Susie Buffett's bequest was just one in a year defined by astonishingly supersized donations. The slew of record-shattering gifts suggests that at least a sliver of the voluminous gains of the late-'90s stock boom is being funneled back into society -- and that today's Carnegie libraries and Rockefeller yellow-fever vaccines can't be far behind.
The year's other billion-dollar-club members include No. 1 givers Bill and Melinda Gates, the world's largest international donors, who made history this year by giving their estimated $3 billion Microsoft Corp. (MSFT
) dividend to their foundation. It's one of the largest donations in history by a living donor. To put it into perspective, that one gift is three times bigger than the amount that America's richest family, the descendants of Wal-Mart Stores Inc. (WMT
) founder Sam Walton, has given during their entire lifetimes, according to our ranking.
Others on our list contributed mega-gifts in the hundred-million range. No. 2 donors Gordon Moore, co-founder of Intel Corp., and his wife, Betty, pledged $275 million for ocean research and eradicating hospital error through world-class nurse training (the latter gift stemming from Betty's own negative experiences in medical facilities). List newcomer and medical-device mogul Alfred Mann gave $200 million for medical research institutes in Israel and at Johns Hopkins. "Money is only worth what you can do with it," says Mann, the 78-year-old son of an immigrant grocer, who still works full time and intends to leave his entire $1.4 billion estate to charity. "Other than that, it's not worth a damn."SCHOOL DAYS
The year of the mega-gift also saw a string of donations to universities that were unprecedented in their size. Liquor import king and Top 50 newcomer Sidney E. Frank, the son of a Connecticut orchard man, slept on sheets sewn from sacks until he got to Brown University. In September, he gave the school $100 million to fund scholarships for up to 130 kids a year whose families can't afford the $31,000 annual tuition and the $8,500 room and board. The gift was inspired by Frank's own need to drop out after his freshman year because he couldn't afford tuition. This was the largest gift in Brown's history and one of the single biggest donations ever toward undergraduate scholarships. Then there's Related Cos. CEO Stephen M. Ross. Though he didn't qualify for the Top 50, he pledged $100 million to the now-named University of Michigan Ross School of Business. Never has the 187-year-old university received a gift so huge -- nor has any other U.S. business school.
Rather than hoard their GDP-sized fortunes, many in the Top 50 became more extravagant in their charity this year, urged on by a growing belief that the value of solving problems today is greater than bequeathing the money when they die. And by accelerating their giving and doling out large sums, they have a better chance of effecting change. "The realization is that it takes that much money to move the dial," says Paul Jansen, the director of McKinsey & Co.'s nonprofit practice.
As this belief spreads, experts say the ranks of the mega-givers are sure to grow, especially as the largest intergenerational wealth transfer in history looms on the horizon, with at least $41 trillion estimated to change hands by 2052 -- $6 trillion of which is projected to go to charity, according to Boston College's John J. Havens and Paul. G. Schervish. Even the most youthful on the Top 50 are participating in the acceleration and mega-gift trends. Michael and Susan Dell, 39 and 40 respectively, followed pledges of nearly $300 million in 1999 and 2001 for children's causes with one that was more than twice that size last year. Says Cheryl Saban, 53, who with husband Haim Saban is ranked No. 46: "You get to a point where it makes you a lot happier to buy a defibrillator for a hospital than another piece of Lalique."
Already, the Top 50 donors, over the course of their lifetimes, have thrown a dizzying $65 billion at charitable causes, many of them addressing the gaping inequalities that increasingly threaten domestic society, global stability, and world peace. The spread of globalization and the post-September 11 political climate have spurred some to direct their giving overseas, a trend mirrored in the corporate sector. (Though overall, international giving by donors still stands at only 2%.) "There's more awareness now that perhaps there would be greater security in the world if more people had more access to ways to make more money," says Marlene Hess, head of global philanthropic services for JPMorgan Private Bank.
That's certainly Ted Turner's view. Despite losing more than $7 billion of his fortune in the epically botched AOL Time Warner (TWX
) deal, the onetime media mogul is continuing to make good on his $1 billion pledge to the U.N., stretching it out over 15 years instead of 10. Disturbed by the fact that 30,000 nuclear warheads are on hair-trigger alert, Turner has focused his recent philanthropy on reducing the number of nuclear weapons in existence and preventing the spread of new ones. "The problems need to be solved now, not in 20 years," says Turner. "If we do everything right in the next 50 years, we'll be living in a paradise. But if we don't we could be gone, or living in a hot, burning hell."
Mega-giving is also helping to take up some of the burden of foundations and other nonprofits that saw their endowments crushed during the recession. Those problems were compounded by deep social spending cuts on the part of the Bush Administration. Given the gargantuan federal deficit, there's not likely to be any increase from Washington anytime soon. That means there will continue to be great pressure on individual givers, and especially on the super-philanthropists, to dig deep. "Philanthropy and the entire nonprofit sector face more challenges than at any other time in recent memory," says Jeff Krehely, deputy director of the National Committee for Responsive Philanthropy.
To suss out the new entrants on this year's list, and to create our overall ranking, we analyzed public records and conducted scores of interviews with community foundations, nonprofit experts, billionaires, fund-raisers, and wealth watchers. To qualify for the Top 50, philanthropists had to have given or pledged $116 million in the past five years -- $21 million more than the minimum last year. That knocked off givers such as Netscape Communications Corp. (TWX
) co-founder James Clark and CyBerCorp founder Philip Berber and his wife, Donna. Maurice "Chico" Sabbah fell off our list after he and his business partner agreed to pay $400 million in July to settle fraud charges, putting an end to further philanthropy. Now their creditors are trying to grab Sabbah's $100 million pledge to the cushy American Hebrew Academy, the nation's first non-Orthodox Jewish boarding school, located in Greensboro, N.C.
Newcomers this year include Veronica Atkins, the widow of Dr. Robert C. Atkins, who pledged her entire $500 million fortune to end the "di-obesity" -- diabetes and obesity -- epidemic, and Oprah Winfrey, the first African American and second self-made woman to make the Top 50. (Catherine B. Reynolds, who made her money in student loans, was the first.) Winfrey says she draws inspiration for her philanthropy, which focuses on education, from childhood experience. When she was 12, her mother told the family there was no money for even a single Christmas present. Just when Winfrey started to accept a gift-less Christmas, three nuns showed up at the door with a turkey and toys. "I remember feeling that I mattered enough to these nuns -- who I had never met and to this day still do not know their names -- and what it meant that they had remembered me. I wasn't forgotten."
Our research this year also turned up a new force in giving that may well disrupt philanthropy in the same way eBay Inc. (EBAY
) revolutionized commerce. Not surprisingly, eBay founder Pierre Omidyar epitomizes the trend. Rather than picking one cause and creating a strategy for attacking it, his philanthropy takes a bottom-up approach, allowing individuals to determine the vision and direction in the same way the community of users do at eBay.NO DELAY IN GIVING
By throwing big bets at targeted causes, the mega-givers are a foil to U.S. foundations, which have been lambasted by critics and legislators for dispensing just 5% of their assets each year, including administrative costs. This enables them to maintain their "corpus," so they can operate in perpetuity, but critics say they could afford to give much more. Pointing to the delay in social benefit, a recent McKinsey study by Jansen and David Katz found that keeping all this cash on the sidelines rather than giving it out now diminishes its power to address problems by as much as 50%.
By donating virtually all of their assets to charity, and doing it during their lifetimes, many of the Top 50 also stand in contrast to their fellow wealth holders. On average, the nation's richest 1% -- who own two-fifths of U.S. wealth -- donate just 2% of their incomes each year, vs. 6% for families in the bottom income bracket. Fully 20% of the wealthiest estates leave absolutely nothing behind to charity. By contrast, AMF Bowling Chairman William Goodwin and his wife, Alice, have donated three-fifths of their wealth to cancer research and education; the Moores have given almost two-thirds of theirs to conservation and science; and American Century Cos. founder James E. Stowers Jr. and his wife, Virginia, have handed over more than two-thirds of their holdings to fund the Stowers Institute for medical research in Kansas City.
Still, these individual examples of largesse aren't enough to convince everyone that the rich are doing enough. Entertainment mogul Saban lambastes those who stand sentry over their piles. Although many in Hollywood do give, he thinks the entertainment industry needs to do much more. "I think a guy like [Viacom Inc. (VIA
) Chairman] Sumner M. Redstone, who's worth $8 billion, should get off the pot and start giving something rather than counting it from morning to night," says Saban during a phone interview from his Beverly Hills home. A Redstone spokesperson says: "Unlike some others, Mr. Redstone prefers to give privately. He is a significant contributor to the fights against HIV/AIDS and cancer, as well as burn-therapy programs."
That's not to say mega-gifts are always an easy solution. If not carefully planned and executed, they can turn into burdens -- especially if the charity is ill-equipped to digest so much money. Some philanthropists attach strings that prove difficult for the charity to cope with. The late Joan Kroc's $1.5 billion bequest to the Salvation Army in February left the organization struggling because it had little warning of the gift. Absorbing the cash has been challenging, especially since Kroc mandated that the money be used for the building and partial operation of up to 30 new community centers. That meant none of the money could go to the 1,400 centers that already exist, many of which are in dire need of facelifts. Sometimes it's the charity that attaches strings. For years, Mann has been trying to give $100 million to his alma mater, the University of California at Los Angeles, for a medical research institute. Finally, two years ago, Mann says UCLA attached so many caveats and clauses -- with five pacts passing back and forth between the lawyers -- that what started out at 50 pages ballooned to several hundred. "I couldn't cope with it anymore," says Mann. "So I put it in a drawer." Still, despite what he calls UCLA's "intransigence," he hasn't given up on trying to make the gift work one day.
Mega-gifts were also on Susie Buffett's mind. In May, shortly before she died, she gave a TV interview to Charlie Rose in which she revealed that she and her husband disagreed about philanthropy. Susie, who reveled in traveling to India for philanthropic causes and sleeping on dusty mattresses, wanted to give more of their wealth away now; Warren thought it was better to concentrate on fortune-building so as to leave behind the biggest sum. Now, after her death, Susie Buffett's mega-gift means she's finally getting her wish. By Michelle Conlin, Lauren Gard, and Jessi Hempel with Kate Hazelwood, David Polek, and Tony Bianco in New York