Philanthropic actions have been around for centuries. Dating back millenniums, the ancient Greeks had a system of charity to help the working poor because these people were essential to the economic vitality of the community.
The latest call for billionaires, having made billions through hard work by being savvy, perceptive, and shrewd, as well as being at the right place at the right time, is to pledge their wealth to charity instead of lining the coffers of their offspring or anyone in their family.
“The idea of passing wealth from generation to generation so that hundreds of your descendants can command the resources of other people simply because they came from the right womb flies in the face of a meritocratic society,” according to a quote by Warren Buffett in a 2009 Knowledge@Wharton report.
Calling on All Billionaires
The most recent call was made by the philanthropic campaign “Giving Pledge,” a brainchild of billionaires Bill and Melinda Gates and Warren Buffett, urging American billionaires to give to charity.
Giving Pledge does not ask donors to provide funds for any specific cause, but encourages those with more than they could ever spend to help make this world a better place to live. Every pledger decides how much and for what cause to give.
“The Giving Pledge is an effort to help address society’s most pressing problems by inviting the wealthiest American families and individuals to commit to giving more than half of their wealth to philanthropy or charitable causes either during their lifetime or after their death,” according to the Giving Pledge.
Although in its infancy, 40 of America’s richest people have pledged to donate the bulk of their wealth to charity, according to an August Giving Pledge statement.
Among the wealthy who have pledged a large portion of their wealth are well-known names, including Michael R. Bloomberg, Barron Hilton, Barry Diller, Diane von Furstenberg, David Rockefeller, and naturally the founders of Giving Pledge, Warren Buffett and Bill and Melinda Gates.
“There’s an old saying about farmers putting back in to the ground via fertilizer what they take out. So it is with money. The larger the estate, the more important it is to revitalize the soil,” billionaire Lorry I. Lokey said in a statement.
The Buffett Fortune
Among the biggest philanthropists is the famous investor Warren Buffett, according to the Chronicle of Philanthropy.
Buffett pledged 12 million of his Berkshire Hathaway Inc. shares to five charities in 2006, all to be distributed over a period of about 20 years, with a declining rate of 5 percent in the number of shares annually. Buffett is certain that the increase in share value will make up for the decrease in number of shares.
“I believe that you can reasonably expect the value of the Berkshire shares you will receive to increase, in an irregular manner, by an amount that more than compensates for the decline in the number of shares you will be receiving. Over time, the increase may be substantial,” Buffett said in letters announcing the charitable contributions.
The Bill and Melinda Gates Foundation, with 10 million shares or 83.2 percent of all Berkshire shares, received the bulk of all pledged shares. The Susan Thompson Buffett Foundation, named after Buffett’s wife, received 1 million shares, and each of his children’s charities, the Howard G. Buffett Foundation, the Sherwood Foundation, and the NoVo Foundation, received 350,000 shares apiece.
On Jan. 12, 1990, a Berkshire share was at $8,200. Since then, the stock has moved up steadily, reaching $122,300 by early this month.
The Rich Giving to the Poor
The Jewish people stressed “tzedakah,” which translates to charitable giving. Tzedakah calls for the rich to give to the poor with an open heart and for the poor to accept the gift without any strings attached.
“The economic implication is the redistribution of wealth so that everybody can become more prosperous and the quality of life can be improved for all, both rich and poor,” according to an article on the Learning to Give website.
Islam calls for alms, asking its wealthy practitioners to give away 2.5 percent of savings and 10 percent of one’s income.
Tariq H. Cheema, a doctor in Pakistan, set up the World Congress of Muslim Philanthropists (WCMP), which was created to link Muslim donors with philanthropic undertakings. According to media reports, Muslims give billions annually to charity.
“Driven by the compassion that is intrinsic in Islamic values, Muslims should reach out to the destitute and oppressed, irrespective of gender, ethnicity, or religious belief,” according to the WCMP philosophy.
Charitable Activities
Queen Elizabeth I of England was the first to legalize the charitable contribution of material goods in 1601, paving the way for tax deductions.
Confectioner Milton Hershey gave all of his wealth to the Hershey Trust in 1918, which stipulated that all needs of the Hershey Industrial School, a school for orphans, be covered. Today, the Hershey fortune remains healthy and covers all the costs of what he stipulated in his Deed of Trust.
Stanley F. and Fiona B. Druckenmiller headed “The Philanthropy 50: Americans Who Gave the Most in 2009” list, published on the Chronicle of Philanthropy website, with $705 million in donations. John M. Templeton gave $573 million and Bill and Melinda Gates gave $350 million.
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