Yesterday world wide billionaire Warren Buffet and power couple Bill & Melinda Gates have issued an ultimatum (of sorts) to the world’s richest people – Give 50% of your wealth to charities of your choice during their lifetimes or at death. The “Giving Pledge” as it is called aims to create $600 billion (which is half of the $1.2 trillion that the Fortune Top 400 earners in America have in wealth).
Fortune has a great post about the entire background behind the Gates’ and Buffet’s drive to urge fellow billionaires to pledge to donate. The data also derived from the post shows that on the average year, America’s richest only donates a collective 11% of their wealth to charity – which is just higher than the national average of 3.2% ($1,600). However this is only accounted for income and not net worth, which billionaires are judged by.
What does this mean for nonprofits and philanthropy? EVERYTHING. This could be the single largest boon to the sector in our time. An overall donation of $600 billion (if not more, as Buffet will give 99% away) to just the American nonprofit sector will have ripple effects throughout the nation, states, and local municipalities unmatched by any federal stimulus the private sector has seen from one group of people. Each year Americans give $227 billion (which includes the $33 billion from the richest Fortune 400). A dramatic increase of another $10-100 billion over the years could revolutionize the sector in ways that brings balance to the communal responsibility society has to causes that government services have made us distant towards.
The Chroncile has an equally refreshing article on this event – and brings up a good point that it doesn’t fully talk about however. Can the nonprofit sector and nonprofits absorb this money in an effective manner?
My opinion? Yes. Yes they can. And yes they will. The largest problem for so many nonprofits is overhead costs, employees, and outreach. If you could help each nonprofit cover these costs – in my opinion – would see an even more effective program base run by nonprofits for their missions. With time and money freed up for these things, the main purpose of organizations, nonprofits could become a growing – rival – sector to the social services provided by the government.
Favorite quote comes from Peter Hero, vice president for development and alumni relations at California Institute of Technology – “Why only half?” We will take it Peter. We’ll take it.