In a pandemic, billionaires are richer than ever

August 04, 2020

LONDON: A decade ago, Bill Gates and Warren Buffett did an important thing. They organised the Giving Pledge to inspire their fellow billionaires to donate more money to charity.On 4 August 2010,...

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LONDON: A decade ago, Bill Gates and Warren Buffett did an important thing. They organised the Giving Pledge to inspire their fellow billionaires to donate more money to charity.

On 4 August 2010, the first group of billionaires announced their intention to give away over half their wealth to charity. Over the last decade, they’ve been joined by many more.

A decade later, however, two obvious problems have emerged. First, billionaire wealth has expanded at a phenomenal rate. Of the 62 living Pledgers who were billionaires in 2010, their personal wealth has increased by 95%, from $376bn to $734bn in 2020 dollars.

They’d pledged to give away half. Instead, their wealth has nearly doubled. Not even the pandemic has slowed them down. From March to July 2020, the 100 US billionaires who are currently part of the Giving Pledge saw their total wealth increase $214bn – an increase of 28% in just four months.

Many have stepped up to give during the pandemic. But their giving is not keeping pace with their exploding wealth.

This leads to the second problem: in all likelihood, most of what they give away won’t go to on-the-ground charities, but to private family foundations often controlled by wealthy heirs and their advisers. Instead of supporting charities on the frontlines of problem solving, these billions end up sitting in tax-advantaged intermediaries, human rights expert on inequality Chuck Collins said.

You may be thinking: it’s their money, they can do with it as they choose. But the notion that philanthropy is a private preserve, apart from the government, is a myth. The wealthier the donor, the more advantaged the charitable tax deduction becomes. For every dollar donated by a billionaire to their private foundation, we the taxpayers chip in as much as 74¢ on the dollar in lost tax revenue.

For this reason, the philanthropy of billionaires is at best understood as a public-private partnership. We taxpayers have a legitimate interest in ensuring these funds serve the public interest.

Through this lens, it is troubling that so much wealth is sequestered in private foundations and donor-advised funds – and that these are the fastest-growing areas of the giving sector. There is over $1.2tn parked in private foundations and an estimated $120bn in donor-advised funds.

Private philanthropy has always been a form of power for wealthy donors. But as wealth inequality has exploded in recent decades, it’s concentrating that private power in even fewer hands – all subsidized by public taxpayers.

Meanwhile. Adar Poonawalla, the CEO of Serum Institute of India, founded in 1966 by his father, Dr. Cyrus Poonawalla, the world's largest vaccine manufacturer by number of doses produced, has said that his company plans to manufacture 300-400 million doses of the vaccine by the end of the year, and it can manufacture up to one billion doses.

The vaccine in question – being developed by Oxford University and the company AstraZeneca -- is a promising candidate among the scores of COVID-19 vaccines being tested across the world.

Scale is what SII excels in – and what makes the Poonawallas such formidable players in this niche industry. The company has in an audacious gamble decided to make hundreds of millions of COVID-19 vaccine doses even before it is tested for efficacy and safety.

The logic of the high-net-worth father-son duo – 78-year-old Cyrus Poonawalla and scion Adar Poonawalla – is that given the magnitude of the health crisis facing India and the world, it’s a risk worth taking so that if and when the Oxford vaccine they are manufacturing gets the post-trial clinical and regulatory go-ahead crucial time will be saved.

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