A Critique of the Giving Pledge


Wealthymatters.com

Following is a very nice critique of the Giving Pledge and the Buffett-Gates style of philanthropy.I found it a couple of days ago at http://heybrowncow.wordpress.com/2010/10/07/are-gates-and-buffet-teaching-the-world-how-to-live-the-american-way/ . It points out the good and the bad in the effort.The red text are points I find particularly interesting.How do you feel about the Giving Pledge? On what points do you agree/disagree with the author below?

Are Gates and Buffet teaching the world how to live (or give), the American way?

By Dingzi

AMERICAN billionaires and founders of The Giving Pledge Bill Gates and Warren Buffet may be heading next for the Nobel Peace Prize. Imagine what a heap of good the billions that have been pledged can do to make a better world.

Having persuaded 40 fellow American super-rich to pledge at least 50 per cent of their wealth to charity by the time they die – the collective pledge has reached US$1.25 billion – the two philanthropists are taking the campaign international.

Last week, Messrs Gates and Buffet hosted a dinner for Chinese billionaires in Beijing. 

Why China and not, for example, Western Europe if not one or more of the countries there? 

It makes sense since according to Forbes magazine, China has the most number of billionaires after the US – 64 (89 including Hong Kong) out of a global 1,011 compared to 403 in the US. 

Chinese reaction initially was one of suspicion, scepticism, wariness and reluctance to participate. Mr Buffet quickly explained that his mission was to understand Chinese philanthropy and not ask for donations. Some 50 guests – two out of three invited – came and at least one of them had joined the club.

Mr Chen Guangbiao – chairman of Jiangsu Huangpu Renewable Resources Utilization – informed BBC he would bequeath his fortune of  more than five billion yuan (US$735 million) to charity when he dies. One other billionaire, Argo Information Digital Technology Company president Feng Jun, indicated he would follow suit. 

(1)The Gates-Buffet campaign can certainly boast its success in creating awareness and positively pushing the charity agenda in the region. Weeks earlier, Shenzhen billionaire developer Yu Pengnian was reported to be already giving away his fortune while he lives, contributing to various charities.

In Taiwan, Mr Terry Gou – chairman of electronics conglomerate Hon Hai and said to worth US$5.9 billion – announced he would leave 90 per cent of his wealth to charity.

In Hong Kong, actor Chow Yuen Fatt told Sun Daily he would donate 99 per cent of his reported HK$1 billion wealth upon his death. He said: “The money isn’t mine but was simply earned by me.” 

That may sound somewhat baffling, but as China’s internet tycoon Jack Ma, who is worth US$1.2 billion, said, (2) Once you net worth exceeds a certain point, that’s not your money anymore. It is money society has given you, and you should take responsibility to allocate the money in a good way.” Mr Ma prefers to invest his excesses in environmental causes.

Yet, for all its altruistic design, The Giving Pledge may divide rather than unite the world. Messrs Gates and Buffet may have made a misstep in going to China before Western Europe, which not only is culturally closer to the US but also has a much longer history of capitalism. Mr Gates said they might target India next. Is not Western Europe a more likely candidate? Of course, (3) even in the US, there is still a lot of work to be done since less than 10 per cent of the billionaire cohort has committed to the pledge. 

The Americans’ lack of understanding of Chinese culture risks incurring the ire of the local population. Mr Chen has been criticized for not giving money to his own poor siblings though he said he had helped them in the past but they had squandered his money. (4) It is Chinese tradition to look after the family first.

Yet keeping the wealth within the family is not something unique to the Chinese society. It is also practiced in other parts of the world, including the US. 

Unfortunately, the campaign may be seen as yet another attempt by Big Brother America telling the rest of the world, especially the lesser brothers, how to live their lives, the American way. Kudos though to Messrs Gates and Buffet as pioneers; better late than never, though the movement should have started long before.

A media headline such as “Instilling charity among China’s super-rich” (BBC, Sep 24) can offend the Chinese (and by extension, Asian) ethos when it implies (5) Orientals are less charitable than westerners, with many press stories citing charity as a fundamental Christian virtue.  In his BBC interview, Mr Chen clarified: (6) Giving and helping has been part of Chinese culture for 5,000 years.” 

There are many reasons why people part with their wealth. For some, as it is for New York mayor Michael Bloomberg, “ (7)it is a moral obligation.” (7)For others, it is satisfying a higher need in the Maslow hierarchy.

(8)Donations are also known to have been catalytic to opening doors to desired or denied opportunities for some people. 

(9)Tax shelters are also great motivators. 

Stories abound about how (10)seeming philanthropy can buy forgiveness if it has not already(11) turned society’s blind eye to the money being made on the back of malpractices. An entity such as The Giving Pledge can easily legitimize the brotherhood of so-called Robin Hoods and lead to a (12)deification of members instead of promoting its cause. 

(13)Club elitism is inevitable when membership means a permanent place in the philanthropy hall of fame. While efforts are made to narrow the widening income gap between the rich and the poor, a new social divide may develop not only between donors and beneficiaries but also between different classes of donors. 

(14)Do we not recognize those outside the circle who prefer to give quietly? (15)What about people who have nothing to commit but their time, energy and compassion? (16)And the small contributors? It is so easy to forget the pauper’s mite.

About Keerthika Singaravel
Engineer,Investor,Businessperson

5 Responses to A Critique of the Giving Pledge

  1. Brian says:

    Hey,

    What happened to your follow up article?

    • Brian check out the newer articles under philanthropy.I put up a few posts after Buffett’s visit to India.Use the buttons at the top of the page to navigate or use the category selector on the right margin of the blog.

  2. Brian says:

    Ms. Expert,

    Are you going to have a follow up post or article about this anytime soon? 🙂

  3. Lourie Pegeron says:

    Interesting point of view.

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