MacKenzie Scott’s Money Bombs Are Single Handedly Reshaping America
bloomberg.com
bloomberg.com
I love how MacKenzie Scott is just jumping in, giving away the money, make smart choices, pull the bandaid off and get to work. At this pace she'll give away all $60B in 7.5 years, assuming she doesn't speed up. I bet she's aiming for 2 years for 99%, so ~$52B next year. She's not trying to spend the rest of her life as a philanthropist, live beyond the grave, supplement government/tax failings, or have hospitals in her name.
To me it's not good enough to make billions and then do good. Do good every moment of every day. Make doing good your work. Or get out of the way.
This is an awkward story to message this on, given a greater fraction of her wealth is going to help the needy than does the U.S. government’s.
There are about 2750 billionaires in the world, 210 of whom have pledged to give away at least half their wealth to charitable causes, so about 12 billionaires who aren't as generous for every Makenzie Scott (assuming that billionaires can't be generous if they haven't signed the giving pledge).
Even if you agree with Mackenzie Scott’s allocations, she wasn’t the direct individual who amassed the fortune (though I’m sure she contributed a lot), it’s something of serendipity that she’s in a position to be allocating her portion at all now. It really shouldn’t be this way.
Now apply that same logic to the US government. If you divide the federal budget by the number of elected officials, each one controls over $7 billion of income per year. The amount of wealth they control is far higher than all the billionaires in the world combined. In addition, they create laws that are backed by the threat of violence. They also capture wealth through taxes, which if I don't pay, will cause men with guns to come to my home and put me in a cage. I didn't agree to any of this and there's no way I can opt out of it.
I'm not worried about billionaires pulling me over and putting me in handcuffs, or telling me who I'm allowed to marry, or what substances I can use in my own home. I'm not worried about billionaires taking my money to fund armies and spending decades invading random countries in the middle east. I'm definitely not worried about billionaires restricting where I can travel or what business transactions I can engage in.
If I have to choose between the government controlling more of people's resources or less, I'm picking less.
In practice, democratic control will be more stable.
I don't see why letting them spend $35.05 trillion for one year will make the world a better place. I just don't see the logic there.
If you think your $1 million today will become $10 million in 10 years, and then $100 million in another 10 years, and then $1 billion after thirty years total... wouldn't it seem deeply wrong to give away the $1 million today, and throw away the opportunity to do $999 million of good in 30 years? Or from an equivalent perspective, to do $999 million of future harm in exchange for a mere $1 million of good today.
Obviously it depends on whether the money will grow, whether who you give to invests it themselves, it's a balancing of risk reward etc. But the idea that you always ought to give charitably now rather than invest and give later seems deeply flawed.
Extreme scenario : one person makes all the people of the world work for him during his entire life. And then give his wealth when he dies.
More harm or good ?
someone making that kind of obscene wealth is almost certainly doing bad things to get it.
Helping people who need it _now_ rather than in ten years helps _them_ start contributing more effectively to their communities, or blunts negative effects of them _not_ having that help for the next ten years.
Sure, it's a bet you can make that you'll grow your money faster than it would have impact being put into the world --- but it's one that takes a certain amount of hubris.
What does it look like for someone fresh out of college to dive into making an impact vs waiting till they're 50, a billionaire? Use climate as an example, assume the problem is getting worse at 10% a year. With climate especially there are tipping points too, i.e. maybe there's a cliff at year 49 where it gets 200% worse.
What kind of challenges lend themselves to "get rich then give"? What kind of challenges lend themselves to "dive right in"?
What would YC say?
"Do good early, do good often".
Lean philanthropy
I think we have to look at where that other $9million comes from, because it's not just appearing in your pocket magically. When an asset grows 10x and production didn't grow 10x, that means the asset grew by draining smaller pools. The people you're waiting to help may be in the same pool as the ones being hurt in the meantime. Like...if I steal money from all of my neighbors and then give it back to them later, the amount I can give them is greater than what I could give before I took from them. But I bet they would rather me not take from them first just to give them back what was originally theirs.
Well if you want to give back, you need to have something first. As heirs, Scott got money without really (deserving|working for) it. It is not really comparable to Gates and Buttet.
> To me it's not good enough to make billions and then do good
Everyone is different, some people choose to do that. It is still better than giving nothing
Commenting on the "have something first". If you're 20 years old you have 60 years you can give. Gates is a poor man comparatively.
I don't get how you could do more good with 40years of life with 0 on a bank account vs 1 day of life and 60bn on bank account
I applaud her, Gates, etc. for trying to do good with their fortune. But that also leaves the choice of what to do to the very few, instead of the society deciding (if the fortunes were collected as tax instead)
Why such an absolutist stance. If I were to follow your advice in the past, I would have had less money to do good with, and my impact would be limited. But because I delayed that, I am able to give more today than before.
> I love how MacKenzie Scott is just jumping in, giving away the money, make smart choices, pull the bandaid off and get to work.
You don't know that these are smart choices. Giving money away in large sums, with little accountability, to organizations that aren't setup to spend it well, can backfire. Look at some of our government's largest spending efforts or at how cities like SF squander hundreds of millions to see what could happen. Startups are given very limited amounts of funding in investment rounds to maintain that sense of hunger and accountability through incremental investments. It is possible that McKenzie Scott's spending is that, since it is spread across such a large number of grants. But since this is the largest gift many of the recipient organizations have ever received, it remains to be seen how this will play out from an impact perspective.
what are you talking about? you think she didn't do anything for the success of amazon? hell she was married to bezos before amazon even started up. What part of that money doesn't she deserve?
> In 1993, Scott and Bezos were married, and in 1994, they both left D. E. Shaw, moved to Seattle, and started Amazon. Scott was one of Amazon's first employees, and was heavily involved in Amazon's early days, working on the company's name, business plan, accounts and shipping early orders.[4][9] She also negotiated the company's first freight contract.[9] When Amazon began to succeed,[when?] Scott took a less involved role in the business, preferring to focus on her family and literary career.
Well said. I wonder whether at this day and age it's even possible for someone without any ancestral wealth to grow from nothing to such massive wealth without exploiting large number of people or environment or both in some manner? In that case doing every day good by common people is lot more valuable.
""" MacKenzie Scott (... formerly Bezos; April 7, 1970) is an American billionaire businesswoman, novelist, and philanthropist. As of May 29, 2021, she has a net worth of US$57.0 billion, owing to a 4% stake in Amazon, after her divorce from Amazon founder and former Chief Executive Jeff Bezos. As such, Scott is the third-wealthiest woman in the United States, and the 21st-wealthiest individual in the world. She is known for her involvement in the founding and development of Amazon, as well as her now dissolved marriage to Bezos. """
""" In 2020, she made US$5.8 billion in charitable gifts, one of the largest annual distributions by a private individual to working charities. Scott donated a further $2.7 billion in 2021. """
It is really the extra resources of all those non-profits that will be "reshaping" their communities. We'll have to wait and see in a few years what the effects are.
Yup. I prefer to believe most schools and non-profits aren't run by folks hoping to enrich themselves (at least not monetarily). But there's also the question of how to deal with such a windfall.
People ( https://www.the-sun.com/news/3031887/national-lottery-euromi... ) and corporations ( plenty of folks misallocate VC funding ) are bad at dealing with windfalls, how could it not be a difficulty for non-profits?
This will irk a lot of people here, but frankly the government is a pretty good nonprofit, as far as nonprofits go.
Did he talk about the specific how / underlying dynamics, and what if anything could be done about it?
Where would I find that conversation?
Soros writes extensively. I've not found a specific comment matching the description above, though this essay discusses his philanthropic activities, goals, and strategies at length:
https://www.georgesoros.com/2011/06/22/my_philanthropy/
DDG: "george soros" philanthropy difficulty
Tuning keywords might turn up something more relevant, though there's a lot of crud to wade through.
The quote about "corruption" was from some interview with him, I'll link it if I find it, though you know how hard it is to search videos like that.
Also, this provides a stark comparison to Mackenzie's style of giving: Over thirty years I have contributed more than $8 billion to the worldwide network of Open Society Foundations. It tool Soros 30 years to give $8B, while she did it in 1 year.
Over the years, starting with his experience in wartime Hungary, he had developed all the instincts of an outsider; he was distrustful of government, disdainful of the establishment, allergic to institutions generally. Traditional foundations did not escape his contempt. He saw them as too bureaucratic to respond in a timely way to real need; laden with overhead, which benefitted the givers instead of the recipients; and inherently corrupting, almost demanding to be exploited. (“They go against human nature,” Soros says, “which is to take and not to give.”) This last point was particularly nettlesome for him, inasmuch as he is a singularly untrusting person, intent on not allowing others to take advantage of him.
https://www.newyorker.com/magazine/1995/01/23/the-world-acco...
I don't find the "human nature" quote referenced elsewhere.
As for other billionaires failing their ambitious goals, I think that is normal, because their goals are more ambitious than their massive fortune. To put things in perspective, US government spends trillions of dollars a year, and the country still has many problems.
> “What do we think they might do with more cash on hand than they expected?” Scott asked in her June blog post. “Hire a few extra team members they know they can pay for the next five years. Buy chairs for them. Stop having to work every weekend. Get some sleep.”
My wild ass guess is that she’s hoping her firehose of money will do more good in a shorter amount of time versus spending a lot of time fine tuning the giving.
I think a lot of billionaire philanthropists see their giving as almost like a kind of investment, and some of them want to see a return on that investment that is above the average return from the average non-billionaire giver. That in turn causes the recipient to spend at least some time thinking about how to make that billionaire feel like they got a good return.
It sounds like McKenzie-Scott’s idea of giving is more hands off, identifying teams that had a history of doing good work, and giving them both resources and mental space to execute.
Something for effective altruists to consider.
I think there's something to be said for this. It's clear none of those people were in it for the money, the prestige, and are passionate enough about that they would risk their health for an unknown gain (its often very hard to measure whether or not your one night of sleeping less actually made the world better). Receiving a one-time donation of someone of MacKenzie's stature not only gives them breathing room but also puts them on the map as a charity a billionaire "invested" into.
I'm not particularly well informed here, but my impression was that the gates foundation has been a relatively successful organization in terms of improving living conditions on a variety of issues. Saying he's an anti-vax meme is irrelevant.
The relevance is that the failure provided fuel to his critics (and a global genocidal disinformation campaign.)
Your point?
My point isn't that the failure invalidates Gates's approach or attempts. If you succeed at everything you try, you're not taking any risks.
My point is that the failure has become fuel for critics, who would quite likely find any possible basis to make such criticisms.
(I'm not uncritical of Gates myself, nor do I consider myself a fan. He ran a highly successful business unethically and illegally. He's been a major philanthropist. His campaigns have a mixed record (see comment re: risks above), with some successes and some failures. The policies he pursues are often self-serving, especially regarding software and intellectual property rights.)
From my dabblings in the non profit space, I'm finding many are unprepared to accept anything aside from cash.
There are also major tax advantages for doing so, since you can avoid the long term capital gains tax while also getting a charitable tax deduction for the full value of the shares donated. That's probably my favorite tax code to be honest.
It's quite a hit to their ``ratings'' as well, if they keep large un-spent sums of money around. Just imagine the clickbait article showing a non-profit hoarding stock instead of helping children in need. Those that do are rightfully derided so much that honest non-profits that are just trying to build their own infrastructure with self-directed spending are caught in the crossfire for not investing in ``programs'' enough.
Often long term goals are involved, so I don’t see any problem with holding appreciating assets so the power and influence of the organization can be maintained into the future.
Of course using non-profits for investing shell games is probably a whole different problem I am not familiar with. But holding assets as a whole doesn’t seem like a big issue to me.
The _problem_ is that this translates to some expectation that every dollar given should go immediately to purchasing something, and that somehow it's "more effective" for a person to go purchase things than to donate to, say, red cross. That's dead, dead wrong. Give money, let them invest in solutions.
However, from the donor's perspective, donating stock, and other valuable stuff, is a good tax dodge. You don't have to pay capital gains taxes and then send money to the org. So usually the org is happy to accept these gifts, but yes, they'll sell them.
It seems to be a recurring story for new entrants to the non profit space to be the "tech savvy one doing things differently", because the whole space is, I guess, not market driven as it isn't motivated by being technologically aware. Only getting a few recurring donors and doing their mission.
However, from the donor's perspective, donating stock, and other valuable stuff, is a good tax dodge. You don't have to pay capital gains taxes and then send money to the org. So usually the org is happy to accept these gifts, but yes, they'll sell them.
If you’re donating huge amounts of money, you have lawyers to help those companies figure it out.
If you’re a small-time donor, trying to saddle a tiny non-profit with all of the extra hassle and legwork of accepting appreciated shares just so they can take your one-off donation is counter-productive (unless they're already set up for this, obviously). They might end up spending more time and money figuring out how to deal with your single donation than they would gain from accepting it, which is why they don’t bother.
The solution is easy, though: Set up a “Donor Advised Fund” through any number of major brokerages. They will handle the liquidation of your shares and mail a check to the charities you choose. Couldn’t be easier for both you and the charity.
going to etrade.com and opening an account, followed up by mailing proof of being a nonprofit? It's as easy as that, I ask charities to do it all the time.
For example, you have $1000 of tesla shares that you bought for $100 a few years ago. You want to donate some money to charity now. If you sold those shares and put them in your bank account and then donate cash, you'd owe capital gains tax (15 or 20% depending on tax bracket) on the $900 gain. So if you donated all of your Amazon stock that way, you would give a donation of $1000 - (900 x 0.15) = $865 and you can take an $865 tax deduction if you itemize.
Alternatively, you can donate $1000 of appreciated tesla shares directly to a charity. Now, you don't owe capital gains, AND you can take a $1000 tax deduction. Double win.
Rich people who give to charity are well aware of this loophole. For them, it pretty much never makes sense to donate cash if they have appreciated assets they can give instead (at the very least you might as well donate the stock and then buy it back later at a higher cost basis, although I think there might be rules about buying the exact stock again within 30 days). And in my experience, most charities are happy to take stock for this reason... because their major donors only want to give stock, so they already have the infrastructure in place for accepting it.*
I live in the middle of nowhere and my best friends live in places like New Orleans, Juneau, San Francisco, Portland, New York, rural Colorado, Mississippi and Florida etc. basically, all over the place and nobody I know has been in any way impacted by any of these charities, and certainly haven’t been impacted by this gifting spree.
Furthermore, none of my friends know anybody who has benefited from these “money bombs.”
I don’t mean to sound cynical, but it doesn’t really seem like “giving” when you’re purchasing some of the most blatantly glowing sycophantic PR imaginable. Seriously, what is the actual purpose of this article? Why was it written? It’s “news” that Bloomberg thinks it’s important that I like this person?
Give it some time
Huh? Is there any reason to think MacKenzie purchased this article? It discusses how MacKenzie is incredibly tight lipped and low profile with her contributions. She’s not interviewed in it. Bloomberg had to do a mass survey to just identity the places she donated to and they still weren’t able to get dollar contribution amounts from many organizations. You’d think if she was promoting herself she’d hand them a list.
IMHO, the article exists because a billionaire donating $4B+ in 12 months is newsworthy in itself.
Agreed on the click-bait “reshaping America” title though.
Based on the headline and content of the article, that’s clearly not true.
I suppose it’s just a coincidence that a gushing love letter to a billionaire just showed up in Bloomberg. Maybe it’s actually newsworthy that I should personally like this obscenely rich person.
“John Sayles, CEO of the Vermont Foodbank said he received an email on Dec. 3 from a philanthropic adviser who said their client was interested in making a donation. Shortly thereafter, Sayles learned who was making the donation and how much it was for.
“And then I just spent about a day in shock,” Sayles said.
The gift is “exponentially” bigger than any other the nonprofit has received, Sayles said. The amount is the equivalent of the organization’s annual operating budget.”
https://vtdigger.org/2020/12/18/billionaire-mackenzie-scott-...
If you personally agree with the headline, I apologize for being flippant about this issue, we’ll just have to agree to disagree. It’s also possible, I suppose, that I’m not the one with the axe to grind though. Anything is possible!
Edit: To clarify, yes I think this is completely bad and I do not think any of this is in any way a laudable act. If Bezos had paid taxes, his ex wife wouldn’t have this amount of power! This is an awful example of the worst parts of American excess. I am aware that this is an unpopular opinion on this site.
The ultra rich have unfathomable amounts of money, sure, but the only way to sustainably fund a large welfare state--as is evidenced by the tax policies of every Western European nation--is to tax the absolute shit out of the middle class. Keep that in mind the next time someone says they're going to fund trillions in new annual spending by 'taxing the rich'... They may keep their promise, but when the golden goose is dead, they'll be knocking on your door!
So we already tax the middle class, just opaquely, and without the benefit of healthcare not being tied to work (which would enable more entrepreneurism).
Also, interesting that $1.2bn (27%) of the money went to ”Philanthropy & Grantmaking Infrastructure”… sounds like a bit of a Ponzi scheme? I really can’t imagine that was the best use for that money…
There's a breakdown of which non-profits that includes, including the United Way and other non-profits.