Those Generous Billionaires
Much has been made in recent months of the donations given to various charitable
causes by our new billionaire class, whose membership roll has increased
from 13 to 170 since 1982.
Iconoclastic TV mogul Ted Turner (current assets of $3.5 billion) led the
way in attracting media attention by offering $1 billion of his own money
to bail out the struggling United Nations, an organization in fiscal crisis
because of the unwillingness of the U.S. government to pay its share of
operational dues. In the process of making his gift, Turner challenged other
billionaires to follow suit and up their charitable contributions across
One who did so was financier George Soros, who announced a plan to provide
$500 million (or 14 percent of his 1997 assets) in philanthropic aid to
Russia for, among other things, health and educational programs necessary
to create a functional democracy.
Putting aside the fact that such an aid package could have equally benefited
many parts of the United States, it is interesting that Soros' expansive
charitable impulses (and his published criticisms of unfettered capitalism
in such places as The Atlantic Monthly) have raised the ire of the
American right wing. Steve Forbes, proud publisher of the "Forbes 400"
listing of the richest Americans, permitted his magazine to characterize
the Hungarian-born magnate as a "megalomaniac" with "intellectual
pretensions." Worse still, Forbes' journalistic lackeys noted, was
the financier's tendency to support "left-of-center" political
and social causes. It makes you think Soros might not be a bad sort.
The same cannot be said for most of his fellow American billionaires. In
light of House Speaker Newt Gingrich's suggestion last year that charitable
giving by the rich and famous be used to replace tax funding of government
programs, it is instructive to track the recent history of billionaire philanthropy
in this country.
Steve Forbes and his friendly competitors at Fortune magazine have
unwittingly made this easy by publishing, independently of each other, the
respective assets and charitable donations of the nation's wealthiest individuals.
An analysis of their combined data for 1997 is enlightening.
Of the 40 leading philanthropists in the United States -- referred to with
unintended irony by Fortune as "America's most generous"
-- 10 are billionaires. The combined net assets of the 10 totaled $73.5
billion in 1997 ($7.4 billion each on average), and their combined charitable
giving came to $1.9 billion (or $192 million each) -- superficially impressive
but a mere 2.6 percent of their amalgamated wealth.
Eliminating Turner and Soros from the mix makes the lords of philanthropy
look even worse. Taken together, the remaining eight billionaires on Fortune's
list gave away just 0.6 percent of their total net assets last year, nowhere
near the level of a traditional tithe.
Among the stingiest of the top givers was William Henry ("Bill")
Gates III, celebrated chairman of Microsoft Corporation, who also happens
to be the richest person in the world with current assets totaling $39.8
billion. Gates' benevolent donations in 1997 came to $210 million, or barely
0.53 percent of his net holdings. Moreover, the money came with virtual
strings attached; most of it was earmarked to provide public libraries with
Internet access (not books, mind you), a self-serving gift for a software
provider if there ever was one. Gates was subsequently quoted by Forbes
magazine on the difficulties of philanthropy: "Giving away money effectively
is almost as hard as earning it in the first place." Since most of
his Microsoft billions are the result of the speculative stock market boom
of the '90s and are therefore unearned, it's hard to sympathize.
Another billionaire tightwad is Gates' Microsoft colleague Paul G. Allen,
owner of 8 percent of the corporation and third richest man in America.
Allen, who is worth $17 billion, contributed $32 million -- only 0.19 percent
of his stockpiled wealth -- to charity last year. That level of giving is
in keeping with his business style. As owner of the Seattle Seahawks NFL
franchise, the software billionaire recently pressured city taxpayers to
pick up three-quarters of the tab for his new $400 million football stadium.
That's called free enterprise.
Also making the list of prominent billionaire givers last year was Joan
Kroc, inheritor of the McDonald's fast-food fortune compiled by her late
husband Ray. In 1997, Mrs. Kroc doled out $15 million to various charities,
or just 0.71 percent of total personal assets calculated to be $2.1 billion.
You deserve a break today, but don't look for it here.
Perhaps as interesting as the billionaires who made the top 40 list of American
philanthropists are those who did not. The cut-off level for Fortune's
"most generous" was $12 million in individual 1997 contributions.
The donations (if any) of the 160 billionaires who gave lesser amounts are
not readily available, but all fell below that figure.
Among the most prominent in the charitable Hall of Shame are Warren E. Buffet
of Berkshire Hathaway, second-richest person in America last year ($21 billion
in net 1997 assets and less than 0.06 percent of it donated to charity);
Lawrence J. Ellison of Oracle Corp., fourth-richest ($9.2 billion and less
than 0.13 percent donated); Steven A. Ballmer of Microsoft Corp., sixth
richest ($8.3 billion and less than 0.14 percent donated); and S. Robeson
Walton of Wal-Mart Corp., 11th richest ($6.3 billion and less than 0.19
percent donated), whose family philosophy holds that "true value for
people is created by for-profit, not not-for-profit efforts."
Another grudging billionaire donor was miserly sports buff Philip H. Knight,
head of the Nike sneaker empire famous for employing low-wage Asian workers.
Knight had net assets of $5.4 billion in 1997 and contributed no more than
0.22 percent to charity, a level of giving that makes Bill Gates look magnanimous.
Also making the reluctant giver list was the esteemed H. Ross Perot, erstwhile
presidential candidate and entrepreneur in computer systems and real estate.
Perot, who told Forbes that charity is one of the few things in life
that matters, gave away less than 0.36 percent of his $3.3 billion fortune
in 1997. That's more than Phil Knight coughed up in percentage terms, but
not really very much for a self-appointed arbiter of the nation's political
and social morality.
Most noticeable on the list of leading non-givers last year were the number
of nouveau riche high-tech entrepreneurs, whose ranks in 1997 included five
of the six richest Americans. The folks who are happily disrupting the American
economy by replacing people with technology (and getting fabulously wealthy
in the process) are also the ones least likely to give back to society in
a meaningful way.
Led by the deceptively bland Bill Gates, they are the true spiritual successors
to the rapacious robber-baron capitalists of the nineteenth century, who
made industrial fortunes by plundering the environment and exploiting labor.
The new robber barons are more clean-cut and articulate, but they are just
as ruthless and, if anything, less charitable. (No Carnegie libraries from
Rather than look to them for a private-sector response to public financial
shortfalls, we might try a more traditional populist solution, namely a
wealth tax on billionaires. It's time not for a flat tax, but for a "fat
Wayne M. O'Leary is a research associate in history at the University
of Maine in Orono.
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