LITTLE ROCK Bill Gates and Warren Buffett have challenged other billionaires to give most of their wealth to charity.
So far, 40 have accepted the challenge, but none of them are from Arkansas,where the idea is receiving mixed reviews from philanthropists.
“I think this charitable-pledge idea is a clever way for Warren Buffett, Bill Gates and others to avoid paying an inheritance tax while the rest of us are trying to build family businesses and create jobs,” said Warren Stephens of Little Rock, chief executive of Stephens Inc., one of the nation’s largest investment banking firms off Wall Street. “I think our family’s charitable giving speaks for itself.”
R. Madison Murphy agreed.
“If Bill Gates and Warren Buffett want to give away whatever they want to giveaway, that’s very admirable,” said Murphy, a member of the board of directors of Murphy Oil Corp. of El Dorado. “I know they’re both advocates of keeping the death tax and keeping it at a high and confiscatory rate. I don’t need governmental or social pressure to be philanthropic. ... I don’t believe I’ll succumb to the blandishments of social pressure when we’re already engaged in what we believe are appropriate philanthropic practices.”
Johnelle Hunt of Rogers said the challenge, which Gates and Buffett announced Aug. 4, is a good idea, but it won’t affect her charitable donations.
“I appreciate the fact that they’re putting that out there because a lot of money has been given over the years to charity because someone starts with a challenge gift,” she said. “Really and truly, I think what they’re doing is great.”
Stephens, Murphy and Hunt are members of three of Arkansas’ wealthiest families.
Stephens is the son of the late Jackson T. “Jack” Stephens, who for almost three decades was president and chief executive of Stephens Inc.
Murphy is the grandson of Charles H. Murphy Sr., the founder of Murphy Oil Corp.
Hunt is the widow of trucking mogul J.B. Hunt, who founded J.B. Hunt Transport Services Inc. of Lowell, one of the largest trucking companies in North America.
Congress phased out the estate tax - which opponents refer to as the “death tax” - from 2001 to 2010, but the tax cut expires next year. That means there is no federal inheritance tax this year, but barring any action by Congress, the tax will resume Jan. 1 at a maximum rate of 55 percent on estates valued at more than $1 million.
For tax purposes, charitable contributions and spousal bequests can be subtracted from the value of the estate.
Gates and Buffett have been using last year’s Forbes magazine ranking of the 400richest Americans as potential pledge contacts. At the announcement, Buffett said they had personally called about 80 people on the list.
Stephens, Murphy and Hunt said they haven’t heard directly from Gates, Buffett or anyone representing them.
On last year’s Forbes list, Stephens was tied with movie producers Steven Spielberg and George Lucas and 10 others for No. 97, each with a net worth of about $3 billion.
Hunt was tied for No. 347 with 18 other people who had a net worth of about $1.1 billion.
Murphy wasn’t on the Forbes list.
Gates and Buffett were No. 1 and No. 2 on the list with a net worth of about $50 billion and $40 billion, respectively. Gates is co-founder of Microsoft Corp., and Buffett is chairman and chief executive of Berkshire Hathaway Inc.
Since the campaign was launched in June, 40 wealthy individuals and couples have joined Gates and Buffett by taking “The Giving Pledge.”
“The pledge is a moral commitment to give, not a legal contract,” it states. “The Giving Pledge is an effort to invite the wealthiest individuals and families in America to commit to giving the majority of their wealth to the philanthropic causes and charitable organizations of their choice either during their lifetime or after their death.”
Each person making a commitment has written a letter explaining his decision to pledge. The letters are on The Giving Pledge website at givingpledge.org.
Those taking the pledge include New York City Mayor Michael Bloomberg, media mogul Ted Turner and David Rockefeller, the patriarch of the Rockefeller family of New York.
In his letter on The Giving Pledge website, George B. Kaiser of Tulsa, chairman of BOK Financial Corp., wrote that he arrived at his charitable commitment “largely through guilt.”
“I recognized early on that my good fortune was not due to superior personal character or initiative so much as it was to dumb luck,” Kaiser wrote. “I was blessed to be born in an advanced society with caring parents. So, I had the advantage of both genetics (winning the ‘ovarian lottery’) and upbringing. As I looked around at those who did not have these advantages, it became clear to me that I had a moral obligation to direct my resources to help right that balance.”
Four of the top 10 positions on the Forbes list are held by Walton family members, the heirs of Sam Walton, founder of Wal-Mart Stores Inc. of Bentonville.
They are Christy Walton of Jackson, Wyo., widow of John Walton, at No. 4 with $21.5 billion; Jim Walton of Bentonville, chairman of Arvest Bank Group, at No. 5 with $19.6 billion; Alice Walton of Mineral Wells, Texas, founder of Crystal Bridges Museum of American Art in Bentonville, at No. 6 with $19.3 billion; and S. Robson Walton of Bentonville, chairman of Wal-Mart Stores Inc., at No. 7 with $19 billion.
None of the Waltons could be reached for comment.
“They’re out there pretty generously already,” said Leslie Lenkowsky, professor of philanthropic studies and public affairs at Indiana University.
“We’re never going to know quite what this pledge does, because they’re [the Waltons] out there being quietly generous.”
Through the Walton Family Foundation and the Walton Family Charitable Support Foundation, the Waltons have given more than $2 billion to charity since 1998, according to federal tax filings. Some of the Walton family donations have been very public, including a $300 million gift in 2002 to the University of Arkansas at Fayetteville. It was the largest gift to a public university in the United States at the time. Previous to that, the family gave $50 million to the university’s business school, which was renamed the Sam M. Walton College of Business.
The Stephens, Murphy and Hunt families also have made several large charitable contributions over the years. Jack Stephens donated $48 million to the University of Arkansas for Medical Sciences in Little Rock, and the Hunt family gave $5 million to the University of Arkansas at Fayetteville. The Murphy Foundation gave $10.1 million to charity from 2006-08, according to tax records.
If all 400 people on the Forbes list gave half their wealth to charity, it would total more than $600 billion. That’s twice the amount of all charitable donations in the United States last year. But Lenkowsky said he’s skeptical about the impact of the pledge.
“If you look at the list of people who’ve made pledges,” he said, “most of them are pretty active philanthropists. ... This may encourage others to either increase their plans for giving because what Gates and Buffett have done is sort of raise the bar of expectation.”
Hunt said she doesn’t feel pressured by the Gates and Buffett challenge, but she’s glad they’re doing it.
“I don’t feel any pressure because of what they’re doing,” she said. “I will always give when I can and when I feel like it’s the right thing to do, whenever we feel it is necessary. ... I think it’s a good idea that they’re doing this because it does encourage other people. When they see someone else’s name attached to it, it does draw attention to that charity.”
Hunt said she doesn’t believe that people make charitable contributions for personal attention.
“People do it because they think it’s the right thing to do,” she said.
In 2006, Buffett decided to give more than $30 billion over 20 years to the Bill and Melinda Gates Foundation, which had assets of $33 billion as of June 30 and has made at least $22.93 billion in total grant commitments since 1994.
“I find it interesting that Mr. Buffett and perhaps Mr.Gates have arranged their affairs, I believe, in a manner where they’re going to give away almost all of their assets and their wealth, yetthey’re ardent advocates of the death tax,” Murphy said. “They’ve arranged their affairs where the government can’t get it.”
On June 14, the Murphy family won a $58.4 million federal court judgment against the Internal Revenue Service regarding taxes the family paid on the estate of Charles H. Murphy Jr., Madison’s father, who died in 2002. The family said the IRS overvalued Murphy’s estate. The IRS is appealing the verdict.
The Giving Pledge has great promise to encourage people, both billionaires and average citizens, to give more to philanthropic causes, said Carol McLaughlin, research director at the Center for High Impact Philanthropy at the University of Pennsylvania.
“A lot of high-net-worth individuals and businesspeople respect Warren Buffett and Bill Gates as entrepreneurs and would like to emulate them,” she said.
The second step is for the money to actually be donated, McLaughlin said.
“Even more important is to see that the pledged and donated funds have the highest impact possible,” she said.
Front Section, Pages 1 on 08/19/2010
Print Headline: BILLIONAIRES GIVING IT UP? No one in state signed up, so far