The Giving Pledge
L. Scott Schultz, President
August 2010

By now, I’m sure you have all heard about the Giving Pledge – a challenge put forth by Bill and Melinda Gates and Warren Buffet, to encourage fellow billionaires to sign a public statement to commit half of their net worth to charity. Already 40 members of this group have made a pledge, which you can read more about here.

If Forbes magazine numbers are right, the 2009 net worth of the Forbes 400 is approximately $1.2 trillion. So we are theoretically talking about $600 billion, if those folks give away a minimum of 50% of their net worth. Contributed over a generation, that could mean at least $20 billion a year.

At face value, it’s a very impressive commitment that would seem like great news for nonprofit organizations across the nation struggling to make ends meet. Yet when I read the report announcing the Pledge, one key phrase gave me pause. According to the official Giving Pledge website,

“The Giving Pledge is an effort to invite the wealthiest individuals and families in America to commit to giving the majority of their wealth to the philanthropic causes and charitable organizations of their choice either during their lifetime or after their death.”

There is certainly nothing controversial in that statement, but it caused me to wonder who or what would really benefit from this noble act of generosity.

In essence, the wealthiest members of society, if inspired to do so by the Pledge, would donate to philanthropic causes AND to charitable organizations.

There is, of course, a poignant difference between charity and philanthropy, as described in a recent blog post by someone I have long admired, Henry (Hank) Goldstein of the Oram Group. In fact, as Hank points out in his post, entitled “The Baltimore Report,” which you can view here, there is a growing divide between philanthropic giving and charitable giving.

Less than one-third of nonprofit organizations in this country serve the needy. Gifts to private independent schools, higher education, private hospitals and the arts are generally designed to serve the people who make the gifts, rather than the homeless shelters, meals on wheels programs or other organizations that deliver support services to the neediest people in our society.

The Chronicle of Philanthropy confirms this observation when you look at their updated list of recent gifts made by individuals of $1 million or more to organizations in the U.S. Or, see another Chronicle article about the Giving Pledge, which says most wealthy people tend to support universities which they attended or large arts organizations versus anti-poverty groups, as an example.

I hope that as a result of the Giving Pledge, billions of dollars will flow into some of our nation’s most prestigious universities, hospitals, museums and orchestras – all important causes, to be sure. But I also hope an enlightened philanthropic leadership will emerge from this challenge as well – leadership who will recognize the fate of smaller, charitable organizations which, frankly speaking, in these difficult economic times, may not survive without them.

Schultz & Williams is a national consulting firm based in Philadelphia; providing management, fundraising and marketing consulting for nonprofit organizations, along with full-service direct marketing, database and creative/production services.