Jan 02, 2007

2006 Charitable Giving Beats Records

by Laura Starita

The Chronicle of Philanthropy came out with its 2006 ranking of the largest charitable gifts this week, reports the Financial Times. The article points out that the top fifteen gifts for 2006 totaled fifteen times more than the top fifteen for 2005. But before swelling with pride, we need to remember that this explosion in giving has just one source: Warren Buffett’s $31 billion pledge to the Bill & Melinda Gates Foundation.

Even more puncturing is the fact that the reported gifts are ‘pledges’. Look at the language in the FT article and you can see that gifts aren’t given in many cases; they are pledged. In other words the money is promised to a particular organization, but it is either held in trust for piece-meal distribution, or held until some future stipulation is met, or held for any number of other possibilities. It is not unheard of for pledged money to be rescinded. In the case of Buffett’s gift, the Gates Foundation receives 10 percent of the pledge every year in the form of Berkshire Hathaway stock—that means the total value of the gift could ultimately be much more or less since it is dependent on the stock’s value at the time it is cashed in.

All this is to say that in the world of philanthropy we have a tendency to get excited about the wrong things. Money pledged instead of given. Or worse, money given, instead of what impact it has. So before we get excited about smashed records, let’s see what all of this pledged money ultimately accomplishes.

Financial Times: Philanthropic Pledges Smash All US Records