Some Billionaires Not Meeting Giving Pledge Promises

Warren Buffett and Bill Gates first created the Giving Pledge five years ago, and in that time they were able to convince 193 people to promise to give away over half of their fortune at some point in their life or upon their death. 16 more people joined the initiative last week, including Hamdi Ulukaya – the Chobani yogurt founder and Ian Wood – the Scottish oil baron.

By signing your name to the pledge you’ll experience glowing media coverage, video testimonials from billionaire Bill Gates, as well as invitations to conferences that take place annually that are held in luxurious resorts with other fellow billionaires including Pierre Omidyar and Ray Dalio.

A less publicized fact is that ultimately, the giving pledge is subjective. Nobody that has signed the giving pledge is under any legal obligation to donate half of their money – or any money at all for that matter – and in some instances the individuals making the pledge never come close to giving away half of their net worth. Estate Law and Charity regulations certainly block public disclosures, and Bill Gates and Warren Buffett do not ask the pledgers to prove anything.

“It’s really thinking about how iconic figures providing inspiration and support can inspire and serve as a model for society,” said Robert Rosen. He coordinates the giving pledge and is the director of philanthropic partnerships for the Bill & Melinda Gates Foundation. “We aren’t looking to add any additional complexity,” said Rosen.

We have learned from the 10 deceased billionaires that signed the giving pledge that fulfilling the pledge varies widely based on public disclosures of lifetime and estate giving. Out of the 10, only two that have signed the pledge have given away more than $1 billion, and they made these donations before the initiative even began.

It is quite clear that the giving pledge emphasizes that this is a moral pledge. There is a very real legal purpose to this distinction: it eliminates the possibility that signers of the giving pledge can sue fellow billionaires who do not act accordingly and give, we learn according to David Scott Sloan, a lawyer and the national head of the estate law practice at Holland & Knight.

“When I give money to charity and I pledge to pay it over five years, I actually sign a contract,” said Sloan. “These are people who sign lots of pledges like that and wanted, I’m sure, to make it very clear it’s a moral direction as opposed to a legal direction.”

Rosen mentions that Buffett and Gates, and the effort that they put forth, is done so as an effort to reset the levels of giving on a long-term level.

“The conversation continues to evolve with what’s expected and what becomes the norm of generosity, both in terms of impact and the impact it has – that’s our true North Star,” said Rosen. “People do it in different ways and at different times because it’s such a personal decision.”

The Low Bar

Warren Buffett and Bill Gates are leading this effort by example. They are the two richest Americans and they have a combined net worth of more than $156 billion, according to the Bloomberg Billionaire Index. Also according to the index, the two have combined to put more than $46 billion into the Gates Foundation. Michael Bloomberg, as well as the other three cofounders of Bloomberg LP, who own Bloomberg News, have all signed the giving pledge.

In an interview in 2010, Bill Gates said to Fortune Magazine that the “low bar” was giving away just half of one’s fortune. But it’s difficult to define what makes up half, which is a point that is clearly exemplified when looking at the estate of Albert Ueltschi.

A pilot of Swiss ancestry and born in Kentucky, he became a billionaire by selling his pilot training school named FlightSafety to Warren Buffett’s Berkshire Hathaway for stock that was valued at nearly $2 billion when he passed away. He also had developed a very close friendship with Bill Gates.

Ueltschi did not hesitate to join the giving pledge when asked by Bill Gates and Warren Buffett. He had pledged to give away most of his fortune in order to fight blindness.

“I have never seen a hearse pulling a U-Haul trailer. You can’t take it with you,” wrote Ueltschi in his Giving Pledge letter that was dated September 18, 2012.

At the age of 95, he passed away just one month later.

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