Last month, 40 U.S. billionaires, including Bill Gates and Warren Buffett made a pledge to give at least half of their net-worth to philanthropic causes. Collectively, the pledges could be worth $200 billion. This amount could be a significant impact on philanthropy and in addressing global and domestic issues in the U.S. However, we also know that donors are driven by their passions and interests and what they choose to support is inherently personal. Therefore, the funds could be dispersed in multiple issues and areas. But there may also be donors like Warren Buffett that decide to partner with other donors to leverage the impact of their philanthropic dollars.
The Brookings Institute looked at the published 35 letters and found that they mentioned at least one cause.
A quarter of the letters mention giving to international causes, ranging from nuclear non-proliferation and Middle East peace to combating climate change and disaster relief. Of the 35 letters, only six, approximately 17%, mention making direct contributions to global development issues such as health care, water, humanitarian aid or education. And while 17 letters - nearly 50 percent - specifically mention making philanthropic contributions to education, only two suggest a direct or implied reference to education in developing countries. Of those two, neither was directly pledging money to tackle issues of access and quality education in developing countries.
I think what most analyst forget is that a majority of the Giving Pledge donors have created or are in the process of creating a family foundations. Therefore, we will need to look beyond the letters and to the family foundations itself to understand the issues that are being supported. A look at past giving of each donor is also required.
In the U.S., family foundations are only required to give out 5% of their funds each year. This means that the funds could sit in the family foundation for years - even generations. While a majority of family foundations do give out more than the 5% requirement, many are having a hard time meeting this law because of the incredible amount they have to give out each year.
What this means for the community is that while the dollars are tremendous, there are many variables as to the impact of the pledge dollars, i.e., when and how the funds are used. People have to pass on, only 5% of funds flow out of the foundation, and when dollars are released, not everyone dollar will be strategically used.