When announcing his enormous pledge of $31 billion to The Bill and Melinda Gates Foundation, Warren Buffett linked his unusually structured gift to his opposition to the repeal of the estate tax by commenting, “I can’t think of anything that’s more counter to a democracy than dynastic wealth.”
This statement, with which I heartily agree, led me to think back on President Teddy Roosevelt’s justification for the creation of the estate tax back in 1906—that he didn’t think America should have a “landed gentry.” We Americans love living in a free country where we can make as much money as energy, smarts, and serendipity will allow—but ever since the Declaration of Independence, we’ve had a resistance to fostering or encouraging a jaded, do-nothing class born of hundreds of years of inherited wealth like those in Europe.
I do not want my successors to lose their incentive to make their own money. My foundation will be shut down after my death. My objection to allowing private foundations to continue in perpetuity is well known—all foundations should be required to adhere to a sunset clause; I use the word “sunset” because of my background in meteorology. I have recommended a 50–year life to prevent the proliferation of self-perpetuating philanthropic institutions at the expense of public benefit. This would also prevent dynasties, to use Buffett’s term, from dominating the foundation world.
Philanthropy (friend of mankind) cannot and should not replace government spending, but in this time of federal and state cutbacks it is important that philanthropic dollars are not just piling up in foundation accounts. It is estimated that the amount of money about to be transferred to the next generation is a staggering $100 to $150 trillion dollars. Under our tax system, there is constructive incentive to use this transfer to expand philanthropy, instead of paying taxes, just as Warren Buffett is doing.
The greatness of our system gives us the opportunity to choose exactly where our money should go. One of the great successes of U.S. philanthropy is how arts and culture benefit from private giving, protecting arts and culture from the whims of government to exercise its judgment on what’s “right” for the people.
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By focusing so much on terror abroad, maybe we’ve forgotten the inequities at home. What our government could have done only a few years ago, with a balanced budget and no debt, it can’t do now (like fixing Social Security, for instance). Who will address the other terrors—our people without homes, food, health, or the vision of a successful future? Our poor are too poor—and our rich are so rich they can do something about it. I hope that the media coverage of Warren Buffett’s generosity, and his immediate sense of responsibility to the society that rewarded him with wealth, will stimulate and create an obligation among the wealthy to follow his lead.
(And I say, don’t let money be the only thing—philanthropists should give of their expertise, too. All philanthropists need to ask themselves, “What else can we do besides giving money?”)
It will be exciting to see who the next generation of philanthropists will be—currently, Bill and Melinda Gates light the way—and how they exercise that most rewarding of obligations: succeeding, and then sharing. It’s work, but it’s a damn lot of fun.
Lewis Cullman is the author of Can’t Take It With You—The Art of Making and Giving Money (Wiley) which chronicles his life, first in business and then in philanthropy.