What Buffett and Gates can teach us
Published 10 July 2006
In the same week that the world's richest man, Bill Gates, announced he was giving up his job at Microsoft in favour of working at his charitable foundation, the world's second-richest man - Warren Buffett - announced he was donating three-quarters of his fortune to the foundation Gates has set up. Philanthropy on this scale dwarfs the investments made by the big philanthropists of old, and rivals the funds that governments and international organisations spend on addressing global ills. The US Agency for International Development (Usaid) spent $1.5bn last year on health programmes, approximately the amount spent that year by the Bill and Melinda Gates Foundation.
But, although these men's donations are unprecedented in size, the Gates-Buffett model, in which donors have a great degree of control over where their monies are being utilised, is indicative of a new trend. Philanthropists today want input into how their monies are being deployed. The big question is, can governments use this insight to sell the rich the idea of paying more tax rather than spend more on charitable giving?
It's not that I am against the rich giving money to charities. I'm all for it, and we should think of ways of encouraging more of it. But I also believe that states, rather than individuals, are ultimately a better bet for delivering a fair and just world and reconciling differing interests.
For every Warren Buffet who gives away a significant proportion of his wealth to charity, there is a billionaire who gives away dimes - only one person in the Sunday Times Rich List top 30, Lord Sainsbury, is also a Sunday Times top 30 "giver". And, for every Bill Gates who is using his billions to make the world a better place, there is a Tom Monaghan who uses his money for such ills as campaigning to overturn Roe v Wade (the US Supreme Court decision that legalised abortion). Most philanthropists would still rather donate to elite schools, concert halls or religious groups than help the poor or sick.
And when the rich give, they are unaccountable: the Gates Foundation answers only to its own board. While we may not like our governments' uses of our money - it is hardly a prudent use of public funds for the British government to spend £4.5bn ($8.2bn) on the Iraq war, or for its US equivalent to spend $318bn on the same - at least we have the option of voting the politicians who make these kinds of choices out of office after a few years. There is no such redress if evangelical philanthropists get things wrong.
But how to sell the paying of more tax to the rich? Perhaps by designing a tax that has some of the most valuable attributes of the best charitable donations - that is to say, by being demonstrably effective and allowing donors some control. I'm thinking of some sort of tax paid for by the super-rich that is earmarked for specific causes, properly monitored and evaluated, into which those who pay have some degree of input.
We could, for instance, establish a delibera-tive forum where these taxpayers' thoughts on where their monies should be spent could be channelled and considered. This might seem elitist, but we would only be considering their ideas - and these alpha success stories could have some pretty good ones. The dialogue process itself could even bring some participants round to the idea of paying more tax, as has happened in experiments with deliberative polling in the United States. More importantly, unless they do retain some sense of ownership of the process, however illusory, the super-rich whose monies we want would be highly unlikely to play ball.
The state would also have to convince them that it would spend the monies wisely. That might, of course, ultimately be the stumbling block. When push came to shove, even Buffett, the big supporter of inheritance tax, chose to bequeath his fortune to Gates rather than the current US government that he so publicly despises. For the rich to hand over increasing amounts of money to them, governments will need to be more transparent and more accountable about how they spend their revenues, and will also have to allocate public funds more sensibly.
It is essential to get all this right. At the end of the day, philanthropy can only ever be an adjunct to what governments provide. And government coffers need to be replenished. So thank you, Buffett and Gates, for raising the bar so dramatically. May your actions inspire more of your peers to follow suit. But, with luck, they may also do something else: inspire governments to work out how to capture more of all your good fortune for themselves.
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