Billionaires Can Save the World
Philip Kotler
Most people never met a billionaire.
I met someone who I thought was a billionaire, the late Jack Welch, former head of GE. We were both on a panel and we carried on an energetic conversation about capitalism. I found out later that he was only a multimillionaire, with a net worth of only $720 million.
Recently I did meet a billionaire. Not one of the Silicon Valley giants. A billionaire who is virtually unknown to everyone, even other billionaires.
In attending a recent party, I was impressed with one of the guests, a man in his mid-thirties. He talked about supporting environmental and social causes. I learned that he had inventions and patents of interest to Silicon Valley companies. He mentioned in passing that one of the high-tech companies recently bought his main company for $6 billion. He plans to give away a lot of his money as soon as he could find trustworthy causes. He is not interested in just sitting on his fortune and letting it grow. He doesn’t see accumulating more money as defining his life’s purpose or making him happier.
How Can an Ernest Billionaire Choose Worthy Social Causes?
I wondered how wealthy people decide on which social causes to support. They don’t respond to every cause that comes their way. Most proactively search for the best social causes to support.
Consider the case of MacKenzie Scott who divorced the multibillionaire Amazon founder Jeff Bezos in 2019. MacKenzie left this marriage with a fortune worth $37 billion. She chose to join the Giving Pledge organization (started by Bill Gates and Warren Buffett) and she committed to give at least half of her wealth to charity. She made an extremely large gift of $5.8 billion in 2020; and in 2021, she gave another $2.7 billion. By mid-December 2022, Scott had given $14 billion to over 1600 charitable organizations. Her gifts focused on racial equality, LGBTQ, democracy, climate change, Covid, and college grants. Her focus was on “identifying organizations with strong leadership teams and results, with special attention to those operating in communities facing high projected food insecurity, high measures of racial inequity, high local poverty rates, and low access to philanthropic capital.”
I was curious how Melinda French Gates used the money she received in her 2021 divorce from Bill Gates. I was shocked to learn that Melinda only received $2 billion as a settlement. My guess is that Melinda chose to leave Bill with virtually all his billions because Bill would continue the Gates Foundation and put money into improving the world.
An Austrian woman, Marlene Engelhon, received an inheritance of $27 million from her family. She chose to send emails to approximately 10,000 randomly selected Austrians and she ended up choosing 50 people who represented Austria’s demographic makeup in terms of gender, ethnicity and income. The 50 chosen persons formed the Good Council for Redistribution and they ended up choosing 77 social organizations to invest in. Instead of Marlene Engelhon deciding who should be gifted, she left it to a group of 50 Austrian citizens to decide who should get the money. The chosen social causes included nature conservation, aid to homeless people, climate charities, a left wing think tank and religious organizations. Marlene Engelhorn was a long time critic of Austria’s policy of not placing any taxes on inheritance. She said, “A large part of my inherited wealth, which elevated me to a position of power simply by virtue of my birth, contradicting every democratic principle, has now been redistributed in accordance with democratic values.” She went further and displayed a sign “Tax the rich!” outside the World Economic Forum (WEF) in Davos on January 15, 2004, knowing that many superrich persons would pass and see the sign. As a rich woman, she is an active advocate for higher taxes on the ultrawealthy.
Getting to Make Choices
Wealthy persons with an urge to help others to live a better life need guidance given the millions of social cause organizations. The most comprehensive classification of meaningful social causes is found in the United Nation’s 17 Sustainable Development Goals. Here are the 17 social causes:
1. No poverty
2. Zero hunger
3. Good health and well being
4. Quality education
5. Gender equality
6. Clean water and sanitation
7. Affordable and clean energy
8. Recent work and economic growth
9. Industry innovation and infrastructure
10. Reduced inequalities
11. Sustainable cities and communities
12. Responsible consumption and production
13. Climate action
14. Life below water
15. Life on land
16. Peace, justice and strong institutions
17. Partnerships for the goals
This list serves as a starting point. No billionaire will want to distribute his or her fortune to support all 17 social causes. Most billionaires will want to invest in one or two arenas. A wealthy woman such as Melinda French Gates may choose #6 clean water and sanitation because of her previous work with ex-husband Bill Gates in this arena. Elon Musk would clearly favor investing in #9 industry innovation and infrastructure. Bill Gates might continue to focus on #4 quality education.
In choosing even one of these 17 sustainable development causes, a whole world of challenges and opportunities open up. A billionaire hoping to impact on #16, “peace, justice and strong institutions” would find a huge number of peace-seeking organizations, including Anti-conscription organizations, Carnegie Endowment for International Peace, Quaker organizations, Buddhist Peace Fellowship, Center for Global Nonviolence, Feminist Peace Network, International Confederation for Disarmament and Peace, International Peace Research Association, UNESC0, World Congress of Imams and Rabbis for Peace, and World Peace Congress. The task is to learn the leading “do-good” organizations and the leading “do-good” experts working in the area.
The key is to support the organizations that have the lowest administrative costs. Ideally, one wants 90% of the money to go to the people needing help and only 10% spent on administration and fundraising. The philanthropist needs to watch the supported organizations through time. There is always the danger that recipient organizations will expect the grants to continue through time even if their performance starts slipping.
Conclusion
Most billionaires are fairly generous in making gifts to needy organizations and causes. Some of their gifts normally go to their religious organizations and colleges where they were trained. Much less goes to really meeting the needs of hungry and starving poor people. That’s why one of the most impressive events has been Bill Gates and Warren Buffett’s creation of The Giving Pledge. The Giving Pledge created an arena where billionaires could talk with each other and compete in showing their generosity. By May 2024, the Giving Pledge had enlisted 245 pledgers from 30 countries. Their pledges are estimated to total $600 billion. This is impressive. The pledgers promise to give away at least 50% of their fortune to philanthropic causes either in their lifetime or in their will. Warren Buffett goes further and pledges to donate roughly 99% of his nearly $120 billion fortune to charity. In 2014, the Giving Pledge created the Next Pledge for the children of the super rich to become involved in thinking ahead to their obligations.
At the same time, it is disconcerting that the world has over 2,755 billionaires and only 245 (less than 9%) have joined the Giving Pledge. Among the world’s richest persons who have not joined the Giving Pledge are Bernard Arnault ($!57 billion net worth), Gautam Adani ($130 billion net worth), Jeff Bezos ($116 billion net worth), Larry Page ($88.7 billion net worth), and Steve Ballmer ($86.3 billion net worth). All of them have been approached but often say either they are giving away a lot of their wealth without joining the pledge or that they are not ready to pledge giving away more than 50% of their wealth to philanthropy. Signing the pledge involves only a moral commitment and is not legally binding.
All said, today’s world mostly relies on governments to raise enough money to help lift the poor out of poverty and to improve the lives of people. But let’s not forget the huge riches of the wealthy class in the hope that more billionaires will want to join The Giving Pledge to make the world a better place for all people.
