Billionaire philanthropists John and Laura Arnold have committed to donate 5% of their wealth annually as part of an effort to encourage increased, timelier donations to charities.
The Arnolds are the first billionaires to sign on to the advocacy organization Global Citizen’s “Give While You Live” campaign, which calls on the world’s billionaires to give at least 5% of their wealth every year to a cause. The Arnolds’ pledge Monday came as part of an alliance between Global Citizen and the Arnold-led Initiative to Accelerate Charitable Giving – a coalition of donors and experts who want Congress to raise giving requirements.
By agreeing to give 5%, the Arnolds are voluntarily subjecting their assets to the same minimum payment standard private foundations must donate annually to maintain their tax-exempt status. But there’s been an ongoing debate during the coronavirus pandemic on whether foundations and donor advised funds — similar to charitable investment accounts – should be required to give more because of increased needs.
“Right now, many charities are in danger of not surviving the pandemic. Yet, more than $1 trillion promised to them remains warehoused in tax-free investment accounts,” John Arnold, the former hedge fund executive turned philanthropist, said in the announcement. “America’s charities cannot afford to wait for some larger crisis to arise. Business as usual is simply not good enough.”
Donor-advised funds aren’t required to make donations in any given year — a hot-button issue in philanthropy since donors are able to take immediate tax deductions before charities get any of the money.
The Initiative to Accelerate Charitable Giving has been calling for these assets to be donated within 15 years. But this, and its other calls for reforming tax benefits for donors, have gotten pushback from groups opposing more government involvement in giving.
“Some donor-advised funds, emulating the Arnolds’ example, are committed to timely and ongoing distribution of their resources. But others are not,” said Edward A. Zelinsky, a tax law professor at Yeshiva University’s Benjamin N. Cardozo School of Law.
“For some, the Arnolds’ example may now be instructive, but I unfortunately do not believe that their example will be followed by all,” he added.
The latest pledge is not the first giving commitment made by the Arnolds. They’ve already signed the Giving Pledge, a commitment developed by Bill Gates, his wife Melinda, and Warren Buffett to get the world’s richest to give a majority of their wealth during their lifetimes or in their wills.
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