Bezos’s $2 Billion Gift Shows Why Appraising Philanthropists Is Tougher Than Ever

The scrum of commentary that formed around Jeff Bezos’s Twitter announcement last week that he would focus his philanthropic efforts on homelessness and preschool education was no surprise. It was the culmination of an unprecedented public buildup.

Bezos had long been singled out for his underwhelming philanthropic commitments relative to his tech-billionaire peers. But in June 2017, Bezos had sent out a digital warning flare, a tweet soliciting advice about where to direct his giving, and subsequently hinted that he would make a final decision by the end of this summer.

The speculation that ensued — paralleling the divinations over the latest twists in the Amazon HQ2 sweepstakes — along with Bezos’s ascent to the status of world’s richest individual, the increased scrutiny on Amazon’s business practices, and mounting public interest in and apprehension about mega-gifts (stoked by Anand Giridharadas’s new book) all converged to prime philanthropy-watchers, myself included, for close analysis.

There was the mix of commendation and hostility that frequently characterizes the revelation of a major gift, a product of the public’s ambivalence to its most powerful benefactors.

Yet the reception felt a bit tentative, as if all the pent-up analytic energy couldn’t find purchase on the details of the announcement.

The uncertain nature of the public response highlights several reasons that appraising major givers has become even more of a challenge of late: the scale of contemporary mega-philanthropy, the ambiguities surrounding interpreting public pledges, and the blurring of boundaries as donors divvy up their resources among social enterprises, political campaigns, and charities.

It’s worth delving deeper into the nature of these challenges because judging mega-philanthropy responsibly requires understanding what makes arriving at those judgments so tricky.

Few Details

First, it’s important to note that Bezos has been relatively stingy with those details.

He announced that he was establishing the Bezos Day One Fund, which would begin with $2 billion and would combine the Day 1 Families Fund to address homelessness and the Day 1 Academies Fund to launch and operate a network of preschools to serve low-income families.

But it’s not yet clear if he’ll put his money into a private foundation or a limited-liability company (though as Axios reported earlier in the year, Bezos and his wife did incorporate a nonprofit in Washington State called the Bezos Foundation). Each of those choices would prompt different critical reactions. We’ll have to wait a bit to let them loose.

Second, there’s a discrepancy between the two distinct approaches that Bezos seems to be embracing that makes it difficult to arrive at coherent judgments about his philanthropy.

In addressing homelessness, he plans to give to existing community-based organizations and is deferring to their expertise and experience. In filling the need for more preschools, he’s creating and operating his own network of schools, guided by “the same set of principles that have driven Amazon,” especially “intense customer obsession.” (The child will be the customer in this model, Bezos explains.)

Critics of tech hubris who tend to favor supporting the work of grass-roots organizations and local institutions and advocates of aggressive “big bets” philanthropy who tend to look askance at “charitable” approaches that don’t attempt to disrupt broken or inefficient systems can find hooks for both their admiration and their contempt.

A Question of Scale

Then there’s the issue of the size of Bezos’s commitment.

I got some pushback for a tweet suggesting that I found the $2 billion he’s set aside for philanthropy underwhelming in relation to his $163 billion fortune.

Of course, if Bezos is actually turning over $2 billion to a private foundation, that would register as a very big gift. Last year, only Bill and Melinda Gates gave a larger one — $4.8 billion — to their foundation. (Mark Zuckerberg and his wife, Priscilla Chan, came close by adding more than $1.8 billion to their own foundation).

But it’s also the case that Bezos could easily give much, much more. We need to be careful that the scale of the giving that today’s massive fortunes allow doesn’t warp our judgments of them.

A Bezos gift of $2 billion, after all, would represent only around 1.2 percent of his total wealth. According to the Organization for Economic Cooperation and Development, the median net worth per household in the United States in 2016 was $77,400, which, at the same giving rate that Bezos adopted, would have produced a donation of $929. While laudable, the gift would be unlikely to generate a hagiographical response from the giver’s peers.

So when dealing with billionaires, it makes sense not merely to consider how much good they are doing with their money but how much good they could do. Yet at least with regard to Bezos, we might be tempted to withhold judgment.

After all, at an event at the Economic Club of Washington, D.C., held just hours after his Twitter announcement, Bezos made clear that he considered this an initial step, that he was “start[ing] small” as he had done with Amazon, with the insinuation that his giving could grow as exponentially as his retail behemoth.

There’s nothing wrong, of course, with starting small. There’s even a measure of humility in tentativeness if it suggests a desire to learn and to grow in giving, what Indiana University emeritus philanthropy scholar Leslie Lenkowsky has referred to as the “acorns to oaks” strategy.

Plenty of other major philanthropists have taken that approach without public censure. Facebook co-founder Dustin Moskovitz received little criticism when he insisted that learning how to give away money effectively requires “invest[ing] upfront time” and predicted “at least 10 years of simply educating ourselves” before committing to a major philanthropic outlay. (Full disclosure: Moskovitz and his wife, Cari Tuna, have funded my own research through their Good Ventures foundation.)

Giving Throughout a Lifetime

But with Bezos, a slow-roll feels unsatisfying.

Part of this has to do with the scrutiny he’s been under — the roll-out and the pressure building on him to make a commitment commensurate with his status dictated a more definite, comprehensive statement of philanthropic intent. It also has to do with the spread among Bezos’s tech-billionaire peers of a particular form of communication of giving ambition: the public philanthropy pledge.

Up until the last few decades, when most major giving was done in the final years of life, this accounting could be done retrospectively. A millionaire’s obituary could offer a tally of gifts and place them against the personal fortune from which they derived to arrive at some conclusion about the giver’s generosity, or lack thereof.

But in the age of giving while living, instead of allowing a donor’s attitude toward philanthropic responsibility to emerge in a piecemeal and cumulative fashion, donors are being encouraged to make an upfront commitment to channel a sizable proportion of their wealth toward philanthropic ends.

We can see this in the spread of the Giving Pledge, championed by Bill and Melinda Gates and Warren Buffett, whose 183 signatories have publicly committed to giving away half their wealth.

The pledge can be satisfied by making a bequest, but other donors have taken the commitment even further and vowed to direct large parts of their wealth to philanthropic ends before they die. Dustin Moskovitz has pledged to give away nearly all his wealth to philanthropy in his lifetime, which is important context to understanding his commitment to philanthropic learning.

Even more prominently, Mark Zuckerberg and Priscilla Chan pledged to donate 99 percent of their Facebook stock “during our lives” to advance their philanthropic mission.

These pledges tell us more about how an individual understands the responsibilities of wealth than the incremental approach Bezos seems to be taking, but there’s still a limit to what they say. For one, there are no enforcement mechanisms behind many of the public pledges; when Bloomberg News looked into Giving Pledge signatories who had died, they found several who had not made good on their promise to give away half their wealth.

Not Just Supporting Charity

Plus, many of the pledges have little respect for the structural boundaries that have traditionally given shape and coherence to charitable judgments.

Zuckerberg and Chan, for instance, formed a limited-liability company, the Chan Zuckerberg Initiative, to house their philanthropic program and to honor their Facebook pledge. It was, as the Atlantic declared, a “noncharity” charity. The format allows Zuckerberg and Chan to use proceeds from the sale of Facebook stock not merely to supply funds for grants to charities but also to make for-profit investments and political contributions. (It also allowed them to avoid the more rigorous reporting requirements associated with private foundations.)

CZI’s scope reflected agnosticism about whether funding business, charity, or political groups does the most good — a view that is in vogue amongst the tech crowd. But it also makes it difficult to assess Zuckerberg and Chan’s Facebook pledge along the lines that have been applied toward major philanthropic wealth transfers in the past.

For-profit investments, political contributions, and donations to charities are all means of achieving Zuckerberg and Chan’s mission, advancing human potential and promoting equality.

But should they count equally in a public accounting of a philanthropic portfolio? Do we prioritize intent or impact or organizational form or degree of profit(lessness) in determining what gets counted?

Bezos clearly shares a similar conception of the varied paths to promoting social good; in his tweet announcing his philanthropic commitment, he made mention of his purchase of the Washington Post and of his funding of his private spaceflight-services company Blue Origin (which he hopes will allow for moving heavy industry to space, saving Earth from ecological cataclysm).

But in doing so, he kept intact lines of demarcation between sectors that many tech donors have chosen to blur. At the Economic Club event, for instance, Bezos explained, “I’m going to give away a lot of money in a nonprofit model, but I’m also going to invest a lot of money in something that most investors might say is a terrible investment — like Blue Origin — but that I think is important.”

Business and the Social Good

Indeed, it’s likely that one factor holding Bezos back from pledging more of his wealth to philanthropy is that he’s still trying to figure out how to allocate resources among grant making to charities, political spending, and for-profit investing and finds some utility in holding those categories institutionally distinct.

After all, this April, around the same time that he must have been homing in on pre-K and homelessness as favored causes, he explained to an interviewer, “The only way that I can see to deploy this much financial resource is by converting my Amazon winnings into space travel.”

That means that if we want to consider Bezos’s support for high-quality investigative journalism through his purchase of the Post in philanthropic terms (a view that I have some sympathy for), we will have to impose that framework ourselves. We’ll have to test the limits of those categorizations, much as Bezos is.

In this sense, the public’s uncertain analysis of Bezos’s Twitter announcement reflects multiple paradoxes at the heart of our understanding of mega-giving.

At a time when philanthropy is coming under greater scrutiny, what that term means is being contested by both donors and critics. While major donors have taken to unveiling their philanthropic commitments with the fanfare of a birth announcement, they have embraced forms of giving (like donor-advised funds and LLCs) that defy transparency.

More generally, the more we know about philanthropy, the more what we don’t know becomes salient. All of this is why trying to assess the giving of the nation’s wealthiest citizens has never felt more necessary, or less satisfying.

Benjamin Soskis is co-editor of HistPhil and a research associate at the Center on Nonprofits and Philanthropy at the Urban Institute.