The taxpayer cost of Big Philanthropy

If billionaire philanthropists follow through on their "Giving Pledges," they could reap more than $500 billion in tax breaks. Isn't it time to end taxpayer subsidies for oligarch philanthropists?

In recent weeks, the news media has moved into herd formation, issuing a parade of group-think pieces that foretell the end of billionaire philanthropy as we know it. Consider these headlines:

“Is the era of the benevolent billionaire really over?” —Fast Company

“Hundreds of billionaires pledged to give away $600 billion to charity—but the Bill Gates and Warren Buffett era of philanthropy may be over.” —Fortune

“The old model of billionaire philanthropy is ending” —Bloomberg

“The Boom Years of Global Charity are Over. What Comes Next?” —New York Times

These eulogies have centered on Bill Gates, amplifying his recent (and questionable) promise to give away all of his wealth by 2045. In the background of some of these reports is a mention of the “Giving Pledge”—Gates’s effort to pressure his super-wealthy peers (or lessers) to follow in his philanthropic footsteps, to promise to give away the majority of their wealth.

The Giving Pledge is a core part of Gates’s plan to make billionaire philanthropy an enduring, sustainable and permanent feature in global affairs, to institutionalize, normalize and legitimize charitable giving by the super-rich. If Gates’s feel-good brand of ultra-generous philanthropy is over, as journalists now report, shouldn’t newsrooms critically reflect on his failures to inspire a new generation of givers?

My own feeling is that Gates’s model of giving is here to stay. The benefits that philanthropy offers to billionaires are simply too great for the next generation of oligarchs to ignore. Most importantly, philanthropy gives billionaires undemocratic political power. Just as Gates uses philanthropic donations to push wrong-headed and, at times, self-serving solutions for public education and public health, why wouldn’t a next generation of tech billionaires use philanthropy to influence the direction of AI or climate change?

Philanthropy also allows embattled billionaires to launder their reputations—an extremely valuable personal benefit. And, very importantly, philanthropy delivers massive tax breaks. That’s a hard fact that journalists almost never acknowledge, which is part of the reason we’ve never had an open, honest, adult debate about the very significant public costs associated with Big Philanthropy.

I decided to take a stab at estimating these tax benefits, asking: if all American signatories to the Giving Pledge—there are around 200—actually follow through on their promise to donate the majority of their wealth, what would it cost taxpayers? The answer:

$510.7 billion in lost tax revenue

When billionaires donate money, they are rewarded by the government in the form of avoided taxes. Academic researchers report that American billionaires can generate tax benefits as high as 74 percent through philanthropic giving. Said another way, up to 74 cents of every dollar a billionaire donates would otherwise be paid in taxes.

(For my analysis, I assumed that Giving Pledge signatories would generate a 50 percent tax benefit on their donations. See methodology at the end of the article.)

My analysis found that American Giving Pledge signatories, as a group, control more than two trillion dollars in wealth. If they were to make good on their pledges and give away the majority of that wealth (51 percent), and take a 50 percent tax benefit from these gifts, it would result in more than half-a-trillion dollars in lost tax revenue.

Most of these tax benefits would go to the richest Giving Pledge signatories from the United States: Elon Musk, Mark Zuckerberg, Larry Ellison, Warren Buffett, Bill Gates and Michael Bloomberg. These six men collectively control well over a trillion dollars. If they were to give away half of their wealth today, they could reap tax benefits at around $300 billion.

Scholars say the avoided taxes that come with billionaire philanthropy should be seen as a public subsidy. Essentially, the super rich, unlike the rest of us mere mortals, get to decide how a big chunk of their would-be (and should-be) tax dollars are spent. We might rationalize such a taxpayer subsidy for billionaires if their giving was clearly delivering a public benefit. But is it?

Billionaire philanthropists, as a class, are not a very diverse group. They tend to be older, white and male. (Take a look at the headshots posted on the Giving Pledge’s website). They look alike, and, in many respects, they think alike—-especially when it comes to their desire to preserve their wealth and power. The numbers show this to be true. While billionaires publicly promote their generosity and their Giving Pledges, privately they remain deeply committed to accumulating more and more wealth.

As the Institute for Policy Studies reports, “The 73 living U.S. Giving Pledgers who were billionaires in 2010 saw their wealth grow…from $348 billion in 2010 to $828 billion” in 2022. That report also found that tax breaks given to charitable donors—-all donors, not just billionaires—resulted in at least $73 billion in lost tax revenues in 2022.

While it is true that the super-rich are giving away billions of dollars—-and are losing at least some money in the process—it is important to remember that they are donating money they don’t need and could never possibly spend on themselves. And, again, they’re giving at such miserly rates that their personal wealth continues to expand.

Often billionaire philanthropists direct dollars at projects that support, or at least do not infringe upon, their own interests. You don’t generally find tech tycoons donating money to causes like taxing billionaires out of existence, breaking up tech monopolies, or imposing strict regulation of AI.

A 2024 investigation by the New York Times accused billionaire Elon Musk of self-serving philanthropy, including donations to a school that his own children attended. This great investigation, unfortunately, was marred by the Times’s editorial decision to present Musk as the bad-apple billionaire. Unlike Musk, the Times reported, Bill Gates, the founder of Microsoft, was nobly “deploy[ing] his fortune in an effort to improve health care across Africa.”

Really? What about the Gates Foundation donating more than $100 million to the elite private school that Bill and Melinda French Gates’s children attended in Seattle? What about the growing body of criticism showing that the Gates Foundation’s work in public health is actually doing more harm than good? (If you want a deep dive, check out my book, “The Bill Gates Problem.”)

Elsewhere, the Times criticizes Musk for donating money toward projects that appear to benefit his own financial interests, like supporting a charitable venture associated with a wealthy customer of Musk’s company SpaceX. Is this really so different from the Gates Foundation donating computers loaded with Microsoft software to public libraries? Aggressively pushing U.S. education policy reforms that Microsoft was positioned to profit from? Endlessly advocating for strong patent protections, which are central to Microsoft’s profit model?

Among other basic questions we must ask is: why are we taxpayers richly subsidizing billionaires for this kind of activity—or, really, for any reason?

One obvious solution is to put an immediate end to all tax benefits for billionaire philanthropy. Insofar as we appear to currently live in a world in which we allow oligarchs to amplify their agendas through philanthropy, shouldn’t we, at the very least, demand they do so with their own money, not our money.

For those American readers who are skeptical that our braintrust of elected officials in Washington would be better stewards of billionaire wealth than billionaires themselves, it is important to remember that democracy is a dynamic system; through democratic engagement, we have at least some ability to hold our elected officials accountable—in ways that we can’t dream of doing with billionaire philanthropists.

It’s easy to become fatalistic about government, but doing so overlooks the extraordinary things that the public sector has accomplished—from landing on the moon to social security to the land-grant university system. When we allow billionaires to decide how their own tax dollars are spent, we lean into the regressive Trumpian ethos of hallowing out of the public sector in favor of oligarchy.

One important caveat to my analysis is that some of the wealthiest signatories to the Giving Pledge—Bill Gates, Warren Buffett, Larry Ellison and Mark Zuckerberg—-have promised to give away not just a slim majority of their wealth, but virtually all of it. If they follow through—and that’s a big ‘if’—their giving will likely dramatically expand lost tax revenues beyond the $510 billion I estimated.

Likewise, many billionaires haven’t signed the Giving Pledge, but are still giving away large sums of money. That includes Jeff Bezos, with an estimated fortune of $230 billion. He has publicly promised to give away most of his wealth. If he follows through on his announcement, this should translate into even greater tax benefits for the billionaire class beyond what I calculated, and a greater burden on the rest of us taxpayers to fill the gap. Or, it simply means we live in a world in which governments do less, and billionaire philanthropists do more.

Now for the really important part:

Whether or not these billionaires avoid paying taxes through philanthropy, or through other legal mechanisms and loopholes, the bigger challenge we face is not around making billionaires pay their fair share, but rather abolishing the billionaire class altogether. That’s a long-term political project—and my own belief is that for this effort to be successful, we need to squarely confront philanthropy, to understand it as an expression of billionaire power, not a solution to extreme wealth. Ending tax benefits for billionaire philanthropy won’t solve our billionaire problem, but it is important step in the right direction.

Signatories to the Giving Pledge are some of the world’s richest people, and, by extension, some of the most politically powerful. They donate vast sums of money to influence political elections (through campaign contributions) and global affairs (through philanthropic donations), at times through dark-money channels. They own and run destructive businesses that human civilization has come to depend on in our daily lives. And then they ask us to praise them as philanthropists for their miserly giving, demanding that we shower them with accolades and tax benefits.

If we are at some great inflection point on billionaire philanthropy, as the media seems to believe, now is not the time for eulogies. Now is the moment to reckon with the enormous public cost of billionaire philanthropy—-the lost tax revenue, the erosion of democracy, and the incredible harms that billionaires produce in the name of charity. Now is the time to fully appreciate that oligarchs who call themselves philanthropists are not heroes. They are threats to democracy.

Methodology:

In late May and early June 2025, I catalogued all 194 signatories to the Giving Pledge—based in North America. Any Canadians and Mexicans I found in the list were excluded. I then used Forbes’s “real-time” billionaire estimates to record the estimated wealth of each signatory. In the cases where I discovered that a signatory was deceased—-like Microsoft co-founder Paul Allen—I recorded Forbes’s most recent estimate of their wealth. Any signatory to the Giving Pledge that I did not find in Forbes was assigned a $1 billion valuation—-because the Giving Pledge explicitly states that it is designed for “those with a net worth of at least one billion dollars (or who would be billionaires if not for their giving).”

Because signatories to the Giving Pledge have promised to donate “the majority” of their wealth, my analysis examined the loss of tax revenue we would see if signatories gave away 51 percent of their estimated wealth.

When donating money, billionaires automatically avoid the 40 percent estate tax—levied on the assets of the super-rich when they die. As tax scholars report, billionaires will likely realize other tax benefits, up to at total of 74 percent. For the purposes of my analysis, I assumed billionaires will generate a 50 percent tax benefit from this giving. The actual tax benefit each billionaire will command, like the total sum of money that each will actually donate, is unknown (and unknowable).

Another caveat concerns the extreme secrecy surrounding extreme wealth. As I write this, Forbes and Bloomberg report wildly different estimates of Bill Gates’s personal wealth—$117 billion and $177 billion, respectively. It is impossible to know how much Gates, or any other billionaire, is actually worth. I chose to use Forbes’s estimates because they include a longer list of billionaires—and because Bloomberg, bizarrely, does not include Michael Bloomberg on its list of billionaires.

As noted in the main text of this article, there are reasons to believe my analysis undercounts the tax revenue lost from billionaire philanthropy—-because billionaires like Jeff Bezos aren’t included in my analysis and because some of the richest philanthropists may donate far more than 51 percent of their wealth. Likewise, billionaires, as a class, tend to be getting richer over time. If they make good on their Giving Pledge in the future, they will probably be donating from a bigger pot of money—which should mean larger donations and larger tax benefits than I recorded.

My analysis, however, also invariably overcounts in other places, as it is reasonable to expect that some signatories to the Giving Pledge will not follow through on their philanthropic promises to give away the majority of their wealth.