Bill Gates Did Give Away Over Half His Money

I was highly disappointed to come across this article in Inc.  about how it has been a failure of Bill Gates to not give away more money.  He signed the giving pledge in 2010 with a net worth of around $53 billion and today has a net worth of around $115 billion.  The author’s main thesis about the giving pledge being a failure is that in the last 10 years Bill Gates wealth has gained value, therefore he must not be giving it away fast enough and the whole giving pledge thing is a joke. He states that many Billionaires give to fake charities to avoid paying taxes.  Although the quality of this article is sub-par even for a teenage Marxists blog, since it was actually published by a respected magazine, I will dignify it with a rebuttal here on my mid 30s capitalist blog.

  1. Bill and Melinda Gates have donated over $50 Billion in their lives SO FAR.  They are not dead yet, and are still relatively young.  Most likely they will be around another 30 years. The giving pledge is about giving money away during their lifetimes.  To put this in perspective only 1 human in all of recorded history has given away more money than Bill Gates and that’s Andrew Carnegie (adjusted for inflation). In 2010 with a net worth of $53 Billion, giving away half of it would mean giving away $26.5 Billion.  Bill Gates has given away far more than this total, so he has fully succeeded at giving away over half of his 2010 wealth.  The rest of his wealth has continued to grow in value.
  2. IF Bill Gates was not interested in philanthropy and lets pretend that he never diversified from Microsoft and owned $55 Billion in Microsoft shares in 2010, when Microsoft was trading at $26 a share, Today, with Microsoft at $210 a share, he would have a net worth of $400+ Billion.  Gates owned 49% of Microsoft at the IPO in 1986.  Had he retained this level of ownership today he would be worth $810 BILLION.  Him being worth $115 Billion today doesn’t mean that he failed at philanthropy because his net worth has increased, he has succeeded to a massive degree because if he hadn’t been giving away his money as his primary job for the past 2 decades he would have another $700+ Billion.  More than likely had he spent the last 20 years focused on growing his money he would be a trillionaire today.  Think about it.  In 2000 when he transitioned to full time philanthropy he was the richest man in the world and was heavily plugged into tech.  He could have very easily been an early investor in Google, Amazon, Netflix, Uber, and several other high growth companies.  Bill Gates IF his only motivation was growing his money would be worth multiple trillion today, not “only” a hundred billion.
  3. This also didn’t happen in a vacuum.  We are looking at a spread of time that encompasses the longest bull market in history.  Stock prices were very low going into 2010 and over the last decade valuations have exploded.  Anyone with a lump sum invested in an S+P 500 index fund saw their money triple from 2010 to 2020.  If Gates had all $55 billion invested in a safe S+P 500 index fund he would have $160 Billion today.  Trust me, Bill Gates has far better ways to invest his money,  Microsoft stock, which instead of returning 300% returned 800% during this time frame.
  4. The Gates Foundation, in addition to distributing Bill and Melinda Gates charitable giving also directs charitable giving of others who donate to the foundation, including Warren Buffet.  Between 2000 and 2020 The Bill and Melinda Gates Foundation spent $54.8 Billion.  An amount roughly equal to Bill Gates total net worth in 2010. The Gates Foundation currently has a $50 billion endowment. This is additional funds that will be spent.
  5. It’s not just about total dollars spent, its about what those dollar did. One of the big investments Bill Gates made in philanthropy is the establishment of GAVI which created a funding mechanism to buy vaccines for the third world that the first world has had readily available for decades.  GAVI’s efforts over the last 20 years have prevented over 13 Million deaths.
  6. You can’t just throw cash at a problem.  In order to systematically solve problems throwing cash is not always the best way to do it.  Bill Gates can’t just write a $50 Billion check and all of a sudden infant mortality just collapses because there is money.  It takes research, systems, and networks attacking several different angles in dozens of countries, partnered with corporations, non-profits, and governments to solve these problems. Bill Gates has put a substantial amount of brain power to work on solving massive problems by hiring thousands of the brightest people on Earth (and spending all of his efforts and brain power) to solve these problems.  The 2010s was “The Best Decade Ever” Because it saw the largest drop in worldwide extreme poverty, child mortality, and hunger than any other decade in human history and by a large margin.  The efforts of Bill and Melinda Gates were no small part in this.

I find it extremely disingenuous when people criticism what Rich people do with their money.  Most of these people have never donated more than a few thousand dollars in their lives.  I can’t imagine how self absorbed a person has to be to think they are on the high ground to criticize someone who has given away more than a million times what they have given away in their lifetimes.  I would like to think that Bill Gates would respond directly to the article Inc. published, but more than likely he is too busy spending his time and about $700,000 an hour 24 hours a day 7 days a week to reduce early childhood death, extreme poverty, and preventable diseases.

Do you think that Billionaires giving away their money are fake?  Do you believe that giving away $50 billion in 20 years is failing at philanthropy? Remember part of the journey to Financial Independence and Early Retirement is to be able to give like no one else!  Although I will never be able to give away billions, tens of thousands per year is not out of reach!

John C. started Action Economics in 2013 as a way to gain more knowledge on personal financial planning and to share that knowledge with others. Action Economics focuses on paying off the house, reducing taxes, and building wealth. John uses the free tool Personal Capital to track his net worth and posts quarterly updates on his finances. Check out the Action Economics archives section for all past posts.

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