Two Cheers for the Giving Pledge!

(Bradford K. Smith is the president of the Foundation Center. This post originally appeared on the center's Transparency Talk blog.)

Two cheers for the Giving Pledge! Why not three? The answer lies in a simple, yet challenging word: transparency. As it stands now, the Giving Pledge is pure potential. And unless we are able to track how all the new money it injects into philanthropy is actually spent, its impact on the world will never be known. But first, the cheering.

More money -- Hooray!

Anyone who cares about philanthropy and its ability to increase opportunity and transform lives cannot help but be ecstatic about the Giving Pledge. You've seen the predictions: if all the billionaires on the Forbes 400 list of the richest Americans signed the pledge, it would double the $600 billion currently devoted to philanthropy in the U.S. But the architects of the pledge -- Bill and Melinda Gates and Warren Buffett -- would undoubtedly be pleased if others around the globe got the bug. The second largest group on the Forbes World Billionaires list are, in fact, Chinese. That explains the Gates/Buffett trip to China and their plans for a similar sojourn to India.

Of course, not everyone will take the Giving Pledge. The China trip got mixed reviews, and Carlos Slim has found a way to get publicity by stating proudly that he will not sign on (because he is too busy improving the world by making money from his businesses). But even Mr. Slim does more philanthropy today than anyone ever expected, so this move may be semantics or a reflection of his desire -- as the world's richest man -- to do things differently than his closet competitors. Anyway way you look at it, though, the Giving Pledge can turbo-charge philanthropy for decades to come, and that is great news.

Leading by Example -- Hooray!

Kudos to Bill and Melinda Gates and Warren Buffett for using their celebrity status and personal example to encourage others to become philanthropists. For all the debate about how private or public the resources of philanthropy should be, most all great philanthropy has started with powerful and immensely successful individuals. Bill and Melinda Gates walk the talk. They are the philanthropy world's equivalent of superstars and have dedicated some $28 billion to their foundation. Warren Buffett set an important example by investing a large share of his fortune in the Gates Foundation rather than creating yet another mega-institution. Face it, the world economy seems to be generating a growing global class of the super-rich, all of whom face a common problem: after investing and spending on themselves, what to do with all that wealth? The Giving Pledge gives them an answer: philanthropy.

Transparency -- ???

An essential element of the Giving Pledge is the individual public "letter" that is posted on the Giving Pledge Web site. Reading through the pledges is fascinating and the themes of good fortune and "giving back" abound. It is not a contract, but rather a kind of vow that carries with it the extra degree of commitment inherent in a written, public pledge. But that is as far as it goes, at least in public. The Giving Pledge is a kind of billionaires' social movement whose rallies take the form of dinner parties. Many of the initial discussions about the idea and subsequent meetings with potential signees have taken place around private dinner tables. That is understandable given the kind of love/hate relationship the media and the public have with the rich and successful. And like anything else, people listen to and learn from their peers. I have no doubt that compelling stories of giving have been shared around those tables, along with confessions about the burdens and responsibilities of extreme wealth.

But what's really important is the good that may get done with all the private wealth the Giving Pledge will make available. And we will only know how the public good is being served to the extent that the signers of the Giving Pledge create their own foundations or, like Warren Buffett, entrust their money to another. For it is through foundation tax returns, their Web sites, the electronic reporting of their grants, and, in today’s world, their Twitter feeds, Facebook pages, and YouTube channels that we learn about how philanthropy is changing the world. Some philanthropists may see this as a burden or as intrusion into their privacy, but in reality it is simply good business. Philanthropy is a notoriously individualistic and inefficient industry. With more information available, philanthropists stand a better chance of knowing what their peers are doing, avoiding duplication, and finding ways to make real progress by working together.

Those who have taken the Giving Pledge will be pleased to know that I have no advice whatsoever on how they should spend their money: that is for them to decide. My only hope is to be able to let loose a third big cheer when they commit to being reasonably transparent about it. Transparency can make the difference between feeling good and doing good. And that is a goal that would seem to be consistent with the aspirations of the Giving Pledge.

-- Brad Smith