Billionaires first to give 5 per cent of wealth annually to charity

Philanthropists John and Laura Arnold are the first billionaires to sign on to the advocacy organisation Global Citizen’s Give While You Live campaign, which urges the world’s richest to give at least five per cent of their wealth every year to a worthy cause.

The Arnolds’ pledge is part of an alliance between the international advocacy organisation Global Citizen, founded by Hugh Evans, Simon Moss and Wei Soo, and the John and Laura Arnold-led Initiative to Accelerate Charitable Giving – a coalition of donors, experts and not-for-profit organisations that represent a broad spectrum of interests across philanthropy.

By agreeing to give five per cent of their wealth annually, the Arnolds are voluntarily subjecting their assets to the same minimum payment standard private foundations must donate annually to maintain their tax-exempt status. There is an ongoing debate during the coronavirus pandemic about whether foundations and donor-advised funds – similar to charitable investment accounts – should be required to give more because of increased needs.

John Arnold has a net personal wealth of US$3.3 billion, according to Forbes. In 2010, he and wife Laura restructured their philanthropic activities into Arnold Ventures, which employs more than 80 people.

"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 Houston, Texas-based 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, which is 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 been met with opposition 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," Edward A Zelinsky, a tax law professor at Yeshiva University’s Benjamin N Cardozo School of Law, told Associated Press.

"For some, the Arnolds’ example may now be instructive, but I unfortunately do not believe that their example will be followed by all."

The Arnolds have already signed the Giving Pledge, a commitment created 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.