First came the 90-year-old Army veteran, Barre Seid, who gave his electrical products company to a new political nonprofit run by a former Federalist Society leader right before it sold for $1.6 billion.
Next was an octogenarian rock climber, Yvon Chouinard, who transferred his $3 billion outdoor retail brand, Patagonia, to a trust with the hope of sending $100 million a year to nonprofits.
And now comes the whale. Michael Bloomberg, who turned 81 in February and has a fortune estimated at roughly $95 billion, has committed to give his 88% stake in the sprawling finance and media company that bears his name, Bloomberg LP, to Bloomberg Philanthropies, according to a report by the Financial Times confirmed by Bloomberg’s representatives.
It’s hard to say if this is a trend, the start of a generation of aging baby boomer billionaires planning to avoid estate taxes and cement their philanthropic legacies by giving over their companies to trusts created to power future giving, as FT’s report suggests is case with Bloomberg. Yet even on its own, Bloomberg’s donation is a landmark and could be the largest private philanthropic donation of all time — albeit of money to a giving vehicle, not actually in the hands of those in need. It’s not wholly unexpected, as Bloomberg signed the Giving Pledge in 2010 and still has a massive sum to give away, but it may be a sign that we are on the precipice of a staggering expansion of philanthropy as we know it. It’s also another extreme example of the “be careful what you wish for” nature of big philanthropy, as the ultra-wealthy give away ever larger sums and in the process wield ever larger influence.
“If all those current billionaires who have endorsed Giving while Living make good on their pledges, it’s hard to get a handle on the extent to which the scale of mega-philanthropy, already so top-heavy, will increase even more,” tweeted Benjamin Soskis, a historian of philanthropy and senior research associate at the Urban Institute, alongside a link to the announcement.
There is, however, quite a lot we don’t know about both the structure of this plan and how it will impact the philanthrosphere. Below, I’ve laid out four initial questions we have about what’s ahead.
Should we call it a trend?
There are plenty of cases in philanthropy of big actions followed by, well, not much. In late 2021, the Ford Foundation publicly committed to divesting its $16 billion endowment from fossil fuels. Coming on the heels of several similar announcements, the decision of the country’s largest legacy foundation seemed like it might be the first ripple of a coming wave. But 18 months later, there have been relatively few other major divestment announcements.
Or consider 1984, the year Chuck Feeney quietly transferred more than a third of his company to what became Atlantic Philanthropies, the spend-down foundation that fulfilled the billionaire Duty Free Shoppers co-founder’s desire to “die broke.” Not until MacKenzie Scott did we see another high-profile billionaire follow his lead by publicly spending their fortune faster than their assets were multiplying.
In short, the winds of change can shift grantmaking, but it takes a lot more than that to move assets. That said, while spending down remains a niche attraction, the desire to avoid taxes knows relatively few borders, particularly among the billionaire class. Dodging estate taxes through creative philanthropic trusts could become quite popular in the years ahead as an aging generation of uber-wealthy decide what to do with their fortunes. It’s also a solution to the dilemma some billionaires find themselves in, having pledged to give away most of their fortunes, but failing to keep up with their ballooning assets. Some at Inside Philanthropy have wondered how, exactly, someone with as much money as Mike Bloomberg or Bill Gates could possibly give it away in their lifetime. This is a potential answer.
We are living through, after all, the greatest wealth transfer in history. So perhaps this really is just the beginning. “Anyone else sense a trend, here?” tweeted Dr. Lucy Bernholz, a philanthropy scholar at Stanford University, in response to the Bloomberg news.
It’s worth noting that all evidence so far indicates broad similarities between Bloomberg’s move and his predecessors, but until the release of further details, there is the possibility that Bloomberg’s chosen structure will be substantially different. It also seems unwise to make much of the timing. It is possible that this plan was hatched well before any of the other announcements.
Who will hold the power?
Are a pair of 40-somethings about to join the ranks of the world’s most powerful philanthropists? The Financial Times reported that the trust to which the company is passed “would be overseen by friends and family, such as his daughters Emma and Georgina.”
The sisters are already on the 25-member board of Bloomberg Philanthropies, alongside a former senator, prior treasury secretary, and several current and retired Fortune 500 CEOs, among others. Already two of the most powerful heirs in philanthropy, the duo could gain a lot more influence, depending on how the trust is structured and power is distributed. Of course, the “friends” portion of that statement leaves open the possibility that all those other figures will continue to have an equal share of control.
In any case, Bloomberg is years ahead of some contemporaries, such as Bill Gates and Melinda French Gates, who only recently expanded their board beyond themselves and Warren Buffett. In that sense, we may not see a major change in control of Bloomberg Philanthropies right away, but we’re eager to see how that balance of power evolves in the absence of Bloomberg himself.
How will Bloomberg’s enormous influence carry on in the future?
Inside Philanthropy has long been struck at how Bloomberg has used philanthropy as just one of many levers of power. He is notable for the way that he has marshaled his grantmaking alongside his governing, consulting, diplomacy and candidacy to push for the world he would like to see.
That approach has at least contributed to some undeniable results, from fewer coal-fired power plants to fewer smokers. But the way he tends to impose his will through his philanthropy has also been troubling at times, setting agendas in arenas like climate action, gun control and public health. Bloomberg often has a heavy hand in his giving, centering himself and his preferred course of action. There are cases where he has pulled those levers in unison to advance his own interests, such as pressuring New York City nonprofits that relied on his philanthropic support to back legislation that would allow him to seek a third term as mayor.
It’s also impossible to catalog the wide-ranging power of the company itself. Take climate change. Bloomberg News, for instance, has done vital and in-depth investigations on climate change. Meanwhile, the company’s data team, BloombergNEF, is closely tracking green investments and trends.
Stepping back, the omnipresence of Bloomberg terminals in the financial world gives the business a say in what literally crosses investors’ screens. A Yahoo columnist recently put him among the most powerful people in finance.
With the business and philanthropy due to be officially linked, and its founder moving out of the picture, it remains to be seen whether the circle of influence Mike Bloomberg has built up over the years will get even stronger or start to recede. Will the Bloomberg machine charge ahead in his absence, continuing to influence any number of arenas? Or will his philanthropic presence turn into something more traditional like a Ford or a Hewlett?
How will we govern such transfers?
If this really is the start of a trend, it’s easy to imagine the nightmare scenario: hundreds of billions in dollars in perpetual trusts shaping our future in the vision of their founders until the end of time. Of course, that could also describe existing philanthropy, but Bloomberg’s transfer and others could mark an expansion of such structures at an unprecedented scale.
This could breathe new life in the moribund efforts to reform philanthropy, such as the Biden administration’s DAF reform proposals. Current law offers a myriad of ways for the wealthy to sidestep estate taxes — and in these cases, indirectly subsidize these perpetual influence machines. If that rouses public outrage, we may see a new attempt to define under what terms our society allows such maneuvers, if at all.
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