This report examines the growing wealth of billionaires and other ultra-high net worth individuals in Massachusetts — where voters will have the chance to levy a 4 percent surtax on those making more than $1 million a year this November.
MacKenzie Scott (Bezos) and The Giving Pledge: The Perils and Possibilities of Billionaire Philanthropy
Almost all growth in charitable giving has come from wealthy donors. Scott's actions offer a possible path forward in an age of top-heavy philanthropy.
Blogging Our Great Divide
July 28, 2020
MacKenzie Scott, the former spouse of Jeff Bezos, has raised the bar for the Giving Pledge billionaires and for the charitable giving sector in general.
Her actions show a possible path forward as philanthropy has become increasingly “top heavy” with billionaire assets surging over the last several decades, even during the current pandemic. The giving sector now mirrors the larger income and wealth inequality trends ravaging all aspects of society.
Donations from small donors have been on a twenty-year downward trend, as low- and middle-income donors feel the squeeze from stagnant wages, declining savings and homeownership, the Great Recession of 2008, and now the pandemic.
Meanwhile, almost all the growth in charitable giving has come from wealthy donors, as documented in a new report I coauthored with Helen Flannery, Gilded Giving 2020: How Wealth Inequality Distorts Philanthropy and Imperils Democracy. A third of all charitable deductions are claimed by households making over $1 million.
This concentration of giving power in the hands of the richest 0.1 percent is bad for the nonprofit sector, democracy, and the integrity of the tax system.
One downside is wealthy donors are more likely to park wealth in private foundations and donor-advised funds, slowing its flow to working nonprofits on the ground. Between 2005 and 2019, the number of private foundations grew from 71,097 to 119,791, an increase of 68 percent. Over the same period, their assets grew 118 percent, from $551 billion to $1.2 trillion.
Donations to DAFs (Donor-Advised Funds) have increased even more rapidly, from $20 billion in 2014 to more than $37 billion in 2018—86 percent growth over just five years. DAFs have seen their share of the giving pie triple between 2010 and 2018, with the single biggest recipient of charitable funds being the Fidelity Charitable Gift Fund.
In her statement in Medium, MacKenzie Scott announced $1.67 billion in direct grants to 116 charities, mostly addressing racial injustice and other aspects of inequality. While only 3 percent of her wealth, that this money will not be parked in a DAF or private foundation is significant (that we know of). Scott pledged in her first giving announcement “to give the majority of wealth back to the society that helped generate it, to do it thoughtfully, to get started soon, and to keep at it until the safe is empty.”
The Giving Pledge is coming up on its 10th anniversary. Started on August 4, 2010 by Bill Gates and Warren Buffett, the Giving Pledge is aimed at organizing billionaires to pledge to give away half their wealth. But based on our analysis in Gilded Giving, the assets of living Giving Pledge members have doubled over the last decade. Basically, their wealth is growing faster than their capacity to give it away. And the wealth of the 100 living U.S. Giving Pledgers has surged $214 billion over the last four months, since the beginning of the pandemic.
Many Giving Pledge members will fulfill their Pledge by plopping assets into private family foundations controlled by their heirs, possibly in perpetuity. Not enough are aggressively moving funds directly to working charities, as MacKenzie Scott has begun to do.
As part of her divorce settlement from Jeff Bezos, MacKenzie Scott received stock worth $36 billion, a quarter of Jeff Bezo’s ownership stake in Amazon worth. She is now worth an estimated $58 billion. Shortly afterwards, Scott took the Giving Pledge with a statement that she plans to give almost all the wealth away. Jeff Bezos has not taken the Pledge.
It’s worth looking at other ways Scott is departing from traditional philanthropy. She talks about holding a “privilege dividend” and the responsibility of not only giving the wealth, but also lifting up the organizations to which she is donating. She has pulled advisors from communities of color and other marginalized groups to identify grant recipients. She acknowledges that “people with experience with inequities are the ones best equipped to design solutions.”
She also disrupts the narrative of entitlement and deservedness that many billionaires have by acknowledging that she is “giving the majority of my wealth back to the society that helped generate it” and adding that, “There is no question in my mind that anyone’s personal wealth is the product of a collective effort, and of social structures which present opportunities to some people, and obstacles to countless others.”
This is a refreshing departure from the “I’m rich because I’m the smartest man in the universe” narrative you hear from the others.
Okay, she’s only given away 3 percent of her wealth. But it’s a good first step forward, and she is already teaching the billionaire boys a thing or two.