A version of this article first appeared in CNBC’s Inside Wealth newsletter with Robert Frank, a weekly guide to the high-net-worth investor and consumer. Sign up to receive future editions, straight to your inbox. Microsoft co-founder Bill Gates announced one week ago that he would give away “virtually all” of his wealth over the next 20 years through his namesake philanthropy. At the end of 2045, the Gates Foundation will close its doors after disbursing all its assets. Gates estimated that the sum would exceed $200 billion, including his wealth and the foundation’s endowment of $77.2 billion as of the end of 2024. Previously, the foundation was slated to close 20 years after the death of 69-year-old Gates. However, the billionaire faces an enviable problem: He can’t give his money away fast enough. The foundation plans to increase its annual payout starting in 2026 to $9 billion to $10 billion. It is doubtful that the foundation would be able to spend down its assets by sticking to that budget, according to John Seitz of data firm FoundationMark. He told CNBC the returns on investment would likely outpace the rate of giving, leaving the foundation with a multibillion-dollar remainder. “It’s mathematically crazy to think that he’s only going to give away $10 billion a year if he really wants to get to zero in 20 years,” said Seitz, whose firm tracks the investment performance of private foundations. “One of two things is going to have to happen: Either he’s going to have to be in cash – in a non interest-bearing account – or he’ll have to give more money away.” The Gates Foundation told CNBC that it would spend down its assets by 2045 but declined to specify how it would get there beyond the $9 billion-plus annual budget. According to FoundationMark’s estimate, even if the Gates Foundation invested conservatively with 4.5% Treasurys and adjusted its $10 billion payouts for inflation of 3%, it would be left with nearly $14 billion at the beginning of 2046. It’s more likely that the foundation will increase its giving beyond inflation as it has in the past, Seitz said. Assuming the foundation’s giving grows at a 6% annual rate and notches 7% investment returns, the foundation would spend down its assets in 2046, giving away more than $30 billion in its final year. In all, the foundation’s two-decade giving would amount to $400 billion, including $220 billion of projected investment gains. “If you have been growing giving at 5.7% for 20 years and now you announce you are planning on spending down, that tells me [there will be] an acceleration of giving growth, not a deceleration,” Seitz said. These jumbo payouts may be used to endow operating charities after the Gates Foundation ceases to exist, he added. While Gates has been commended for his vow to not die rich, the foundation’s timeline raises concerns about how global health efforts will fare in its absence. “The decision to sunset the foundation in only 20 years is stunning,” said Renée Irvin, professor of nonprofit management and philanthropy at the University of Oregon. “The Foundation already has an immense global impact on children’s’ health, for example, and this decision, while targeting the next two decades, will have effects that ripple across many generations beyond that.”
Bill Gates arrives for a press conference to launch the Global Polio Eradication Initiative at the European Commission’s Berlaymont headquarters in Brussels on October 11, 2023.
Simon Wohlfahrt | Afp | Getty Images
A version of this article first appeared in CNBC’s Inside Wealth newsletter with Robert Frank, a weekly guide to the high-net-worth investor and consumer. Sign up to receive future editions, straight to your inbox.
Microsoft co-founder Bill Gates announced one week ago that he would give away “virtually all” of his wealth over the next 20 years through his namesake philanthropy. At the end of 2045, the Gates Foundation will close its doors after disbursing all its assets.
