The Spectator

How To Fix the Billionaires’ “Giving Pledge”

Show us the money—and put it to work now!

An angelic choir of media approbation has greeted Warren Buffett and Bill Gates’ “Giving Pledge.” The pledge they have set out to get the superrich of the nation to sign. The pledge where billionaires commit to give away the majority of their wealth to charity. Sometime. At some point, maybe after they’re dead and declining stock values and greedy heirs and legatees have taken their share.

Which is why, to make the “Giving Pledge” more than a vague promise to do good, billionaires should be asked to put an audited 50 percent of their net worth on the table for charitable use now, when it can make a difference to people starving today, not later, after they’ve worked up a heart attack from their third wife on their fourth yacht. Look at how the Forbes list changes, how many billionaires lose their fortunes and drop off it from year to year. Gates and Buffett are right to use the Forbes list as a symbolic target, but let’s get these big-talking “givers” to give now, when they’ve still got it.

I don’t want to be too cynical about billionaires right off the bat, but there’s a lot of wiggle room in that pledge. The text of the pledge obligates the pledger to give the majority of his wealth, a number that is not audited (and would obviously be minimized with taxes in mind, especially after death). In addition, the pledge just vaguely talks about giving, rather than specifying what it’s most important to give money to.

But hey, why be cynical? After all, we know from recent experience we can always trust billionaires not to hide their assets and to be extremely scrupulous about their disposition. Oh, and yes, the definition of “charity”: unspecified. (Would tips to struggling pole dancers count as anti-poverty work?)

There’s no doubt that the billionaires pledge is a beautiful idea, and Gates and Buffett deserve at least some of the sainthood the media has conferred on them. They’ve just announced they’ve already signed up 40 billionaires, including New York Mayor Michael Bloomberg, Star Wars’ George Lucas, and Oracle’s Larry Ellison. Even so, there has been little scrutiny amid the adulation of what the “Giving Pledge” really means. In fact, it may require more than warm and fuzzy words, gauzy and fluffy sentiments, to extract the cold hard cash.

There has been a lot of billionaire self-congratulation (Mayor Bloomberg, I’m looking at you), and Gates and Buffett themselves have already shown exemplary generosity. But it’s worth pressing the rest of the world’s billionaires, many of whom have declared that they already give munificently to their “private charitable trusts” (not exactly transparent institutions) and thus that they’ve basically pretty much fulfilled their pledge obligations already.

And I think I can speak for the rest of the world when I say: Dudes, the “pledge” is nice and all, but show us the money if you want the credit. And show it to us now, before you die, not in some distant future when a lot of poor and diseased people will themselves have died for lack of timely aid. 

And as self-appointed representative of the neediest potential beneficiaries of the “Giving Pledge,” the billion or so stricken with hunger, poverty, and disease in the world, I think I know a better way to save them sustainably than the well-meaning but nebulous Buffett-Gates plan.  A way that puts cash on the table and then gets it to the people and places that most need it most efficiently and synergistically. 

First though, for those of you not familiar with the Billionaire’s “Giving Pledge,” it was first unveiled June 16 in Fortune, supposedly dreamed up a year or so earlier. As Fortune put it:

Buffett and Gates and his wife, Melinda, set the goal: They are driving to get the super-rich, starting with the Forbes list of the 400 wealthiest Americans, to pledge—literally pledge—at least 50% of their net worth to charity during their lifetimes or at death.

I think everyone would feel more trusting about the pledge if the givers didn’t just pledge half their net worth but publicly named that net worth and allowed a Gates- and Buffett-appointed auditor to see if it was realistic. Otherwise, some people might want to inflate their worth for bragging purposes or deflate it for tax purposes. There’s an old New York street saying: “Money talks, bullshit walks.” Let’s see what the money says when it talks.

Furthermore, there’s a lot of incentive for them to spend what they have on luxuries and babes while there’s a breath left in their body. After they’re dead, why should they care how much is left behind and who gets it? They get the private islands and the flattering approbation of the world for their exemplary generosity. Then they die. 

It’s an indication that benevolent billionaires like Buffett and Gates can let their own lofty and idealistic visions obscure the dark, sordid underbelly of your average billionaire’s behavior. Do I need to repeat the line from Balzac? “Behind every great fortune there lies a great crime.”

And who’s going to say no to Buffett and Gates with their combined fortunes behind them, enough to intimidate even the most brazen 10-figure billionaire? What do they have to lose? It’s an incentive to spend everything they have when they’re alive and leave the rest for the lawyers to dole out to Buffett and Gates when they’re dead.

Besides, look at all the perks: All signatories will be invited to attend three or four dinners this fall, Buffett told the Wall Street Journal. Note the awesome “three or four” (italics mine). I bet the food is gonna be great!  I sure hope those famished billionaires get that fourth gratis dinner. Plus, I understand they all get to wear little halos made of pipe cleaners on their heads. No, really, I’m all for it and applaud it, I do!  I just think they haven’t figured out how to actually extract cash from these guys, cash that will go to the right places. Not some wing of an art gallery that gets named after them and allows them to hype the value of their collection.

Yes, I know, support for the arts is important, and the pledge as currently worded doesn’t specify where the money should go. But I propose that the “Giving Pledge” establish some priorities about what the most urgent needs for charitable giving are. The Bill and Melinda Gates Foundation, for instance, focuses on disease and poverty in the Third World. (They’ve almost entirely eradicated polio.) I would argue that saving starving and diseased children who need the help STAT is more important than adding another wing to the Guggenheim.

But consider the astonishing naivete of Buffett’s statement to the Wall Street Journal, which reported that “[t]he group won’t monitor whether the signatories meet their pledge commitments.”

“I think the chances of there being any significant slippage of that are virtually nil,” Buffett told the Journal.

Right, and why should we waste any money on that whole SEC enforcement bureaucracy? Just get the big shots of finance, those angelic billionaires, to sign a “pledge” to always be trustworthy. Bring the Boy Scout Oath back to Wall Street instead of all this legalistic stuff. We’re dealing with billionaires here; everyone knows they can be trusted. 

And let the billionaires decide what “the majority of their wealth” actually is. If the billionaires are serious about this, and they should be, since lives are at stake, I think we’d all feel better about it if they set up some kind of auditing system.

And might the whole Pollyanna project not backfire in an utterly counterproductive way? Doesn’t it say to the nonbillionaires of the world: Hey, don’t worry about charitable giving (or tax-funded government aid). Bill and Warren and their billionaire friends have got it all taken care of. Anything you give would be a drop in the bucket compared with the take from one of these “Giving Pledge” guys.

But I know how to fix the whole thing. It’s true I’m a little short of a billion myself, but I know how to turn this nebulous never-never-land pledge into something that will benefit the poor it’s designed to help now and actually save the billionaires half their fortune. Don’t thank me now, just read on.

I got the idea I’m about to present from one of the world’s leading developmental economists, Jeffrey Sachs. The Harvard-trained scholar is currently head of Columbia’s Earth Institute and was an influential shaper with Kofi Annan of the U.N.’s global campaign against hunger, poverty, and disease. Sachs was also the developer of the ambitious synergistic and sustainable Millennium Villages in Africa, which might be the solution to endemic poverty if they could ever get funded sufficiently.

Let me tell you the circumstances in which he disclosed the Sachs Plan, which has the teeth, the immediacy, that the Buffett-Gates plan currently lacks.

I had been doing a profile of Sachs for what turned out to be the last issue of Portfolio magazine. I had just returned from a trip to Tokyo with him where I’d seen him try to coordinate funding for an array of anti-poverty initiatives with the bureaucrats in Japan’s foreign ministry. All very polite, but—one sensed—not eager to give another yen when Japan was already one of the world’s leading givers and the rest of the world was not picking up the slack. There were some side comments over sashimi about how superwealthy China is still posing as a “developing country” to avoid having to give to charities for truly needy developing countries. It didn’t seem like anything was going to happen until Sachs made another circumnavigation or two of the giving centers of the globe to persuade the Japanese they weren’t being taken for suckers.

That’s what Sachs did with a good part of his time: circumnavigate the globe with a metaphorical begging bowl, trying to get governments, private individuals, NGOs, and the like to work together to address the most acute problem in the poverty realm: The so called  “bottom billion.” These are the billion or so poor souls who earn less than a dollar a day, and are so starved, disease ridden, resource-deprived, and plagued by civil war that they are caught in a “poverty trap”: too weakened by disease and malnutrition to sustain themselves long enough to escape from the trap without outside help. And not just any outside help but the synergistic combination of food, medication, improved seed stock, transport, and electricity that would allow them to produce goods, get them to market, and thus escape the poverty trap. That’s what Sachs Millennium Villages were supposed to do: not just parachute in food and medicine during famine but make communities famine-resistant, sustainable. These are the people most urgently, life-threateningly in need of the Buffett-Gates “Pledge” money.

Anyway, there came a point when I was sitting across a table from Sachs in the tastefully appointed townhouse Columbia University  had provided him with and he looked just profoundly weary, and, despite his relentless can-do attitude, a bit hopeless.

It was then he disclosed his Billionaire Begathon fantasy to me. Or that’s what I came to call it.

Sachs said he had just seen the new (2008) Forbes list of the world’s billionaires. There were going to be upward of 1,000 people on it with assets amounting to about $4.2 trillion.

What if, he said, those 1,000 billionaires decided they’d put half their assets in an interest-bearing trust. NOT (take note billionaires) give away a cent. The money would still be theirs. But they’d have to come up with it now. And let Sachs or some trustworthy trust have the interest on it.

If they allowed him to manage their money, he said, he could show them how they could end extreme poverty all by themselves without the rest of us lifting a finger.

“They wouldn’t have to give away a cent,” Sachs told me. “They could just put half their assets into an interest-bearing trust.” He’s done the math. “That would be $2.1 trillion, and 5 percent payment on that would be $105 billion a year. That would do the job. Actually, that would be quite good.”

“Are you serious?” I asked.

“I’m getting ready to go door-to-door,” he said, at least half-seriously. I liked the idea myself. After all, the free market hadn’t worked, socialism hadn’t worked. Sally Struthers hadn’t worked. Nothing else had worked.

Alas, this conversation took place shortly before the Crash of ‘08. Then the economy collapsed and the number of billionaires tumbled, and the last time I talked to Sachs he said even this final fantasy of poverty eradication would be unlikely to fund the goal of  making the bottom billion sustainable all at once. The ball was back in Sally Struthers’ court.

And now it’s back in Gates’ and Buffett’s. Three years have passed and a certain segment of the economy has experienced a recovery. According to Forbes2010 accounting of the world’s billionaires they’re coming back, even if we aren’t. It’s springtime for billionaires. At a press conference this year Steve Forbes said:

“The number of billionaires has gone from 793 last year to 1,011 this year, almost to where it was [in] the record level of 2008… The overall net worth of these billionaires is $3.6 trillion, up from $2.4 trillion just a year ago—a 50 percent increase.”

True, things aren’t quite back up to the $4.2 trillion Sachs had in mind when he first spoke of the fantasy, and interest rates are down. But I suspect that if we allow some semi-demi-hemi billionaires, you know, $500 million-plus types, into the super exclusive billionaire’s pledge club with the three or four dinners a year with Buffett and Gates, we could get the figure sufficiently inflated to get Sachs the cash he needs and allow him to direct it to the places it’s most needed in the ways that will be most effectual. Sure, it’s top down, but people are dying now in the bottom billion, so let’s not be so punctilious.

More than that, the “Giving Pledgers” would actually have to produce the cash, not just pledge half of some figure they wish they had. I bet we’d see the shakeout of a lot of fake billionaires, but there would also be a lot of others who stepped up, if we put the pressure on.

Those who don’t take the Pledge for the Gates/Buffett/Sachs/Rosenbaum plan (I know I contributed nothing but my name and this publicity) would be liable to find their yachts spray-painted with Big Golden “G“‘s for Greedhead. 

We wouldn’t give the holdouts a moment’s peace.

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