How to give away a fortune is a challenge for the wealthy

The pandemic is in focus but how do rich individuals and foundations target their philanthropy?

How to give away a fortune is a challenge for the wealthy
Steve Randall

What do you do when you have such great wealth that you don’t know what to do with it?

Imagine having all the assets and luxuries you could ever want, plenty of money to help friends and family, a sizeable legacy for your children…and still having an eyewatering bank balance.

It may seem a nice challenge to have but for today’s philanthropic wealthy it’s a genuine concern.

This was highlighted last week as Bloomberg named Elon Musk as named the world’s richest person for the first time, with a record net worth of $209.3 billion.

Musk responded to the news by telling his 41.9 million Twitter followers “…critical feedback is always super appreciated, as well as ways to donate money that really make a difference (way harder than it seems).”

Even over the past year, when the world’s focus has been in one direction, there are multiple sub-sectors of the pandemic-ravaged world that need help.

Canadians stepped up to the challenge with 83% of adults surveyed by Mackenzie Investments saying they had already made at least one donation to a charitable cause or planned to do so, with an average donation of $585.

Four in ten said their giving was constrained by the economic impact of the pandemic and a separate report from the Fraser Institute revealed that the number of Canadians donating to charity, as a percentage of all tax filers, was at the lowest point in the past 18 years.

Giving better

In a blog post last month, the CEO of Philanthropic Foundations of Canada, a non-profit supporting foundations, praised the sector’s response to the COVID crisis.

But Jean-Marc Mangin called on those making donations to not just give more but to give better.

“A mandated increase in the disbursement quota does not however offer a sinecure for achieving impact and relevance in this hour of public need. The ‘’what’’ and ‘’how’’ of giving matters as much as the amount of giving,” he wrote.

Mangin said that there are many things that foundations can do right now including improving funding and partnering with not-for-profits led by racialized Canadians and Indigenous Peoples.

A report from the Foundation for Black Communities, published in December 2020, reveals that of 40 leading Canadian foundations, whose assets total nearly $16 billion, only 6 funded Black-serving organizations and two foundations funded Black-led organizations between 2017 and 2018.

The pandemic has highlighted inequality among several groups of Canadians with Black communities continuing to face “poor education and health outcomes, economic exclusion, precarity in housing, food insecurity, over-policing, and disproportionate involvement with the criminal justice system.”

"When you look at the philanthropic sector and you realize that we're not demographically representative, then you have to conclude that, even with the best intentions, I can't presume to be meeting your needs, because you're not telling me, because we're not in conversation. We're not in a relationship." said Kevin McCort, President of the Vancouver Foundation.

Musk’s challenge

To return to where we started, how can Elon Musk give more – and make an impact – while his Tesla-driven fortune continues to top up the tank?

With Musk having donated an estimated US$257 million to the Musk Foundation, 0.1% of his current net worth, if he wanted to match Bill Gates’ pledge to give away half of his fortune he’ll have to significantly increase his philanthropy. This figure does not include separate direct donations that may have been made.

But while Musk’s musings have reflected potential funding of projects that are literally out of this world, such as building a city on Mars; one expert says that staying grounded may make more difference.

“A trap that many wealthy philanthropists fall into is a desire to reinvent philanthropy on their own, rather than rely on those who already have expertise and experience but simply need the funds in order to expand their impact,” Brian Mittendorf, a non-profit expert at Ohio State University told Bloomberg.