to flush money down a black hole?" "Gifts, from many different donors, will fund a broad range of social needs." I could go on. But I also remember how Leona Helmsley's last wishes raised eyebrows a few years back.
Philanthropy, like anything else, needs a game plan.
Perhaps the government should increase the tax advantages of giving to target areas like education, alternative energy or that new bridge I mentioned earlier. The tax incentives would encourage money to flow where we need it the most.
Or perhaps it would be simpler for the US government to campaign for its share of philanthropic contributions. Click here to reduce the US government debt.
What do you think?