My column in this week’s Chronicle of Philanthropy focuses on the Gates/Buffett Giving Pledge and argues that the real impact of the Pledge is the potential for it to spur more every day donors to give more rather than simply trigger the giving of the billionaires which the Pledge focuses on.
I tried to calculate the potential dollar impact of a shift in the giving of every day donors and argued that it could result in a 100% increase in annual giving vs. a maximum of a 10% lift if every billionaire fulfilled the pledge. But yesterday Ryan Allis, writing on the Social Entrepreneurship blog at Change.org gave a more compelling break down of the numbers that illustrates how vastly more important the giving patterns of major donors is compared to the ultra, ultra wealthy.
There are 10 million millionaires in the world, with a total net worth of $39 trillion according to the 2010 Merrill Lynch and Cap Gemini World Wealth Report. The average millionaire has $3.9 million.
Excluding the $1.3 trillion of the Forbes 400 [Sean: these are the billionaires targeted by the Giving Pledge] from this $39 trillion, there is $37.7 trillion in assets among millionaires globally. What if there were a Millionaire Pledge?
If through a directed effort we can get 20% of global millionaires to commit to give half of their wealth, instead of an extra $120B for philanthropy, we’d have an extra $3.8 trillion.
Did you get that? If every billionaire commits to giving away 50% of their wealth, we’d see billions of dollars going to philanthropy. But if just 20% of millionaires commits to giving away 50% of their wealth we’d see trillions of dollars going to philanthropy.
Most people can’t even begin to grasp the difference between a billion and a trillion. Below is the best illustration I’ve seen.
This is a billion dollars of stacked $100 bills:
This is a trillion dollars of stacked $100 bills:
(Illustration from PageTutor.com)
The idea of giving away 50% of your wealth isn’t something to suggest lightly. It is certainly not something that I would personally be willing to do today. But for a billionaire or for a millionaire at the right stage of their life and given the right circumstances, it is entirely possible.
In fact there is an excellent group called Bolder Giving which launched in 2007 with The 50% League to tell the stories of people from all walks of life who had committed to giving away 50% of their wealth. Interestingly, Patty Stonesifer, former president of the Gates Foundation and now an advisor to Gates and Buffett was quoted in the Chronicle of Philanthropy as saying that the efforts of Bolder Giving were one of the reasons they thought the Giving Pledge was achievable.