Money talks: Why tuning into the Giving Pledge matters
As the saying goes, “Money talks,” and there’s no better example of this than the Giving Pledge and its effect on the social sector.
To date, 241 individuals with a cumulative net worth easily surpassing $1 trillion have made the pledge—a public commitment to give the majority of their fortunes to charity. That’s potentially a lot of philanthropy.
Whether these megadonors are on your radar, their voices are shaping broader conversations in the philanthropic sector about what and who gets funded, as well as how that funding materializes.
Influential Pledgers’ philanthropic approaches
The Giving Pledge was formed in 2010 by Bill Gates, Melinda French Gates, and Warren Buffett to encourage the super-rich to publicly elevate and accelerate their giving. Pledgers have convened in past years to informally share perspectives on how best to leverage their philanthropy, but from the outset—and by design—the pledge is only a general affirmation with no rules, no timetables, and no specific expectations.
The Giving Pledge provides a starting point for pledgers to express their worldviews, philanthropic priorities, and styles of giving. Pledgers are as varied as the sources of their immense wealth, and it’s no surprise to find that personal interests and passions drive their giving. In that sense, they’re just like the rest of us. However, their philanthropic gestures are executed with millions, if not billions, of dollars that move global markets and spur governments to action.
Case in point: Through the Gates Foundation, Bill and Melinda Gates have such outsized effect on philanthropy in the U.S. and around the world—be it through their investments in gender equality, the capacity to convene collaborators to streamline development financing for low- and middle-income countries, or the ability to make billion-dollar, long-term commitments in Africa. Moreover, when their foundation announced a dramatic increase in annual spending, it made national news.
They are not the only pledgers with the capacity to set public priorities. When Michael Bloomberg, through Bloomberg Philanthropies, committed $420 million to reduce tobacco use, it changed the landscape of what is possible for advocates and organizations working in that space– from education initiatives to legislation to taxes. When Jim and Marilyn Simons’ family foundation committed $500 million to Stonybrook University, they effectively transformed the trajectory not only of the school but also of the community and region it serves.
Impacts on funding transparency and accessibility
When it comes to the transparency of pledgers’ philanthropy, it’s important to consider the ways pledgers formalize their giving outside of foundations. For example, some prefer personal giving or directing their philanthropy through limited liability companies (LLCs).
LLCs do not get the benefit of tax-advantaged contributions. However, there are also no limits on how an LLCs’ dollars can be spent or public disclosure requirements, like those expected of nonprofits under the Internal Revenue Code. Examples of this include Pierre and Pam Omidyar’s Omidyar Network, described as a “philanthropic investment firm,” and Mark Zuckerberg and Priscilla Chan’s Chan-Zuckerberg Initiative. Most recently, MacKenzie Scott, whose unprecedented giving of a reported $5.82 billion in 2022, now channels her philanthropy through Yield Giving, an LLC, which announced an open call in March of 2023 to distribute an additional $250 million.
Other pledgers are using the rising popularity of donor-advised funds (DAFs) to formalize their giving. These tax-advantaged funds are held in trust by a nonprofit third party, which in turn distributes those dollars at the donor’s direction. For example, pledgers Mark Zuckerberg and Priscilla Chan have taken advantage of DAFs, helping make Silicon Valley Community Foundation one of the 10 largest foundations in the U.S.
Like LLCs, gifts distributed via DAFs do not have to be publicly disclosed. As a result, managed funders, such as National Philanthropic Trust, Fidelity Charitable, Schwab Charitable, are not only annually responsible for directing tens of billions of dollars in funding that is largely inaccessible to the typical nonprofit. The volume and relative opacity of their giving also warps the practice of how nonprofits operate and how and from whom they seek funding.
Giving Pledgers are just like other funders. Some are intentionally transparent, while others are less so. Some fund causes for which they care deeply; others, however generous, are also looking to avoid taxes. And while many or only a few may ever live up to their pledge, making their philanthropy a bit more public and accessible benefits the sector.
What this means for today’s social sector
The ability of Giving Pledgers as well as non-pledgers—like those represented in the 25 biggest givers of 2022—to pick winners and create competition for funding comes just as the social sector has begun the long and necessary march toward equity and access. Pledger MacKenzie Scott’s focus on those very issues is both an affirmation that underrepresented communities have been systematically at a disadvantage in fundraising and a sign of how substantial the influence of these individuals’ philanthropy can be.
As pledgers and non-pledgers alike use their enormous wealth to drive the larger conversations on issues, such as racial equity, education, gun violence, among many others, that outsized influence means that they are shaping the landscape for the rest of the sector, creating opportunities for specific solutions, and intentionally or not, crowding out other voices.
Deep pocketed and media savvy, these high-net-worth-individuals continue to affect how grantseekers access funding and fuel their efforts to make the world a better place. That may put the typical nonprofit or smaller family foundation at a disadvantage.
But that doesn’t mean that this ocean of philanthropic dollars should be ignored. The more nonprofits, large and small, stay attuned to the Giving Pledge—and broadly the philanthropy of high-net-worth individuals—the more effective and better positioned they will be to achieve their missions in a challenging and changing world.