Billion-Dollar Giving Streak

Billion-Dollar Giving Streak

The top 5 donors in 2019 gave over $1 billion each, and many wealthy Americans gave to fight climate change and inequality.

By Jim Rendon and Maria Di Mento | February 11, 2020 | Chronicle of Philanthropy | Link

As a new decade opens, America’s superwealthy are on a record-breaking giving streak: Five people donated more than $1 billion last year, the first time so many have crossed that threshold in the Chronicle’s 20 years of tracking who gives the most to charity.

All signs suggest that a growing sense of urgency about the problems of the world are prompting America’s richest to donate more now to support causes that once got little of their attention. They are reacting to mounting pressure to close the inequality gap, and they’re giving to fight climate change and homelessness, and to promote social justice.

Michael Bloomberg topped the list with $3.3 billion in donations. He was followed by Barron Hilton, the hotel mogul who died last year; technology executive Eric Schmidt and his wife, Wendy; Walmart heir Jim Walton; and the late businessman Thomas Lord. The combined contributions of these five people totaled $9.3 billion. That was more than the total giving of all donors on the 2018 list.

Bloomberg channeled his biggest gift to an effort to encourage social mobility: His $1.8 billion contribution enables students from low- and middle-income families to attend his alma mater, Johns Hopkins, without ever needing to take out loans. “No qualified high-school student should ever be barred entrance to a college based on his or her family’s bank account,” Bloomberg wrote in a New York Times op-ed in which he announced the gift. “Denying students entry to a college based on their ability to pay undermines equal opportunity. It perpetuates intergenerational poverty.”

Bloomberg’s college gift came long before he declared he was seeking the Democratic nomination for president, but questions about what billionaires owe society through philanthropy or taxes are likely to persist as part of the 2020 elections, especially because he is not the only Giving Pledge signer in the race for the White House: Tom Steyer, another billionaire, has been running primarily to call attention to climate change.

Staggering Wealth

Still, the biggest reason behind the boom in gifts from the rich is clear: They are getting richer. “A lot of people have gotten much wealthier over the last decade than they had ever imagined,” says Melissa Berman, CEO of Rockefeller Philanthropy Advisors. “They are able to give at levels that they had not thought about before.”

What’s striking about last year’s giving is the share of wealth going to philanthropy.

According to a Chronicle analysis of giving by individuals who appear on both the Philanthropy 50 and the Forbes 400 ranking of America’s richest people, the average donor on both lists gave away 4.42 percent of his or her wealth in 2019. That is much higher than the average for the last five years, which was 2.59 percent.

Even so, only 21 of the donors on the Chronicle’s list are among the 400 wealthiest, a proportion that has not changed much over the years. Throughout the past two decades, many of the donors who have appeared on the Philanthropy 50 have not been household names. This year that includes Lorraine Stengl (No. 47), a physician and real-estate investor who left $38.6 million to the University of Texas at Austin, and Allison and Dorothy Rouse (No. 36), lawyers who left more $54.4 million to George Mason University’s law school, even though they were educated elsewhere.

With so few on the Forbes 400 giving sums that were large enough to get onto the Chronicle list — which took a minimum of $35 million in contributions this year — some philanthropy observers believe that donors could be doing more. “There is still a lot of money on the sidelines,” says Betsy Doyle, a partner at the Bridgespan Group, which advises wealthy donors and charities.

While the Philanthropy 50 has never seen so many people giving $1 billion or more, the total sums donated have been surpassed by others. The largest contribution in the 20-year history of the Philanthropy 50 was Warren Buffett’s commitment in 2006 of $43.5 billion ($54.9 billion in inflation-adjusted dollars) to the Bill & Melinda Gates Foundation and several of his family’s philanthropies. (See table on Page 14.) Rankings on the Philanthropy 50 are based on the total donated in the previous year and are compiled based on extensive Chronicle reporting as well as publicly disclosed contributions. Because donors are not required by law to disclose how much they give, however, it is possible some big donors were left out because they kept their contributions quiet.

The Urgency of Climate Change

Beyond the rise in the sums donated last year, the kinds of gifts that the largest donors are making are also starting to shift. For instance, in 2019 they made contributions of $1 million or more to eight environmental groups — more of those groups than have ever attracted such large gifts from the Philanthropy 50.

Richard and Melanie Lundquist, Los Angeles real-estate developers, made their first environmental gift this year. They have been longtime philanthropists: This year is their fourth appearance on the Philanthropy 50 list, ranking No. 28 by donating a total of $81.9 million to an array of causes. In the past, they have given to a hospital and championed programs to improve public schools. But the environment was never that pressing.

That changed this year. “There’s a sense of urgency,” says Melanie Lundquist. News about devastating fires in California, the drumbeat of sea-level rise, and a recognition that there is little time to delay on carbon emissions prompted the Lundquists to act. “Older people such as us really are concerned for their children and grandchildren and future generations,” she says.

This year they gave $5 million to AltaSea, a Los Angeles organization that works with universities to conduct marine research focused on climate change and other environmental issues and then seeks out businesses that can commercialize solutions based on academic findings.

Other big conservation donors include Stewart and Lynda Resnick (No. 6), who contributed $750 million for environmental-sustainability research programs at the California Institute of Technology and $1 million to Conservation International for its climate and other programs. Technology entrepreneurs Marc and Lynne Benioff (No. 15) also gave to the environment with $1.5 million to the Sustainable Ocean Alliance, an organization that is developing ways to protect and clean the world’s oceans.

“Many donors are saying if we don’t act now, then we’re going to lose a window of opportunity,” says Nick Tedesco, chief executive of the National Center for Family Philanthropy. “Many donors embrace the opportunity when it presents itself to address an immediate need.”

With so much criticism of the wealthy dominating the Democratic primaries — Sens. Elizabeth Warren and Bernie Sanders have both proposed a wealth tax, and Bloomberg plans to increase taxes on the highest earners — donors are getting more introspective about their wealth and their philanthropy, say experts.

“Families are really starting to acknowledge that there’s responsibility with wealth,” says Jacqueline Valouch, head of philanthropy at Deutsche Bank Wealth Management. “They are really starting to uncover how is that money made, how’s it being invested? How is it being deployed?”

Some are countering that criticism by finding ways to use market forces to help demonstrate how free markets can work for everyone.

This year private-equity billionaire Orlando Bravo (No. 23), who gave $100 million, focused his philanthropy on his home island of Puerto Rico. He’s helping young entrepreneurs and recent college graduates start technology companies. He also plans to mentor those young people by linking them with staff members from his company.

Other donors on the Philanthropy 50 list have done what Bloomberg did by providing college aid to jump-start economic mobility.

David Walentas (No. 22), the New York real-estate developer, and his wife, Jane, made their first appearance on the list. They donated $100 million to the University of Virginia for scholarships for first-generation college students. Walentas says he has made gifts to arts organizations and others in New York, where he is known for revitalizing the Brooklyn neighborhood of Dumbo, short for Down Under the Manhattan Bridge Overpass. But this is by far his largest gift. “To give away money is a big decision, especially when you grow up poor,” Walentas says.

He was the first one in his family to attend college, going to the University of Virginia on a Navy ROTC scholarship. He knew nothing about colleges and picked the institution from a list on the back of the ROTC test because Virginia would be warmer than Rochester, N.Y., where he grew up.

“I never knew anybody who went to college,” Walentas says. “It’s important to give qualified students that opportunity to shine, to get that exposure. It changed my whole life.”

Others have also tried to alleviate student debt burdens and give more people access to higher education. Denny Sanford (No. 8), a banker from Sioux Falls, S.D., donated $350 million to programs for working adults at National University.

Private-equity billionaire Robert Smith (No. 35) took more direct aim at the issue last year. He gave $34 million to Morehouse College to erase the student debt of the entire graduating class of 2019. “Whether he solved that problem or not, he certainly made many more people aware of it,” says Berman. (See article on Page 34.)

Knowledge Gaps

While many donors are targeting the cost of college, others are starting to understand and address the complex tangle of problems that underlie this country’s poverty and growing wealth inequality.

“Many more donors recognize that education by itself is not going to solve everything, just as access to health care by itself will not solve inequality,” says Berman. “They’re much more aware that there’s a big, complicated system that, in some cases, includes institutional racism that is keeping people in a trap.”

More and more wealthy philanthropists, aware of the complexities and challenges and their own knowledge gaps when it comes to these large systemic issues, are seeking information and education about how to give effectively and even how to judge what makes a difference, says Nadia Roumani, co-founder of the Effective Philanthropy Learning Initiatives at Stanford Center on Philanthropy and Civil Society and now a philanthropy consultant. They are also turning to some collaborative efforts like Blue Meridian Partners, which pools resources to address economic mobility.

John and Laura Arnold (No. 10) have been working on some of the deep systemic problems in American society that have been at the heart of social and economic inequity for many years. They have long targeted efforts to overhaul the criminal-justice system (see more on Page 36) and to reduce health-care costs. This year they gave $200 million to their foundation and $150 million to their donor-advised fund and other groups.

Marc Benioff, who has been vocal about the economic chasm between rich and poor in San Francisco, donated $30 million to the University of California at San Francisco to research solutions to homelessness and also gave to organizations working to help homeless people in the Bay Area.

Another of the Lundquists’ gifts was to Homeboy Industries, a Los Angeles group that offers a range of services to people getting out of prison, including job training, legal help, substance-abuse counseling, and education. It has several social-enterprise ventures, including a bakery, a cafe, and an electronics recycling business — something that appeals to the couple because they like efforts that combine for-profit and nonprofit approaches. Homeboy is planning to develop housing for those in its program, an effort that Richard Lundquist says is especially important given the high cost of housing in Los Angeles.

“It’s the right thing to do,” says Melanie about this gift and another for education. “This is not the glamorous, sexy name on the university building philanthropy. This is deep in the trenches.”

Like the Lundquists, more donors are starting to tackle complex systemic problems, says Tedesco. “Donors are becoming increasingly aware of the biases that continue to perpetuate social divides, whether it’s education or the criminal-justice system,” he says. “There’s a need to address unjust systems through a new lens.”

Large gifts to institutions like universities won’t always be the best places to give when addressing climate change or income inequality, says Bruce Boyd, a principal at Arabella Advisors, an organization that provides counsel to many philanthropists. “You really need to broaden your horizon and think more deeply about your grant making,” he says. “They’ve got to think about not just the traditional big players but think about community-based organizations as well.”

To that end, Arabella has created several funds that allow donors to pool money to support groups that work on such issues as climate justice, gun violence, or civic engagement.

A Shift Among Young Donors

Young donors are among those more interested in some of these large and complex issues. Sixty-four percent of the family foundations started after 2010 are focused on poverty, hunger, and homelessness, compared with just 3 percent of family foundations started between 1970 and 1989. Those founded after 2010 are also more likely to focus on economic opportunity and social and family services than older foundations, according to a survey by the National Center for Family Philanthropy.

“What we’re seeing is a fundamental shift,” says Tedesco. Young philanthropists are interested in different causes, and they think about national or global issues rather than focusing on a geographic area like their predecessors did.

To help families understand and harness the potential in these differences, the Family Office Association has been sponsoring intergenerational meetings so families can discuss and learn about their differing views of philanthropy. Millennials and those who are younger are very focused on climate change and poverty.

Angelo Robles, CEO of the Family Office Association, says the young donors show a passion that is based on legitimate concerns about the future. “They don’t know if there’s going to be a world to live in the way that we know it in five years, let alone 30 or 40 years.”

Older donors like the Lundquists share that concern and are focused on making a big impact now rather than waiting to leave big bequests.

“We try to make transformative contributions big and small. It’s about creating systemic change,” says Melanie. “We would like to be able to match our last penny to our last breath.”

Michael Theis contributed to this article and other Philanthropy 50 reporting.

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