Bill Gates Gave Away The Entire Amount of His Net Worth As of The Giving Pledge and Is Still Worth Double

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Bill Gates Gave Away The Entire Amount of His Net Worth As of The Giving Pledge and Is Still Worth Double

Post by FireNexus » 2019-05-11 06:07am

https://www.vox.com/future-perfect/2018 ... ilanthropy
“Vox” wrote:Bill Gates is committed to giving away his fortune — but he keeps getting richer

Gates is now worth $100 billion. Why is it so hard to give money away?

Last week, a bump in Microsoft’s stock prices pushed Bill Gates’s net worth above $100 billion. He remains the world’s second-richest person, behind Jeff Bezos. It’s a mind-boggling amount of money. What makes it more mind-boggling is that Gates says he’s working to give away nearly all of it.

Bill and Melinda Gates have given away more than $45 billion through the Bill and Melinda Gates Foundation, which primarily works to combat global poverty. Their work has saved millions of lives. At the same time, the Gateses themselves have just kept getting wealthier. (Gates’s fortune surpassed $100 billion once before, briefly in 1999 at the height of the dot-com boom. Adjusted for inflation, that’d be $150 billion today.)

It’s not just the Gates fortune, either.

In December, writing for Inside Philanthropy, David Callahan looked at the numbers and pointed out that across the board, the wealthiest people in the world are sitting on $4 trillion, and accumulating money much faster than they give it away.

“[Bill] Gates was worth $54 billion in 2010, the year the Giving Pledge debuted; he’s worth $97 billion today. [Warren] Buffett’s wealth has also nearly doubled, to $90 billion, despite annual transfers of Berkshire Hathaway stock to the Gates Foundation and the four foundations controlled by his three children,” Callahan wrote.

With some billionaires, there’s a simple explanation for why they don’t give away more money: They don’t really feel like it.

But that doesn’t seem like a fully satisfying explanation when it comes to Gates, Buffett, or other billionaires who’ve pledged to give away their wealth before they die. I want to speak up in their partial defense here: It’s actually shockingly challenging to effectively give away vast sums of money, especially at the rates billionaires would need to give to keep up with their recent gains on the stock market.

Philanthropy is harder than you think

It can strain credulity that it’s really that challenging to give away money. But when you look at the track record of many poorly planned, failed philanthropy projects, it gets clearer.

Last year, the data came out from a $575 million multi-year project to improve schools, spearheaded by more than $200 million from the Gates Foundation — and the expensive intervention didn’t improve student outcomes at all. Mark Zuckerberg spent $100 million to improve schools and saw some modest gains — but they were small and accompanied by outrage and local backlash. (My colleague Dylan Matthews has pleaded for philanthropists to stay out of education, where their track records are particularly disappointing.)

The charity evaluator GiveWell, which researches promising interventions, found that these failures aren’t the exception but the norm. “We think that charities can easily fail to have impact, even when they’re doing exactly what they say they are,” they write. “[M]any of the problems charities aim to address are extremely difficult problems that foundations, governments and experts have struggled with for decades. Many well-funded, well-executed, logical programs haven’t had the desired results.”

GiveWell recounts what went wrong with one intervention that didn’t live up to expectations: PlayPumps, a merry-go-round that was also supposed to pump water and which replaced standard pumps in some villages. “Children found playing on the PlayPumps exhausting and women ended up having to push the merry-go-round around themselves to pump water; the PlayPumps were more expensive, pumped less water, and were more challenging to maintain than the hand pumps they had replaced.”

A history of such disappointments can make donors understandably unsure where their money will actually do good. And, Callahan observes, billionaires are really leery of spending money in a sector they don’t understand and where they know many things don’t work.

I want to be clear here: Program failures are to be expected, even applauded. If a nonprofit is trying new things, which it should be, and conducting careful research to determine whether its programs are cost-effective or have unintended consequences, which it also should be, then sometimes it’ll find that a program failed. Trying new things, learning about them, and adjusting accordingly is the right way to make progress in a new domain.

But this also suggests that it’s going to be difficult to spend money usefully fast. It’s unwise to start a program at large scale, affecting hundreds of thousands of people, because it might not be effective — and you might even do harm if your program has unintended consequences.

One alternative is to validate your approach in small studies, scaling up only if those are a success. But many programs that work great in small studies still fail when you scale them. And you can fund many hundreds of promising pilot programs without spending even 1 percent of the $40 billion that Bill Gates has gained in net worth since 2010.

When the Gates Foundation has found an intervention that works and continues to work at scale, it’s poured in more money. Fighting malaria, for example, is a case where money continues to make a big difference even at scale, and the Gates Foundation has committed $2 billion to the fight.

But if foundations aren’t giving away money as fast as we’d like, that reflects, in part, that most causes aren’t like malaria: the fact that there’s an urgent need for $50,000, or $100,000, doesn’t mean that there’s a good opening to spend $2 billion.

Grants can go wrong — and require a lot of due diligence

Many people, hearing that, will wonder why organizations aren’t just a lot more generous with grants to the smaller charities everywhere that can definitely use the money, or why they don’t take advantage of the numerous funds, projects, and big ideas detailed in the Inside Philanthropy piece. Callahan writes that many people have tried to identify for billionaires some great opportunities that can absorb billions in funding, and that hasn’t gone anywhere. Why not?

I think a lot of what’s at work there is that foundations are understandably risk-averse, concerned with their own reputation, with avoiding disastrously bad grants, and with not getting scammed. Any foundation re-granting to smaller charities will worry a lot about the potential for a grant to backfire. One way that can happen, of course, is the program turning out to be a bad idea and hurting the people it was meant to help. Another way is the program being corrupt, a fraud, or worse.

Last fall, one case came to light that I expect every grant-reviewing officer has in the back of their mind as a worst-case scenario: A school in Liberia, funded by eager Western donors, allegedly ignored warning sign after warning sign as a senior staff member assaulted many of the young girls attending the school. Consistently applied accountability standards could have flagged what was happening at More Than Me, the Liberian organization. A thorough grant reviewer would at least have noticed that the teachers had no teaching experience and the administrators no administrative experience.

So while due diligence doesn’t eliminate the risks of funding something really bad, it definitely reduces them. But it’s expensive and time-intensive. It also requires significant back-and-forth with nonprofits, meaning it isn’t costless for grant applicants either.

To make many more grants, an organization like the Gates Foundation needs to scale up its staff, oversight, and procedures. The Gates Foundation as an existing institution has some huge advantages here compared to any billionaire who wants to do good; a smaller or newer institution would have to develop, from scratch perhaps, the organizational capacity to evaluate grants carefully.

There really are a lot of ways for money to do good in the world

Callahan observes that the difficulty of giving — while a very real challenge any megadonor will run into — can also slide into a justification for ignoring the challenge entirely. And that’s tragic, as philanthropy remains a way to do extraordinary good.

Looking at a charitable landscape where many programs are ineffective, others can’t absorb tens of millions in new funding, and some inflict harm might make billionaires (or the rest of us) decide that there’s nothing we can do. But that’s not true at all.

There are absolutely high-impact, well-established giving opportunities out there, and many of them can make use of hundreds of millions of dollars in new funding. Many global health interventions scale well and need more money than they are getting. Charities that work for animals are typically profoundly underfunded. And there are lots of important problems where we still need to fund more basic research.

The challenges are real, but they’re surmountable. Moving slowly on donating your billions makes sense, as long as caution doesn’t slide into inaction.
I find this really irritating. He could have kept his fortune stable by giving $1M trust funds grants to 25,000 people with free and mandatory financial education and still have done all he’s done. He could have paid off student loan debts for 250,000 people. He could spend big pharmaceutical money developing new antibiotic classes to be open-sourced as soon as they receive approval. He could do so much if he just decided to raise his tolerance for “risk” (risk being money spent on doing something that won’t help).

When you give away all your money and still double your fortune, you’ll never give enough away to deplete it before you die. So give more, be willing to get less bang for your buck because those bucks are getting no bang growing a fortune you’re trying to fucking deplete.

I know this also says damning things about global capitalism, but I’ve lost all sensitivity to that. Yeah, we should tax him, but we don’t. It’s the fact that he’s apparently sniffing his own farts so hard on effective altruism that he’s doubling a fortune he’s explicitly trying to get rid of instead of getting rid of it. The opportunity cost of his strategy is $100B over 10 years.
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Re: Bill Gates Gave Away The Entire Amount of His Net Worth As of The Giving Pledge and Is Still Worth Double

Post by Ziggy Stardust » 2019-05-11 07:52pm

In general, I do agree with you that Bill Gates and other billionaires could and should be doing more than they currently are to use their wealth in a way that will benefit the most people.

The one thing I will have to say in defense of Gates specifically (the article references this a little, which you seem to gloss over) is that he has vast sums of money in the Gates Foundation ear-marked for a variety of research purposes. For example, the Gates Foundation funds a lot of large malaria research programs (in particular the one that I have some experience working with, which is an ambitious plan to eradicate malaria from south-east Asia by 2030). The thing with medical research is that it takes decades even when done perfectly well, and vetting and finding groups to carry out that research is a complicated and expensive process in and of itself. The point being that there is a lot of money that Gates has set aside specifically for the purpose of being used to fund future research. So, on the surface it would appear that the money is being "spent" and just being hoarded by Gates, but it's not really a fair characterization.

As I said, I'm not going to argue that I don't think he and others couldn't be doing more. But I think the above should at least be noted and taken into consideration.

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Re: Bill Gates Gave Away The Entire Amount of His Net Worth As of The Giving Pledge and Is Still Worth Double

Post by Napoleon the Clown » 2019-05-11 09:37pm

Most of the wealth that billionaires possess is in the form of intangibles that cannot be quickly and easily liquidated. Liquidating these assets (stocks, mostly) would cause panic sells and fuck the economy. Add in that these assets tend toward increasing in value over time more quickly than inflation (sometimes substantially so) and it's easy to see how someone like Bill Gates could bring in money faster than he could ever realistically spend it without literally gifting all of his assets to someone else. And doing the latter would potentially cause mass panic, with people thinking Gates (or whichever billionaire) knew there was something going on and attempting to avoid trouble.

I would be shocked if even 10% of billionaires actually have something close to a billion in the bank, so to speak. Compared to intangibles, that's way too high risk.
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Re: Bill Gates Gave Away The Entire Amount of His Net Worth As of The Giving Pledge and Is Still Worth Double

Post by Lord Revan » 2019-05-12 12:10am

Napoleon the Clown wrote:
2019-05-11 09:37pm
Most of the wealth that billionaires possess is in the form of intangibles that cannot be quickly and easily liquidated. Liquidating these assets (stocks, mostly) would cause panic sells and fuck the economy. Add in that these assets tend toward increasing in value over time more quickly than inflation (sometimes substantially so) and it's easy to see how someone like Bill Gates could bring in money faster than he could ever realistically spend it without literally gifting all of his assets to someone else. And doing the latter would potentially cause mass panic, with people thinking Gates (or whichever billionaire) knew there was something going on and attempting to avoid trouble.

I would be shocked if even 10% of billionaires actually have something close to a billion in the bank, so to speak. Compared to intangibles, that's way too high risk.
Also something that should remembered is that the economic troubles/panic caused by those panic sells would hurt the people in the poor more then it would hurt the super rich as it would probably cause panic downsizing or companies going under, so it's not desireble either unless all you are after is bloodshed and chaos.
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Re: Bill Gates Gave Away The Entire Amount of His Net Worth As of The Giving Pledge and Is Still Worth Double

Post by Broomstick » 2019-05-12 04:32am

Yo, Bill! - I'm willing to help out, just give me 100,000 or 150,000 straight out, it would be life-changing for me.

But, more realistically.... the malaria projects he has going on really are doing good. But there are still side effects. Distribution of mosquito netting HAS reduced malaria cases significantly, but some people use the nets for fishing rather than as mosquito netting with potentially very bad consequences beyond just more malaria cases. Yet, these people are still hungry, and mosquito nets do work as fishing nets. Maybe they should be distributing fishing nets as well? Except then you have people overfishing and depleting fish stocks.... Reminds of one of the first phrase I learned in Irish: Tá ocras mór agus tá pócaí folamh Hunger is great and pockets are empty. At the end of the day the poor are hungry and they're poor because they have no money. What's the use of preventing malaria next week if you're starving today?

Even so, the idea of using some of that money pay off student debt is interesting - why don't you write Mr. Gates and make the suggestion?
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Re: Bill Gates Gave Away The Entire Amount of His Net Worth As of The Giving Pledge and Is Still Worth Double

Post by Jub » 2019-05-12 05:06am

Broomstick wrote:
2019-05-12 04:32am
But, more realistically.... the malaria projects he has going on really are doing good. But there are still side effects. Distribution of mosquito netting HAS reduced malaria cases significantly, but some people use the nets for fishing rather than as mosquito netting with potentially very bad consequences beyond just more malaria cases. Yet, these people are still hungry, and mosquito nets do work as fishing nets. Maybe they should be distributing fishing nets as well? Except then you have people overfishing and depleting fish stocks.... Reminds of one of the first phrase I learned in Irish: Tá ocras mór agus tá pócaí folamh Hunger is great and pockets are empty. At the end of the day the poor are hungry and they're poor because they have no money. What's the use of preventing malaria next week if you're starving today?
The real question is. how do you help people in regions like sub-Saharan Africa where just getting water to drink, let alone enough to grow crops with, may require major engineering projects? Is the investment into local infrastructure even worth it or should we ask these people to resettle? What if they refuse to resettle, do we keep supporting people living in areas barely capable of supporting humans in anything less than utter poverty indefinitely?

Malaria is small potatoes next to figuring out how to get the poorest people in the world into a place (physical or metaphorically) where they have prospects that involve more than mere survival. I could be homeless in Canada and live like a king compared to the truly poor that exist as refugees or who are stuck in a region without water or crops.

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Re: Bill Gates Gave Away The Entire Amount of His Net Worth As of The Giving Pledge and Is Still Worth Double

Post by K. A. Pital » 2019-05-12 06:14am

Capital accumulates. It is not possible to be a generous capitalist because of the nature of capital and the logic of capitalism. But it is possible to surrender private ownership of capital to the community, to the workers and to the state. But none of this will happen, because it is much easier to just funnel a part of the funds to some charity which you control, get some tax concessions and carry on accumulating.

All these discussions about why the good hearts of the Good Masters did not save the world yet make me laugh. :lol:
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Re: Bill Gates Gave Away The Entire Amount of His Net Worth As of The Giving Pledge and Is Still Worth Double

Post by bilateralrope » 2019-05-12 06:25am

K. A. Pital wrote:
2019-05-12 06:14am
But it is possible to surrender private ownership of capital to the community, to the workers and to the state.
Sure, it's possible. But is it going to help if there is significant corruption and/or politicians wanting to spend that money in ways that will hurt people ?

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Re: Bill Gates Gave Away The Entire Amount of His Net Worth As of The Giving Pledge and Is Still Worth Double

Post by Jub » 2019-05-12 06:33am

K. A. Pital wrote:
2019-05-12 06:14am
Capital accumulates. It is not possible to be a generous capitalist because of the nature of capital and the logic of capitalism. But it is possible to surrender private ownership of capital to the community, to the workers and to the state. But none of this will happen, because it is much easier to just funnel a part of the funds to some charity which you control, get some tax concessions and carry on accumulating.
What does giving away a company like Microsoft to the workers even look like? What happens if he tries it but the rest of the shareholders refuse to play ball? Is it on Gates to make sure that the workers are properly organized to run something like Microsoft?

I get that we need at least UBI and that it would be highly beneficial to push down the peaks and raise the valleys of wealth inequality, but what roadmap do we have to make such drastic changes happen smoothly without making things so bad in the near term that any good is wiped out? How do we then prevent the corruption and natural accumulation of power that tends to happen in most communist and collectivist groups? I ask because the future you want is a good one but I struggle to see the path that gets us there.

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Re: Bill Gates Gave Away The Entire Amount of His Net Worth As of The Giving Pledge and Is Still Worth Double

Post by K. A. Pital » 2019-05-12 10:42am

bilateralrope wrote:
2019-05-12 06:25am
K. A. Pital wrote:
2019-05-12 06:14am
But it is possible to surrender private ownership of capital to the community, to the workers and to the state.
Sure, it's possible. But is it going to help if there is significant corruption and/or politicians wanting to spend that money in ways that will hurt people ?
So better to keep an unelected, unaccountable elite owner class, because there is „corruption“? I see.
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Re: Bill Gates Gave Away The Entire Amount of His Net Worth As of The Giving Pledge and Is Still Worth Double

Post by K. A. Pital » 2019-05-12 11:02am

Jub wrote:
2019-05-12 06:33am
What does giving away a company like Microsoft to the workers even look like? o see the path that gets us there.
In the best case, all else unchanged, it would look like Mondragon.
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Re: Bill Gates Gave Away The Entire Amount of His Net Worth As of The Giving Pledge and Is Still Worth Double

Post by The Romulan Republic » 2019-05-12 10:00pm

Things Bill Gates could do to get rid of his money:

-As noted above, buy the student debt of millions of college grads.

-Give his employees and their extended families all free health care and college.

-Get us to fucking Mars.
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Re: Bill Gates Gave Away The Entire Amount of His Net Worth As of The Giving Pledge and Is Still Worth Double

Post by bilateralrope » 2019-05-13 12:08am

K. A. Pital wrote:
2019-05-12 10:42am
bilateralrope wrote:
2019-05-12 06:25am
K. A. Pital wrote:
2019-05-12 06:14am
But it is possible to surrender private ownership of capital to the community, to the workers and to the state.
Sure, it's possible. But is it going to help if there is significant corruption and/or politicians wanting to spend that money in ways that will hurt people ?
So better to keep an unelected, unaccountable elite owner class, because there is „corruption“? I see.
Nope. Just acknowledge that spending that money in a way that is a net help is difficult.

I'm not going to say that he can't do more. He should build whatever bureaucracy is needed to provide enough oversight to allow him to donate more.

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Re: Bill Gates Gave Away The Entire Amount of His Net Worth As of The Giving Pledge and Is Still Worth Double

Post by K. A. Pital » 2019-05-13 02:25am

The Romulan Republic wrote:
2019-05-12 10:00pm
Things Bill Gates could do to get rid of his money:

-As noted above, buy the student debt of millions of college grads.

-Give his employees and their extended families all free health care and college.

-Get us to fucking Mars.
Clean up the ocean is a thing he could do too.
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Re: Bill Gates Gave Away The Entire Amount of His Net Worth As of The Giving Pledge and Is Still Worth Double

Post by aerius » 2019-05-13 11:05pm

The Romulan Republic wrote:
2019-05-12 10:00pm
Things Bill Gates could do to get rid of his money:

-As noted above, buy the student debt of millions of college grads.

-Give his employees and their extended families all free health care and college.

-Get us to fucking Mars.
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Re: Bill Gates Gave Away The Entire Amount of His Net Worth As of The Giving Pledge and Is Still Worth Double

Post by bilateralrope » 2019-05-14 12:57am

The Romulan Republic wrote:
2019-05-12 10:00pm
-Get us to fucking Mars.
Who does that help ?

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Re: Bill Gates Gave Away The Entire Amount of His Net Worth As of The Giving Pledge and Is Still Worth Double

Post by The Romulan Republic » 2019-05-14 01:18am

bilateralrope wrote:
2019-05-14 12:57am
The Romulan Republic wrote:
2019-05-12 10:00pm
-Get us to fucking Mars.
Who does that help ?
Ensures the long-term survival of life by ensuring we're not dependent on a single vulnerable planet. Economic boost for the tech. and engineering sectors (providing a more positive use for the military-industrial complex) and any scientific discovers are side benefits, but secondary to the main point.
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Re: Bill Gates Gave Away The Entire Amount of His Net Worth As of The Giving Pledge and Is Still Worth Double

Post by Steel » 2019-05-23 11:22am

(Partially) Gates funded researcher here, so I have some familiarity with this topic.

The foundation tries to fund things that will be transformational advances, rather than infrastructure. The thinking is that infrastructure and ongoing maintenence costs as well as dealing with known problems with known solutions should be tackled by governments, rather than the foundation. Even though the gates foundation has incredible resources, compared to annual (planetary) government spending it is absolutely tiny. To get the maximum effect they want to go for areas where the money will have a multiplicative effect and change things long term, rather than a one off small bump that disappears.

One of their key metrics for funding a project is that it has to deliver better value for money to the people it affects than just giving those people the money directly. This is why they don't just give money away for student loan relief to the public - the money is already being spent on something projected to have a larger effect than that. (Not to mention that if they were to give every student $10k for free then student loans would just become $10k more expensive overnight).

That said, they aren't looking at an infinite time horizon either, they want to make a change now and in the near future. The foundation has a policy that within 20 years of the last member of the current board (B&M Gates, Warren Buffet, couple of others) dying, all the foundation's money has to be spent and the foundation shuts up shop. This is a longer time horizon than it might appear, as some of the board are relatively young, and Bill Gate's dad is still active in the foundation.

The foundation doesn't have infinite staff, and it is actually the same effort in terms of monitoring grantee progress for them to give a grant of $10M as to give one of $100k, so they would much rather fund a smaller number of larger grants than a huge number of small grants. That said, they do still give away small grants - some of them even in anonymous applications where the ideas are selected purely on merit, blind to who the applicant is. They do have to do a hell of a lot of checking, as the number of bullshitters and fraudsters who come at you when you're giving away free money is immense.
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Re: Bill Gates Gave Away The Entire Amount of His Net Worth As of The Giving Pledge and Is Still Worth Double

Post by The Romulan Republic » 2019-05-23 07:43pm

That's a very informative insight into the foundation's reasoning. Thank you for posting it.
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Re: Bill Gates Gave Away The Entire Amount of His Net Worth As of The Giving Pledge and Is Still Worth Double

Post by Mr. G » 2019-06-15 05:22pm

As long as you do not spend the money on consumption goods you are investing it. Smart investment in capital assets improves the quality of capital allocation and raises overall productivity of the economy. It's true the assets are under his name, but since he is not spending the assets they are being used to benefit others (in particular, capita invested in a company is benefiting the consumers of that company's products, the employees of the company, among others), in return the value of the assets increase.

Billionaires that lose their wealth due to poor investments are the ones wasting resources. For example, the retired basketball players who destroy their savings 10 years into retirement. So, it is a good thing Gates and Buffet's wealth continue to increase in value. That will also allow then to continue their philanthropic work without risks of reduced funding.

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Re: Bill Gates Gave Away The Entire Amount of His Net Worth As of The Giving Pledge and Is Still Worth Double

Post by Simon_Jester » 2019-06-18 01:14pm

Steel wrote:
2019-05-23 11:22am
(Partially) Gates funded researcher here, so I have some familiarity with this topic.

The foundation tries to fund things that will be transformational advances, rather than infrastructure. The thinking is that infrastructure and ongoing maintenence costs as well as dealing with known problems with known solutions should be tackled by governments, rather than the foundation. Even though the gates foundation has incredible resources, compared to annual (planetary) government spending it is absolutely tiny. To get the maximum effect they want to go for areas where the money will have a multiplicative effect and change things long term, rather than a one off small bump that disappears.
That's basically another way of saying what others said earlier. Namely, that the Gates Foundation is so focused on spending only on things with high multiplier effects and permanent consequences that they literally cannot find ways to spend their money fast enough to fulfill their pledges.

Well gee, there most certainly are ways they could spend their money faster, if they were marginally less picky about the multiplier effects! And we'd still be talking about things with a multiplier significantly greater than one, still making the world an unambiguously better place.

If you promise to give away X dollars, then stop giving away money at X/2 dollars, because the multiplier effect of your donation is "only" ten or whatever, you're not actually committed to giving away X dollars.
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Re: Bill Gates Gave Away The Entire Amount of His Net Worth As of The Giving Pledge and Is Still Worth Double

Post by FireNexus » 2019-06-18 08:41pm

Mr. G wrote:
2019-06-15 05:22pm
As long as you do not spend the money on consumption goods you are investing it. Smart investment in capital assets improves the quality of capital allocation and raises overall productivity of the economy. It's true the assets are under his name, but since he is not spending the assets they are being used to benefit others (in particular, capita invested in a company is benefiting the consumers of that company's products, the employees of the company, among others), in return the value of the assets increase.

Billionaires that lose their wealth due to poor investments are the ones wasting resources. For example, the retired basketball players who destroy their savings 10 years into retirement. So, it is a good thing Gates and Buffet's wealth continue to increase in value. That will also allow then to continue their philanthropic work without risks of reduced funding.
The idea that profit-motivated financial investment is inherently valuable to society reads to me as something you haven’t bothered to examine very closely. For instance, for a very long time tobacco was an awesome investment. Still is a pretty good one thanks to corrupt governments in the developing world. So was cocaine. Still is if you have very high risk tolerance. So was lead paint. Shit, fossil fuel companies are still a reliably profitable investment without any qualifier. Facebook is highly profitable, and while it has some benefits I don’t know that there is a decent argument that its impact on society is positive on net.

The only person you can be sure is unambiguously benefitting when an investment portfolio is rapidly growing is the investor. Investment can be good for society, but the most profitable investments are in no way necessarily a net benefit for society. Besides that, Gates signed The Giving Pledge, not The Investing Pledge. And I don’t think he likely did so because he gave the subject a hell of a lot more thought than you ever will.
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Re: Bill Gates Gave Away The Entire Amount of His Net Worth As of The Giving Pledge and Is Still Worth Double

Post by Steel » 2019-06-19 11:28am

Simon_Jester wrote:
2019-06-18 01:14pm
If you promise to give away X dollars, then stop giving away money at X/2 dollars, because the multiplier effect of your donation is "only" ten or whatever, you're not actually committed to giving away X dollars.
That in no way resembles what is happening. The foundation has not stopped giving away money, the foundation has only increased its spending rate each year. All his money is going to go through the foundation, and in finite time - there is no stopping point.

I wrote a longer reply, but I deleted it as the above is the key point.
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Re: Bill Gates Gave Away The Entire Amount of His Net Worth As of The Giving Pledge and Is Still Worth Double

Post by FireNexus » 2019-06-19 03:06pm

Steel wrote:
2019-06-19 11:28am

That in no way resembles what is happening. The foundation has not stopped giving away money, the foundation has only increased its spending rate each year. All his money is going to go through the foundation, and in finite time - there is no stopping point.

I wrote a longer reply, but I deleted it as the above is the key point.
Honestly, I was taking about Gates’ personal fortune and only when researching this post did I look into the financials of the foundation. And it’s basically the same thing. Between Gates and Buffet’s donations, best I can tell, the foundation has taken in somewhere around $55B up to 2018 and has given away about $46B in grants since inception.

Its current endowment is about $50B. Entirely separate from Gates’ personal fortune, his charitable foundation alone can’t give away money fast enough to not maintain its balance what in spite of giving an amount not far from its total lifetime donation income. It doesn’t make a good god damn of a difference if it’s accelerating it’s giving year on year if it’s growing the endowment annually.

So Gates personally has pledged to give away his net worth, has given away approximately his net worth as of the pledge and has doubled his money. The foundation has given away almost as much as it’s taken in and has only reduced its pile of cash by 10%.

I get that they, meaning Gates personally and the Foundation, are legitimately trying to give everything away. But the criticism of their strategy is valid because the Foundation isn’t giving money away fast enough to lose money over time and Gates himself isn’t giving his money to the foundation fast enough to not double his money over time.
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Re: Bill Gates Gave Away The Entire Amount of His Net Worth As of The Giving Pledge and Is Still Worth Double

Post by Steel » 2019-06-20 12:37am

FireNexus wrote:
2019-06-19 03:06pm
I get that they, meaning Gates personally and the Foundation, are legitimately trying to give everything away. But the criticism of their strategy is valid because the Foundation isn’t giving money away fast enough to lose money over time and Gates himself isn’t giving his money to the foundation fast enough to not double his money over time.
Creating an organisation that can spend donor money efficiently is a very delicate and difficult task. There are no market pressures or outside forces to correct inefficient spending. You need good staff and objective data.

One of the major donors (I think Buffet) placed a requirement that foundation headcount not increase beyond 1500 for a period of time. This was done so that the foundation didn't just grow vast and bloated and spend inordinate quantities of money on bureaucracy, and also could be tightly controlled to build a culture of efficiency and good management practices for administering grants.

Yes, they could have grown the foundation staff faster, but then you end up with the problem that exists in a lot of the charitable sector: stupid shit gets funded that will never actually help anyone. Let alone the corruption risk that massive rapid hiring and expansion would bring.

Further, if they were to spend all their money in 5 or 10 years, then that isn't enough time to see the effects of the first generation of investments. This way with a slower ramp up you can assess the results of your strategy and improve the direction of investments based on objective data about what actually works, rather than doing something simple, obvious and wrong.

Consider also that Gates wealth increase comes mainly from microsoft stock. If he sold it all 10 years ago and gave the cash to the foundation (or they get the stock but sell it off faster and earlier) then it just gets less money overall.

Given the enormous amount of extra money available from Buffett if they capped headcount temporarily, and the side benefits of a slower growth in staff counts, I would say this approach is very sensible.
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