SALT LAKE CITY — Most Americans will never be billionaires; there are only about 800 people in the U.S. with that kind of money.
But MacKenzie Scott gave $1.7 billion away, and for some critics that isn’t enough.
The amount is a fraction of the wealth that Scott accrued after her divorce from Amazon founder Jeff Bezos, to whom she was married for 25 years, some people pointed out on Twitter. Others complained that the gift, distributed among 116 nonprofits, is evidence that that America is a plutocracy, with its policies and priorities shaped by its wealthiest citizens.
Scott, who explained her donations in an essay on Medium, has not responded to her critics. But she is facing many of the same challenges that philanthropists did 100 years ago.
“Criticism that the wealthy have an inordinate amount of power through their philanthropy goes back to the the late 19th and early 20th centuries when people were criticizing (Andrew) Carnegie and (John) Rockefeller,” said Bill Stanczykiewicz, director of The Fund Raising School at the Lilly Family School of Philanthropy at Indiana University.
Detractors also said that the philanthropy of Carnegie and Rockefeller would not have been necessary if they ran their businesses in “a more just manner,” Stanczykiewicz said.
Wealthy people are accused of grandstanding if they publicize their gifts, of being stingy if they don’t. Even the methods by which they give money can come under fire, such as donor-advised funds. But despite the social-media sniping, Scott has won admiration from people in the field of philanthropy for her announcement. Here’s what they say she has done right.
Trust and transparency
Scott, who reportedly received $38 billion in a divorce settlement, is a signer of the Giving Pledge, a 10-year-old initiative that encourages the world’s wealthiest people to give away more than half of their wealth during their lifetime or upon their death.
In a letter about her pledge, dated May 25, 2019, Scott wrote that she had a “disproportionate amount of money to share.”
“My approach to philanthropy will continue to be thoughtful. It will take time and effort and care. But I won’t wait. And I will keep at it until the safe is empty,” she wrote.
In the first public accounting of her gifts, Scott said she chose beneficiaries that work with causes she supports, such as racial justice, LGBTQ rights, climate change and public health. Recipients included historically Black colleges and universities, the George W. Bush Presidential Center, the Obama Foundation, the International Trans Fund, LatinoJustice, the Solutions Journalism Network, Black Girls CODE and A Call to Men. (The Deseret News participates in the Solutions Journalism Network.)
In addition to funding colleges, nonprofits and foundations, Scott put cash directly in the hands of people in America and Africa, through GiveDirectly, which makes surprise cash grants to people in poverty.
Scott’s diversity of beneficiaries impressed Phil Buchanan, president of The Center for Effective Philanthropy in Cambridge, Massachusetts, and author of the book “Giving Done Right.” He also noted that the gifts came with no directives on how the money should be used; Scott is trusting the organizations to decide what is best for the people they serve.
“Too much philanthropy is done in a way that is top down and assumes that business or tech titans have all the answers and nonprofits don’t know what they’re doing. Her philanthropy was the antithesis of that,” Buchanan said.
Una Osili, an economist and associate dean for research and international programs at the Lilly Family School, also said that Scott’s transparency was notable, and that she appeared to fulfill her promise to be thoughtful by enlisting advisers, reportedly The Bridgespan Group of Boston.
“It does seem like there was a lot of research and intentionality in finding the organizations,” Osili said.
Also, Scott has been praised for making direct gifts to the organizations, rather than through a foundation or donor-advised fund, which allows donors to take a tax deduction while deferring the actual gift to a future date.
Invitation to a meme
By signing the Giving Pledge and making public her donations, Scott opens herself up to criticism of large-scale virtue signaling. The Giving Pledge has been called a “glorified tax break” for billionaires, who are featured on the initiative’s website, along with their pictures and personal letters explaining the reason for their decision.
Justin Tosi, an assistant professor of philosophy at Texas Tech University and coauthor of “Grandstanding: The Use and Abuse of Moral Talk,” said that philanthropic largesse is especially vulnerable to criticism in an age when some people try to signal their own virtue by criticizing the actions of others.
“Whenever a rich person gives money away now, immediately it becomes a meme: .02 percent of their net worth, more money than most of us could ever dream of, and it’s going to make a big difference, but it’s not enough because it’s nothing to them,” Tosi said.
“People are always on the lookout for surprising or exotic moral claims they can make, and the thought there is, if I spot this thing that most people don’t see as a moral problem, I must be especially morally sensitive, I see things most people miss.”
Moreover, in his Giving Pledge letter, financier Warren Buffet acknowledges that givers of modest means make more of a sacrifice than he has with his pledge to give away 99% of his wealth.
“Millions of people who regularly contribute to churches, schools, and other organizations thereby relinquish the use of funds that would otherwise benefit their own families. The dollars these people drop into a collection plate or give to United Way mean forgone movies, dinners out, or other personal pleasures. In contrast, my family and I will give up nothing we need or want by fulfilling this 99% pledge,” Buffet wrote.
He also said that people who give of their time to help others are doing even more than people who give money. “A struggling child, befriended and nurtured by a caring mentor, receives a gift whose value far exceeds what can be bestowed by a check. My sister, Doris, extends significant person-to-person help daily. I’ve done little of this,” he wrote.
But the challenges that confront wealthy donors can be more serious than public scoffing. For one thing, they have to think about the unintended consequences of their gifts. For example, if a small nonprofit establishes a new program with a generous gift, what will happen when the money runs out, asked Buchanan at the Center for Effective Philanthropy.
“It’s a surmountable challenge, but it’s a challenge,” he said.
‘The most stubborn problems’
As an individual donor, Scott is among the majority of charitable donors in the country, according to Stanczykiewicz. Eighty percent of charitable funding comes from individuals, and half of Americans give regularly, even during an economic downturn like the U.S. is experiencing now. They are helped this year by the temporary reinstatement of the universal charitable deduction, which allows anyone to deduct up to $300 in charitable donations on their taxes, even if they take the standard deduction.
Stanczykiewicz wants to see that deduction made permanent and says it would help combat the argument, made by author David Callahan in his book “The Givers” and others, that the rich wield too much influence in society by way of the causes they choose to support.
“There’s a social-justice argument there, for people who say, ‘Oh, the Jeff Bezoses and MacKenzie Scotts have way too much influence,’” he said. “OK, let’s let everyone have the universal charitable deduction; let me count my $1,700 donation the way MacKenzie can count most of her $1.7 billion, or at least a significant share of her $1.7 billion.”
Scott’s gift is not the largest by an individual; Buffett donated $2.9 billion in stock to five organizations last month, part of $37 billion he has given away since 2006. The New York Times reported that he still owns stock worth $67 billion, which brings up another problem that wealthy donors face. They’re so rich that it can be difficult to give all their money away, because it’s multiplying so fast.
Business Insider reported that Scott announced her donation on a Wednesday and by Friday was more than $1.7 billion richer than she had been because of Amazon gains.
Her gift stands to have impact beyond her own donation, however. On Medium, one reader responded that she had been inspired to donate between $25 and $50, which was all she could afford, to most of the causes that Scott supported.
Similarly, Osili, at the Lilly School, said that while the impact of the Giving Pledge has yet to be fully seen, it creates a community and environment of philanthropy among the world’s richest people. (With the exception of Scott’s former husband, Bezos, the world’s wealthiest man, who is not listed on the website.)
But the biggest problem facing wealthy donors may be frustration at how difficult it is to effect change. Bill and Melinda Gates have made significant progress in child mortality through their foundation, but sometimes results are elusive.
“Philanthropy is working on the world’s most stubborn problems, problems that have defied business or government solutions,” said Buchanan at the Center for Effective Philanthropy.
“Andrew Carnegie said he was going to turn from accumulating wealth to the far more difficult challenge of distributing it widely. Buffett said something similar: In business, you look for easy things to do. In philanthropy, you take on the hardest challenges.”