I love the formula which Jeff Bezos uses to define where he’d like to focus his philanthropic efforts: “at the intersection of urgent need and lasting impact”. His note arrives as Robert Frank, in the NYT, asks some pointed questions about Bezos’s philanthropy, and the fact that Bezos is by far the richest American not to sign the Giving Pledge.
Bezos says that he wants to be “helping people in the here and now,” which is a surprisingly rare focus for mega-scale philanthropy. Most billionaires tend to the opposite end of the charity-philanthropy spectrum, embracing ultra-long time horizons with an aim of having impact for many centuries to come. Philanthropically-funded scientific research, for instance, gave us both Norman Borlaug’s green revolution and the Pill, with almost unquantifiably enormous positive consequences in both cases. Similarly, a lot of billionaires have a tendency to fund foundations, hospitals, universities, libraries, and other quasi-permanent institutions; again, the idea is that the gift will keep on giving for decades or even centuries to come.
I’m not a huge fan of this kind of thinking. I believe that philanthropy should be front-loaded, since the clear secular trend in philanthropy is that more and more rich people are giving more and more money every year. The future is going to enjoy a massive quantity of philanthropic resources, even if we’ve already spent down all the gifts currently in existence. And on top of that, the world in general is becoming richer and healthier, which means that today’s neediest are, to a first approximation, the neediest that the world will ever see. Let’s focus on them.
The next question, of course, is how to do that. The main reason given by the very rich to move away from the charity end of the charity-philanthropy spectrum is that it doesn’t make a lasting difference. Give a man a fish and he’ll eat for a day, but he’ll still be hungry tomorrow.
Still, it’s easy to overstate this phenomenon. Give Directly and other researchers in the world of unconditional cash transfers have found that simply giving poor people a lump sum can have astonishing lasting effects: it doesn’t just disappear into short-term consumption or waste. And if you save lives, cure the sick, and house the homeless today, those people will become much more productive members of society tomorrow, improving not only their own lives but those of many people around them.
To put it another way: Every time a foundation is set up in such a manner as to retain 95% of its cash for future expenditures, spending only a bare minimum of 5% each year, the opportunity cost of that 95% is enormous, and almost certainly far greater than any reasonably foreseeable investment return it might generate.
So I have no problem at all with the fact that Bezos has not set up a personal foundation. I also have no problem with him keeping the Washington Post as a for-profit company, although presumably he could turn it into a non-profit trust any time he wanted. I do consider the Washington Post to be a philanthropic endeavor, either way: to use Bezos’s own formula, it meets an urgent need and it is having a lasting impact.
Bezos is in the fortunate position of having most of his wealth in the form of a liquid minority stake in a large public company. That means he can give away his money quite easily, without having to worry about how to sell his stock or what would happen to his control of Amazon. (Bezos has absolute control of Amazon by dint of being the visionary founder; he is utterly secure in his roles of chairman and CEO, no matter how much he reduces his stake in the company.)
My advice to Bezos, then, would be to say that the answer is pretty much staring him in the face: Sell your shares in Amazon, and give the cash to poor people. How many shares you sell, and which poor people you give the cash to, is ultimately a personal decision. Do you front-load your giving by selling most of your shares today? Or do you place your faith in an ever-rising share price which will maximize your giving if you hold on to the shares for many years to come? And in terms of which of the world’s neediest you target, will you begin at home, in Seattle? Or will you go somewhere like Kenya, where the objective need is greatest? Those are decisions only Bezos can make.
Bezos does not need to set up any kind of charitable foundation to do this; nor does he need to sign the Giving Pledge if he doesn’t want to. In terms of intermediaries, there are any number of non-profit institutions who would be happy to take care of the logistics of transferring the cash efficiently and effectively to the poor. The results would be enormous, and Bezos could even spend a bit of extra money trying to measure them, if he were so inclined. But the fact is that the intersection of urgent need and lasting impact is not hard to find. You just need to believe in the transformative potential of money. And that’s not very hard to believe in at all.