Three years ago, ultrawealthy families and individuals began following the example of Warren Buffett and Bill and Melinda Gates, pledging to give away at least half their wealth to charity in an endeavor called the Giving Pledge.
Earlier this month, Giving Pledge announced seven new signatories from the U.S. and three other countries, bringing the total number to 122.
That subscription rate seems “paltry,” according to a recent report by Wealth-X, which set out to analyze why only a little more than 5% of the world’s 2,170 billionaires have signed the pledge. (The population estimate was published by UBS and Wealth-X Billionaire Census.)
The article identified several likely reasons for the low rate of pledgers. One was the pledge’s focus on raising awareness rather than actively raising funds.
“The Giving Pledge has served to elevate the profile of philanthropy in different parts of the world where philanthropy is not so openly discussed, even though it might be widely practiced,” Maya Prabhu, executive director of philanthropy services at Coutts private bank, told Wealth-X.
In addition, many high-profile people have declined to sign the pledge, among them Apple founder Steve Jobs, possibly because there were uncomfortable about making a public statement or discussing their wealth and its purpose. Others may have worried that a change in circumstances could prevent them from meeting their pledge.
Yet another factor is cultural differences, according to Wealth-X. Whereas speaking openly about charitable giving is acceptable in the U.S., in China, discussing social problems openly may raise fears about offending the state. In 2010, a personal invitation to 50 Chinese billionaires to join the pledge from Buffett and the Gateses fell flat.
Moreover, China’s rich are at a different point in the wealth cycle, the article said, their money often tied up with businesses and family dynasties.
The article noted that unwillingness to sign the pledge did not mean ultrawealthy families were not generous. It said that in the past three years, billionaires have donated $69 billion — or $32 million per billionaire.
The article said that defenders of The Giving Pledge were satisfied that the campaign’s chief goal of creating a ripple effect across the world has been successful.
The Giving Pledge has also prompted other wealthy people to create alternative ways to help solve global problems.
For example, the One Thousand and One Voices investor group of some of the world’s most influential families plans to deploy $300 million in private equity funds, first in sub-Saharan Africa and then in Latin America, Southeast Asia and Eastern Europe.
Check out 3 Charity Strategies to Cope With Rising Taxes on ThinkAdvisor.