FT : US Philanthropy
Monday, December 13, 2010
…..The billionaires of the world may be starting to realise that handing over untold wealth to their offspring may not be the best use of their fortunes, or indeed the best public relations strategy. So Bill Gates and Warren Buffett have found some success twisting the arms of the world’s most privileged rich: a further 16 billionaires this week pledged to give away at least half of their wealth, including Facebook founder and chief executive Mark Zuckerberg. In the Gates philosophy, expertise, the entrepreneurial skills that created these fortunes in the first place, is almost as important as the money. The Microsoft founder’s idea is to use the billionaires’ wealth and wisdom to address grand global problems. His own foundation makes a valiant effort.
But charities are beset by the same bureaucratic inertia, biases and flawed human decision-making as other large institutions. And the very wealthy do not always aim high; the Helmsley fortune of about $8bn was given over to a trust dedicated to the provision of care for dogs, while the Ikea billions are controlled by a foundation dedicated to promoting architectural innovation. Why give in to the plea of Messieurs Gates and Buffett to give so much away? Virtue is aided by tax benefits; the US government allows charitable donations to reduce taxable income by up to 50 per cent. The most telling assumption behind the pledge and its signatories is that their billions will endure long enough to join the philanthropic elite. Mr Zuckerberg’s wealth is based upon the putative value of Facebook, which remains private. When Ted Turner pledged $1bn to the UN in 1997, Forbes listed his net worth at $3.5bn. Last year he had a mere $1.9bn left. But money is absolute. Most of the elite can afford to give away half, because the half remaining is bigger than ever before.
Reference : The Financial Times, Dec 13, 2010