What’s Next for the Giving Pledge?

Ten years ago, Bill Gates and Warren Buffet first launched the Giving Pledge, a commitment for uberwealthy families or individuals to donate at least half of their net worth to philanthropic endeavors. Forty families first signed the pledge and today more than 209 members have joined and pledged over $500 billion.

Created immediately after the 2008–09 financial crisis, The Giving Pledge has been applauded as a revolutionary philanthropic initiative with benefits on a global scale. But ten years later, and during a global pandemic, it is worth considering some amendments that can make the initiative more effective in the future.

The COVID-19 Effect and Market-Creating Innovation

Philanthropy and giving back has blossomed over the past decade. In a time of great wealth inequality exacerbated by the COVID-19 pandemic, harness the power of giving back is a prime focus and responsibility for the mega rich who have pledged to the initiative. 

The most evident economic impact of the pandemic has been on workers and small businesses across the globe. Many workers and small to medium-sized enterprises have suffered disruptions in ascending economies as trade plunged in almost all categories. Many venture capital and private-equity funds have exited riskier markets, accelerating retrenchment trends and withdrawal from growing economies.

The immediate cost of the current economic climate is devastating. The ripple effects that extend into the future worsen as a generation of capable and determined entrepreneurs are forced to abandon promising ventures. Notably, they redirect efforts away from an enterprise that, arguably, can improve more people’s lives than any other category of human endeavor. 

However, some have suggested that putting money toward market-creating innovation could help save many industries needing support. Market-creating innovators target non-consumers — the population who would benefit from owning or using a product but can’t, because they can’t get access to it or don’t have the time, money, or expertise needed to use it. Instead, these innovators can transform products into more simple and accessible ones. Further, they create social value: instead of expanding the frontier of human progress, they expand its scope. Overall, they advance participation in markets that needs life.

The Giving Pledge is relevant here as Gates has considered changing the pledge’s messaging so that participants are required to put money forward toward specific causes like COVID-19 relief. Thus far, the pledge’s organizers have remained resistant to the idea of sharing with the signers what other billionaires are choosing to fund, a transparent feature of the marketplace that Gates’s team has explored building for Covid-19 response. This marketplace involves creating a technology platform that allows billionaires to disclose the causes they are backing or connects them to projects in need of funding.

Some experts have suggested that philanthropically motivated individuals and institutions consider responding to the current crisis by allocating 2% of all of their philanthropy or 2% of their assets to investments in market-creating innovations that could help provide economic support across the globe. A 2% figure mirrors the Small Business Innovation Research (SBIR) Program, the U.S. Government’s most successful program to support market-creating innovators. While 2% may seem limited compared to the Giving Pledge’s 50% goal, the SBIR program proves that a commitment to providing 2% of aggregate resources to support market-creating innovators is among the highest-leverage investments a society can provide. 

While no plans have been made as of yet for The Giving Pledge, it could help speed up the momentum for the initiative’s efficacy in the future.

 Mandated Support Efforts?

The Giving Pledge website mentions explicitly that it “does not solicit support for any specific philanthropic foundation, cause, or organization.” If Gates is considering making moves on COVID-19, it will send a clear, direct message about its recommended priorities.

It’s unclear how signers would react. Many say Gates’s aides are unlikely to pursue an initiative that would draw money from Giving Pledge signers, especially if donors disagree with one another or with Gates over which particular coronavirus-related causes to support. Sources say that foundation officials are more likely to pursue a marketplace plan, as previously mentioned. 

The idea of anew marketplace would surface and curate nonprofits on the platform that fellow billionaires have vetted and backed, instead of a bevy of solicitations coming in on listservs, Excel spreadsheets, and Google Docs. If one pledge member sees that a fellow, respected member of the mega-rich group is financing a particular project, they may feel more confident backing it with their fortune. Its success depends on the billionaires’ willingness to be transparent with their gifts to one another on the platform.

Until now, that type of collaboration hasn’t necessarily been available for signers who may share similar philanthropic passions. Foundation officials, including Bill and Melinda Gates, have taken calls from signers on an ad-hoc basis, connecting billionaires with each other.

Gates is now exploring how to convince other billionaires to donate more money for coronavirus. As of now, it’s not a requirement to contribute to COVID-19 work through a marketplace or even a pooled fund. However, Gates’s team is aware that launching a marketplace, when no product for Giving Pledge signers focused on a single issue existed before, would send a clear signal to signees.

Gates’s aides remain sensitive to concerns that they are overdirecting their donors. However, a platform that supports specific causes could allow the Giving Pledge to truly meet our era’s greatest needs while emphasizing their core dedication to philanthropy.