In a Moment of Crisis, a Test of America’s Billionaire Class
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The Five richest people in the u.S., as of April 1, 2020. Source: Forbes
The battle against the COVID-19 pandemic is increasingly taking the shape of a war effort. Government has begun to enlist the private sector to manufacture N95 masks and ventilators, while ordinary citizens who work at supermarkets and pharmacies are being hailed as heroes online. And across the U.S., philanthropy is engaged in its own unprecedented mobilization effort. More than 200 local emergency funds have appeared in the past two weeks, many quarterbacked by community foundations, and a who’s who of top foundations have stepped forward with major commitments.
But what about America’s billionaire class? How has this group responded to a growing global emergency with pledges of financial support? It’s an important question, since other than government and the private sector, the ultra-wealthy may be the only players with enough resources to move the needle on rapid response efforts.
Before the market crashed earlier this month, the nation’s 400 richest households were worth about $3 trillion—or more than three times the assets of all U.S. private foundations put together. And even after a brutal stretch on Wall Street, many billionaires still sit on astonishing fortunes at the time of writing, April 1, according to Forbes’ “real-time” tracking of their wealth. Mark Zuckerberg, for example, is worth $61 billion; Bill Gates has $101 billion (outside the assets of his foundation), Google’s co-founders—Sergey Brin and Larry Page—have a combined net worth of more than $100 billion; the Walton family’s net worth is north of $150 billion; Jeff Bezos remains the richest man in the world, with his wealth pegged at $119 billion. Even quite a few less well-known billionaires, like the digital trading pioneer Thomas Peterffy, have fortunes well over $1o billion.
In short, if anyone can afford to give more in response to the pandemic, it’s the richest of the rich. And it’s fair to say they have a strong motive to step up, too. Well before the disruption from COVID-19 brought the deep inequities of U.S. society into starker view, America’s wealthiest faced intense criticism for their role in fueling stratification, as well as their lackluster record of charitable giving. A study in 2018, for example, found that “ultra-wealthy American families donated just 1.2 percent of their assets to charity in 2017, which falls considerably short of average, long-term investment returns on assets.”
With the country now in crisis, will America’s billionaire class move to give at a higher level? And who’s making major commitments so far, and with what priorities?
The Usual Suspects
Michael Bloomberg and Bill Gates are two prominent givers who have long been on the front lines of global health issues. So it should come as no surprise that each has responded to the pandemic by committing major dollars in a timely manner.
Bloomberg Philanthropies announced a $40 million project to partner with the World Health Organization to combat the COVID-19 pandemic in emerging economies. Bloomberg also launched a virus information and crisis coaching initiative, gathering top officials and public-health experts to collaborate on best practices for mitigating the disease’s spread.
The Gates Foundation, meanwhile, has earmarked $100 million to support global detection, isolation and treatment efforts, and is also investing more money into researching a vaccine, as well as curtailing the local outbreak in the Seattle region.
Bill Gates has long had a keen interest in the threat posed by a global pandemic. A Ted Talk Gates delivered in 2015 about “the next pandemic” has been viewed nearly 25 million times and, as we’ve reported, the Gates Foundation co-founded the Coalition for Epidemic Preparedness Innovations, or CEPI, in 2017 with the Wellcome Trust, the World Economic Forum, and the governments of India and Norway. In years prior to the COVID-19 outbreak, the foundation had given $100 million to pandemic-related work.
Mark Zuckerberg is another billionaire with a history of responding to global health emergencies. He and Priscilla Chan gave $25 million to the CDC Foundation in 2014 during the Ebola outbreak, and now they have also become similarly important donors in the fight against COVID-19. Last week, the Chan Zuckerberg Initiative announced a $25 million commitment to the COVID-19 Therapeutics Accelerator to speed the development of treatments for the disease. CZI has also granted more than $1 million to support education initiatives related to the pandemic, including support for long-distance learning.
In addition to CZI efforts, Mark Zuckerberg announced in mid-March that Facebook will match $20 million in contributions to the U.N. and CDC coronavirus response funds. The company followed that up with an announcement this week that it is pledging $100 million to media outlets impacted by the pandemic.
Don’t Let the Perfect Be the Enemy of the Good
A genuine concern for many top philanthropists may be that this particular problem is so new, and therefore rife with so much uncertainty, that it’s difficult to know what shape their giving should take in order to be most effective. Given finite resources, is it wiser to contribute slowly and deliberately, only ramping up commitments once further information becomes available and outcomes appear more predictable? Or better to move quickly and get grants out the door as soon as possible?
The answer isn’t so obvious. As Cynara Lilly, executive director of communications and advocacy at the Ballmer Group told me, “there are so many emerging community needs that have to be addressed now and in the future, that it’s hard to know what the ‘right’ response is.”
But former Microsoft CEO Steve Ballmer and his wife, Connie, haven’t let that uncertainty stop them from giving. The Ballmer Group has pledged $25 million to help communities in Seattle, Los Angeles and Michigan (Ballmer is from Detroit, and currently owns the L.A. Clippers). The foundation previously donated $3 million to Seattle Foundation’s COVID-19 Response Fund, $1 million to All In Seattle, $500,000 to the United Way for Southeastern Michigan, and $1 million to support families in Los Angeles. All grants support urgent needs in their respective regions.
According to Lilly, the Ballmer Group is in the process of engaging with grantees to identify the areas where the organization’s giving can have the most immediate and profound impact. “What is clear,” said Lilly, “is the urgency to support critical issues like food security, small business support, first responders, and more. We are committed to stepping up to this need, and are seeing a tremendous number of people/foundations who want to help and are coming together to do so.”
That being said, Lilly also acknowledged the complex reality that many givers and would-be givers are facing: What seems like the correct response today may appear premature weeks from now.
Wall Street titan Ray Dalio and his wife Barbara are two other major philanthropists who’ve moved quickly despite the fluidity of a fast-moving crisis. In February, Dalio Philanthropies—along with Dalio’s hedge fund, Bridgewater—committed $10 million to fight the coronavirus epidemic, and more recently, the foundation pledged $3 million to support childcare services for hospital workers across the state of Connecticut, as well as another $1 million for food and nutrition for Connecticut residents in need.
Another billionaire couple, Nicholas and Susan Pritzker, the co-founders of the Libra Foundation, a social justice grantmaker, recently sprung into action. This week, the foundation announced a full doubling of its funding level—from $25 million in 2019 to $50 million in 2020. “Philanthropy must step up in this pivotal year, said Susan Pritzker. “In 2021, no one wants to look back and wish they’d done more.” The foundation said that the new funds will enable its grantees “to respond and adapt to the grave threats our democracy is facing, as well as the economic and public health impact of the COVID-19 crisis as they set about the difficult work of rebuilding our communities and greater society.”
Super-Citizens Activate
Although it’s still far too early in this saga to tell how things will play out, one emerging theme from the response of the billionaire class thus far has been a focus on local needs.
The Seattle Foundation’s COVID-19 Response Fund is a great example. The fund launched on March 9th, addressing community needs in one of the hardest-hit regions in the United States. Already, the fund has raised more than $15 million from the philanthropies of a number of wealthy residents in the region, including the Bill and Melinda Gates Foundation, the Schultz Family Foundation, the Paul G. Allen Foundation, the Raikes Foundation and the Bezos Family Foundation (which was co-founded by Jeff’s parents). The fund will prioritize low-income residents who have been especially impacted by the COVID-19 crisis.
The launch of a similar rapid-response fund—this one a $75 million fund launched to support New York City nonprofits—is another sign of wealthy donors mobilizing for action. Its backers include prominent legacy foundations like Carnegie and Ford, but also foundations piloted by living donors, such as Bloomberg Philanthropies, the JPB Foundation, the Kenneth C. Griffin Charitable Fund, and the Laurie M. Tisch Illumination Fund.
“The coronavirus pandemic threatens to cripple New York City’s nonprofit organizations and the vitally important services they provide. This joint initiative with so many incredible philanthropic partners will help ensure that many of our city’s nonprofits can withstand this crisis and continue to serve all New Yorkers,” said Patricia E. Harris, CEO of Bloomberg Philanthropies. (After 9/11, Bloomberg provided hundreds of millions of dollars in support to the city’s battered nonprofits.)
Wealthy donors are also backing emergency relief efforts in Silicon Valley. On March 13, Facebook executive Sheryl Sandberg and her fiance Tom Bernthal launched a push to raise millions for food bank services in the region. The pair donated an initial $1 million, and raised additional funds from tech leaders that include Reid Hoffman and Scott Cook.
Meanwhile, in Oregon, Nike co-founder Phil Knight and his wife, along with Nike executives, announced a $10 million donation for COVID-19 response efforts led by Oregon-based organizations. This includes $1 million to the Oregon Food Bank, $2 million to the Oregon Community Recovery Fund, and $7 million to Oregon Health & Science University.
Elsewhere, the Arthur M. Blank Family Foundation is donating $5.4 million for COVID-19 relief efforts in Atlanta and Montana. Blank is the owner of the Atlanta Falcons and just purchased a $20 million, 9,300-acre ranch in Montana last year. Similarly, Stephen Bisciotti, owner of the Baltimore Ravens, has donated $1 million to support four Maryland nonprofits. Billionaire New Orleans Pelicans owner Gayle Benson is covering the wages of Pelicans employees and has donated $1 million to a fund that will be distributed to local residents via the Greater New Orleans Foundation. Other sports owners including Mark Cuban, Jimmy Haslam and Jim Irsa are all following suit with donations to their respective local communities.
In Chicago, another city hard-hit by COVID-19, it’s not surprising to see members of the Pritzker family stepping up—this clan of billionaires has long supported causes in the greater Chicago area. When the outbreak began, Illinois Governor J.B. Pritzker phoned his older sister, Penny, herself a former Commerce Secretary under President Obama. J.B. tasked Penny with spearheading a rapid-response fund, and less than a week later, the Illinois COVID-19 Response Fund was launched with $23 million in funding, not to mention some key human capital commitments. J.B. and Penny—both heirs of Jay Pritzker’s hotel fortune—donated millions to the fund, as did other family members and the Pritzker Foundation. The Pritzkers have also donated millions to the Chicago Community COVID-19 Response Fund, which was created by the Chicago Community Trust and United Way of Metro Chicago. The Chicago fund has already announced over $3 million in grants to over 40 nonprofits.
In his book “The Givers,” IP editor David Callahan defines a “super-citizen” as a wealthy individual who lends support to his or her community in ways that local government can’t or won’t. Certain mega-givers have long exemplified what it means to be a super-citizen—think George Kaiser’s Tulsa grantmaking, or Eli Broad’s reshaping of Los Angeles’ cultural milieu.
One question about the COVID-19 crisis is whether it will catalyze more billionaires to embrace this model of activist local giving. So far, there’s no evidence that it will: Nearly all the donors stepping forward already have long track records of philanthropy. Meanwhile, the vast majority of U.S. billionaires have been silent about their charitable giving plans amid the growing pandemic. And while some may be making donations quietly, our hunch—based on lots of evidence of paltry giving by the ultra-wealthy—is that many billionaires aren’t making any significant gifts at all.
Damned If You Do, Damned If You Don’t
One possible reason for the lackluster public response of some billionaires could be the double-edged sword they face when it comes to crisis response. Those who don’t proactively tackle this issue may naturally face public scorn for their inaction, yet those who do may also face reproach—either for not giving enough, or for addressing the wrong problem.
Take Jeff Bezos. The world’s richest man penned a letter to his workforce stating his intention to purchase millions of masks for their use. The publication of that letter led to a stream of criticism about everything from Amazon employees working without proper protection, to the very fact that Bezos is placing the purchase order in the first place. Shouldn’t all medical essentials like masks and gloves be designated for hospital staff and first responders as opposed to Amazon employees? Bezos also unleashed a wave of public wrath after suggesting that people voluntarily donate to Amazon’s relief fund. At the time of this writing, Amazon’s market cap is just under $1 trillion. Perhaps the company—one of the few to see a sales increase during the pandemic—could front the money for its employee relief fund so the rest of us don’t have to. To be fair, Bezos did take a step in the right direction here by personally committing $100 million to Feeding America, a nonprofit that distributes money to food banks across the country. The gift is the largest in Feed America’s history, and tied with the aforementioned Gates Foundation’s gift for the largest single donation in response to the COVID-19 outbreak.
So here’s Jeff Bezos trying to do the right thing by his employees, and he gets skewered for it. Billionaires may be obscenely wealthy, but they’re also human. No one wants to be on the receiving end of a public backlash that characterizes them as indifferent to the suffering of millions. As a result, some givers may pause a moment to formulate an optimal response, which to an outside observer, may seem like dithering.
That’s not to say we should let the billionaire class off the hook entirely. A public skewering in some cases may be just what the doctor ordered if it helps to coax more money out of the pockets of the ultra-wealthy during a global catastrophe.
Time to Lean In
It’s not just more money that is important right now. It also matters how donor dollars are distributed. On March 16th, Inside Philanthropy published a much-read guest post by Lori Bezahler, president of the Edward W. Hazen Foundation, calling for funders to take urgent steps to support nonprofits, including converting project grants into general operating support, providing emergency funding, and increasing payout levels to support grantees. Since then, dozens of major foundations have come together—through an effort catalyzed by Ford—in a pledge to lift restrictions on grants in order to help nonprofits.
The Ballmer Group is one such organization. Lilly says, “One of the most important things the grantmaking community can do is to not become an additional burden on grantees, many of whom are on the front lines dealing with the COVID-19 response, and who have families to care for, as we all do. This means being flexible with dollars, listening to needs and relaxing our own requirements—like allowing changes in timelines or reporting requirements.” Ballmer has also assured grantees that the foundation will meet its existing grant commitments so organizations can concentrate on emerging needs. Other philanthropies led by living donors, like the Barr Foundation in Boston, have provided similar assurances.
After the Great Recession, philanthropic gifts dropped by more than 15 percent. That left many nonprofits reeling. As we stand at the precipice of another recession, we’ve entered a clutch moment for the heavily criticized billionaire class. It may take government and the private sector to get us out of this mess, but billionaires could soften the blow by offering bridges of support during the coming transition.
If nothing else, the current moment is an opportunity to show the nation and the world that they’re not just out for themselves.
