My colleague Geoff Colvin refers to Bill Gates’ philanthropic organization, the Gates Foundation, as a “behemoth of benefaction.” It is the largest private foundation globally, established on the immense wealth Gates amassed at Microsoft, complemented by around $40 billion contributed by his friend Warren Buffett. Gates has been spending an average of $5 billion annually for 25 years and recently pledged to continue this trend by committing to an annual expenditure of $10 billion until 2045, marking the most significant philanthropic commitment in modern history before closing operations.
While these figures are staggering, they pale in comparison to the collective generosity of Americans. In 2023, individuals, corporations, and foundations in the U.S. reported a total of $557 billion in charitable donations, with individuals contributing $417 billion through donations or bequests. Wendy McGrady, chair of the Giving USA Foundation, noted that the U.S. is known for its generosity, as reflected in the World Giving Index.
McGrady highlighted that the reported $557 billion only accounts for monetary gifts to registered nonprofits, excluding informal donations like crowdfunding or aid for personal needs. The scale of American generosity is significant, especially amidst cuts to international aid and domestic programs for marginalized groups under the Trump administration. However, Una Osili, an expert in philanthropy and social innovation, cautioned that philanthropy alone cannot fill the void left by government aid reductions.
Osili underscored the immediate and long-term impacts of diminished government support on humanitarian organizations, both in the U.S. and abroad. She suggested that this period of change could present opportunities to rethink how philanthropy operates and addresses societal needs more effectively.
As philanthropy navigates these shifts, nonprofits face economic challenges akin to those affecting businesses and individuals. McGrady noted that the sector, like the economy, struggles during recessions, with individual giving still recovering from the Great Recession.
Charitable giving has shown a slight growth overall, but there has been a concerning trend of 20 million households discontinuing their donations between 2010 and 2016, according to a 2024 report from the Generosity Commission, a nonpartisan group of NGO leaders. This decline in donors has been attributed to factors such as “middle-class precarity,” increased social isolation, and reduced social trust. The COVID-19 pandemic further exacerbated polarization and distrust in institutions.
On the other end of the spectrum, prominent figures like Warren Buffett and Mark Zuckerberg, along with his wife Priscilla Chan, have announced their intentions to donate large portions of their wealth to philanthropic causes, with some planning to cease donations upon their passing. The trend of “spend down” foundations, which aim to sunset their giving rather than perpetuate it indefinitely, is gaining traction among today’s ultra-wealthy philanthropists who prioritize tangible and measurable results in the present.
These modern philanthropists, often coming from successful business backgrounds or the tech industry, are more focused on immediate impact rather than leaving a lasting legacy through traditional institutions. They are keen on addressing pressing issues efficiently and effectively, as exemplified by Bill Gates’ ambitious plans to tackle major health challenges with a substantial portion of his wealth.
While some philanthropists have specific causes they support, many prefer to donate through various channels that provide more privacy, such as donor-advised funds, charitable LLCs, or impact investing. This shift has made it challenging for observers like Maria Di Mento, a senior reporter at The Chronicle of Philanthropy, to track and analyze high-level giving trends. The philanthropic landscape has seen fluctuations in causes supported over the years, with a recent increase in donations towards social justice causes during the pandemic and in response to events like the murder of George Floyd in 2020.
Overall, the evolving nature of philanthropy reflects a shift towards more immediate and impactful giving practices among the ultra-wealthy, as they seek to address pressing global challenges and make a tangible difference in the world.
In recent years, billionaire philanthropy has garnered significant attention, both positive and negative, with critics from various ideological backgrounds expressing their opinions. With the ongoing Great Wealth Transfer and the emergence of new fortunes worldwide, the landscape of philanthropy is expected to evolve. The question of whether the upcoming generation of philanthropists can achieve the remarkable accomplishments of their predecessors is crucial for the millions of lives they impact.
Recent years have witnessed the rise of two distinct approaches within philanthropy that initially appear contradictory. Effective altruism emphasizes the use of data to determine the most impactful ways to utilize donations, focusing on measurable outcomes. On the other hand, figures like philanthropist MacKenzie Scott and the organization GiveDirectly advocate for unrestricted giving, allowing recipients the autonomy to allocate funds based on their expertise and judgment. While these philosophies may seem divergent, there is merit in combining a data-driven approach with trust in aid recipients, as it may offer the most effective path forward for philanthropists.
Experts suggest that conducting thorough due diligence upfront and prioritizing the organization’s work over the donor post-investment could be a fruitful strategy. While metrics and impact numbers are essential, it is also crucial to acknowledge the nuanced nature of philanthropic work, where outcomes are not always quantifiable.
The future response of the American public to the significant reductions in foreign aid and domestic programs under the Trump administration remains uncertain, and there is potential for funding restoration in the future. Bill Gates highlighted a perception-reality gap regarding government spending on international aid, urging a more informed understanding of aid budgets. Notwithstanding these challenges, Americans continue to support various causes they believe in, demonstrating a consistent trend of generosity over the years.
Despite economic and social challenges brought about by the pandemic, philanthropy has played a vital role in addressing critical needs. While the landscape of philanthropy may be evolving, the enduring generosity of individuals and organizations underscores the importance of thoughtful and strategic giving in creating positive social impact.
The COVID-19 pandemic has sparked a surge in philanthropic efforts, ranging from providing tablets for remote learning to organizing vaccination drives. This wave of community support has revitalized many in the sector. “It’s not just the billionaire philanthropists,” one individual noted. “It’s everyday people setting up community fridges, showcasing the innovation, speed, agility, and flexibility that private donors possess.”
There is a shared ideology in philanthropy, as private giving is shown to be the most trusted form of institutional support. Local organizations, in particular, serve as a common ground for mutual understanding. Regardless of political affiliations, individuals can unite in the shared goal of creating spaces like parks for their children.
Despite significant contributions from figures like Bill Gates, philanthropy alone cannot fill the void left by reductions in government funding. This calls for a collective effort from all individuals to support causes close to their hearts. The message is clear: philanthropy can make a meaningful impact, and it is up to each of us, not just the wealthy, to contribute to positive change.
