How Billionaires are Pledging to Give Away Most of Their Wealth

What do MacKenzie Bezos, George Lucas and Ted Turner have in common? Money, yes, but they also share a vision — and a promise — to give away the majority of their wealth.

Welcome to the Giving Pledge.

Founded in 2010 by Microsoft co-founder Bill Gates, his wife Melinda Gates and Berkshire Hathaway investment guru Warren Buffet, the Giving Pledge is a public commitment by individuals and families to give away most of their wealth, either during their lifetime or as a legacy.

The pledge's founders aimed the idea at billionaires, first in the United States and then globally in 2013, with the goal of spurring more support for worthy causes among the world's uber-rich.

The Giving Pledge has no set parameters as to which causes can be supported, but donors tend to be involved in climate change, education, poverty alleviation, medical research, healthcare services, economic development and social justice.

As of May this year, 204 signatories from 23 countries had signed on, with the list reading like a billionaire who's who. You'll find names like Netflix founder Reed Hastings, Saudi tycoon Prince Al-Waleed bin Talal bin Abdulaziz al Saud, Star Wars creator George Lucas, British politician Lord Michael Ashcroft, Facebook founder Mark Zuckerberg and former New York mayor Michael Bloomberg on the list. Canadian names you might recognize include Seagram liquor magnates Charles and Edgar Bronfman.

MacKenzie Bezos recently made headlines after promising to give away much of her fortune following her divorce from Amazon founder Jeff Bezos earlier this year. Her wealth has been estimated at nearly US$37 billion; she has written that her approach to philanthropy "will continue to be thoughtful." Ms. Bezos has been involved in a variety of causes, including homeless housing, gay marriage rights and anti-bullying campaigns.

Since the Giving Pledge isn't a formal or binding agreement, there's no enforcement or monitoring of declarations. The Chronicle of Philanthropy, a magazine that covers the non-profit world, points out that the rate of signees has fallen off in recent years since the pledge's initial founding. However, part of the Pledge's intent is to generate public discussion about how participating billionaires can use their wealth. Melinda Gates has acknowledged that the effort is encouraging more wealthy people to think about giving away their money.

For investors, estate planning can be an important part of an overall investment plan — playing into goals, timelines and the type of legacy we want to leave behind. In Your Guide to Naming Beneficiaries in the Investing Academy, you'll find out what it takes to create an effective estate plan. And for an engaging take on executorship, check out Why The Wealthy Barber Won't Act as Executor.