In early April, Jack Dorsey announced he would use $1 billion of his shares in Square, the payment-processing platform he co-founded, to fund COVID-19 relief efforts through a newly formed limited liability company (LLC), Start Small. After the crisis ebbs, the LLC will direct funding toward universal basic income and girls’ health and education.
The $1 billion figure, which represented roughly 28% of Dorsey’s then-estimated $3.9 billion net worth, provided critics with fodder to sharpen their arguments that the mega-rich—and Dorsey’s tech brethren in particular—haven’t provided sufficient COVID-19 relief and remain too protective of their own accumulation of wealth. Meanwhile, more optimistically inclined commentators wondered if billionaires would respond to Dorsey’s hope that his move would “inspire others to do something similar.” (They have yet to do so.)
In mid-March, Dorsey announced he had donated over $87 million toward COVID-19 relief and provided a spreadsheet showing where the money went. The spreadsheet shows that Dorsey is providing funding to many smaller and under-resourced organizations that have been pushed to the brink by the pandemic. At the time of this writing, Start Small has allocated $85 million to 55 nonprofits.
Dorsey’s growing philanthropy lies right at the core of raging debates over the role of private wealth during COVID-19, especially in the Bay Area. And while the tech mogul’s giving is unlikely to settle them anytime soon, we are getting an encouraging look at where, exactly, these dollars are focused.
“I want to give out all my money in my lifetime. I want to see the impacts, selfishly, in my lifetime,” Dorsey recently told Andrew Yang on an episode of the “Yang Speaks” podcast. “I want to make sure that we’re helping people.”
The Billionaire Donor Paradox
Dorsey’s $1 billion pledge dropped in a philanthropic climate where, as one study found, the wealthiest Americans gave away an average of just 1.2% of their assets in 2017. At the same time, anti-poverty group Global Citizen found that eight out of 10 survey respondents think billionaires “should help end poverty, inequality and a host of global ills.”
The stinginess of the mega-rich in the face of widespread need presents something of a paradox. On one hand, if billionaires don’t pull their weight in a global pandemic, they’re hoarding wealth. But on the other, if billionaires do ramp up their giving—and with it, their influence over American society—they become a threat to democracy.
IP’s David Callahan picked up on this thread during the early days of the pandemic, questioning how it would impact a then-swelling revolt against billionaire donors. As of late March, communities across the United States were appreciating philanthropy’s vital role, as foundations and major donors scrambled to provide relief. Critics seemed mostly to be tabling their concerns about a plutocratic takeover. Vox’s Kelsey Piper summed up the sentiment best: “The crisis has been an example of how, at its best, billionaire philanthropy can do critical work that democratic systems are failing to get done. It’s fair to say that things would be much better off if President Donald Trump had mounted a competent response—and much worse off if Bill Gates weren’t around to help fill the void the incompetence at the top has created.”
And yet, Callahan cautioned, “any sense that foundations and the wealthy are doing enough could vanish quickly in the weeks and months ahead.”
(Relatively) Small Gifts, Growing Wealth
Three weeks after that warning, Forbes’ Hayley Cuccinello compiled a list of 77 billionaires who publicly disclosed financial gifts for coronavirus relief. Dorsey’s $1 billion commitment was the largest by far. (To put this figure in perspective, if Bill Gates were to donate 28% of his $107 billion net worth, we’d be looking at a $30 billion commitment.)
Coming in at No. 2 were Bill and Melinda Gates, who publicly committed $305 million, according to Cuccinello. Indian tech tycoon Azim Premji was third with $132 million, followed by George Soros, Australian businessman Andrew Forrest, Jeff Skoll, Jeff Bezos and Michael Dell, all of whom committed approximately $100 million. However, as IP’s John Freund noted, these $100 million gifts, “while eye-opening in absolute terms, are quite small relative to the overall wealth of the givers.”
In fairness, many of these donors have signed the Giving Pledge, meaning they have plans, on paper, at least, to give away much more. But that is of little comfort to the millions of Americans being impacted by COVID-19 right now. And the relatively small amount of philanthropic giving is especially glaring as billionaires have seen their own wealth grow during the pandemic.
A new report from Americans for Tax Fairness and the Institute for Policy Studies’ Program on Inequality found that between March 18 and May 19, the total net worth of the 600-plus U.S. billionaires jumped by $434 billion, or 15%, based on the group’s analysis of Forbes data. The billionaires’ worth rose from $2.948 trillion to $3.382 trillion. The top five U.S. billionaires—Jeff Bezos, Bill Gates, Mark Zuckerberg, Warren Buffett and Larry Ellison—saw their wealth grow by a total of $75.5 billion, or 19%.
As for Dorsey, Forbes pegged his net worth at $3.8 billion when he announced his commitment in mid-April. As of May 22, that figure was $4.9 billion. Since his contribution to Start Small is in stock, Dorsey’s donation is currently worth more than $1.5 billion.
In mid-April, IP’s Freund called billionaires’ collective COVID-19 response “lackluster.” The response from those in the Bay Area has been worse.
On March 13, San Francisco Mayor London Breed set up the Give2SF COVID-19 Response and Recovery Fund. By the end of April, the fund raised a mere $10.5 million. Curbed SF’s Chris Roberts found that approximately 70 of the city’s 75 billionaires had yet to chip in, including Dorsey. “Those who have the least to give are giving the most, both as a percentage of their wealth and as a percentage of total charity,” Roberts wrote.
Two weeks later, in a piece titled “The Bay Area Billionaires Are Breaking My Heart,” the New York Times’ Farhad Manjoo wrote, “I’m… waiting on the city’s billionaires to open up new floodgates of generosity, at least for mitigating the immediate pain of the crisis.”
Meanwhile, John Burbank, executive director of the Economic Opportunity Institute, called out in Real Change News the relatively meager contributions of Seattle’s Bezos and the Ballmers, whose $10 million donation for COVID-19 testing represents “less than two one-hundredths” of the couple’s wealth. “The wealthiest among us remain insulated from the pandemic crisis and the economic crisis,” he wrote. “And it seems that they really don’t care.”
The philanthro-shaming doesn’t end there. Morris Pearl, a former managing director at BlackRock, called billionaires’ response “utterly disappointing.” Former U.S. Secretary of Labor Robert B. Reich opted for “self-serving rubbish,” and the Atlantic’s Russell Berman asked, “Where Are the Billionaires?”
Another individual who thinks that billionaires aren’t doing enough to support COVID-19 is Bill Gates, who has been brainstorming ways to tweak the Giving Pledge so the 209 billionaire signatories will open their wallets while they’re still breathing. The most likely proposal, writes Vox’s Theodore Schleifer, “centers on creating a ‘marketplace’ for Giving Pledge signers, and possibly other ultra-rich people who have yet to sign it, to pitch one another on projects.”
Billionaires, Taxes, and Philanthropy
Upon committing $10 million to COVID-19 relief, Oklahoma billionaire George Kaiser said, “It’s unfortunate that private charity has to assume the role of primary safety net and even supply chain and logistics manager because of the failure of government to perform its function.”
While the comment was a knock on the Trump administration’s ineptitude, Kaiser should also consider that the government’s efficacy has been eroded by 40 years of federal tax policy tilted in favor of the wealthy, while shredding the safety net that donors are now trying to patch with donations. It’s the same tax policy that, in part, enabled Kaiser to amass a net worth of $6 billion by “shrewdly playing the Internal Revenue Code” and reducing his tax bill by $4 billion across a lifetime of charitable giving, according to the Sunlight Foundation. (In fairness, Kaiser called on Oklahoma legislators to raise taxes in 2017, although some found it disingenuous, given his history of minimizing his own tax burden.)
For critics of billionaire parsimony during COVID-19, this disconnect shows that the wealthy are not only giving too little, they are also overlooking meaningful solutions that may threaten their own fortunes. As the mega-rich accumulate more money than they know what to do with, they rarely call for legislative action to expand the social safety net or reform the tax code.
Vox’s Piper acknowledges the system isn’t perfect, but says it beats the alternative. Philanthropy is “filling in the gaps—moving faster than the government, moving around bureaucratic red tape, making sure that good ideas break ground immediately instead of waiting weeks for approval,” she wrote. “Abolishing the billionaire class hardly guarantees the kind of competent government response needed in a crisis like this.”
Anand Giridharadas, author of “Winners Take All: The Elite Charade of Changing the World,” isn’t sold, however. “Billionaires back us into a corner,” he tweeted. “They’ve tax-dodged, lobbied, wage-thieved, benefit-cut, monopolized, and rigged society to a place where, in a crisis, people and institutions are hard-up, and they have resources. So they step up to fix what they helped break. And we take it.”
Closing “the Enormous Gap”
SF Curbed’s Roberts leveled a similar, though less scathing, line of attack in the aftermath of Dorsey’s $1 billion commitment. “Generosity like this,” he wrote, “is why Dorsey is ‘adored’ by his employees, fellow celebrities and the public at large.” But he added that Dorsey’s largesse highlights the “enormous gap between what the public needs and what the government can provide, a deficit that’s forced elected officials across the country to go begging.”
Roberts went on to rebuke Dorsey for contributing $125,000 to an effort to defeat Proposition C, which intended to raise $300 million to help San Francisco’s homeless population by taxing companies that have more than $50 million in annual income. “The ability to dodge such taxes is something Jack Dorsey is more than happy to pay for,” Roberts wrote.
Critics of the proposition, noted CNBC’s Jillian D’Onfro, argued that it “lacked proper accountability and oversight, and would unfairly affect financial services companies like Square.” Opponents also included Zynga founder Mark Pincus, venture capitalist Michael Moritz, and San Francisco Mayor London Breed. Salesforce CEO Marc Benioff claimed that tech companies, many of which enjoy lucrative tax breaks to operate downtown, had a moral obligation to support the measure. He and Salesforce contributed more than $7 million to support the proposal. San Francisco voters passed the proposition in 2018.
Even though Dorsey resisted the tax increase as a CEO, he’s still out to do good as a private citizen. Fast-forward to May 12, 2020, and Mayor Breed announced that the beleaguered Give2SF received a $15 million donation from Jack Dorsey’s Start Small. “This donation will make a critical difference in the lives of thousands of undocumented, mixed-status and low-income San Franciscans who are struggling during the COVID-19 pandemic,” Breed said. The commitment was $13.5 million more than the donation from Salesforce, and more than doubled the $11.3 million the fund had raised to date.
Nonprofits “Facing Devastation”
Dorsey, who has been criticized in the past for his lack of transparency around philanthropic efforts, told Yang that he created an LLC because he doesn’t want to pay the overhead expenses involved with running a philanthropic organization.
Philanthropy watchdogs are quick to note that by forming LLCs as charitable vehicles, donors can evade the public disclosures that traditional foundations are required to make. Dorsey pledged to reveal all donations made on a public spreadsheet, and so far, he has delivered. Moreover, all of the money appears to have been in the form of easily traceable philanthropic grants.
Notably, funds flowed to many small organizations for whom a $300,000 grant can make a galvanizing impact at a time when “nonprofits are facing devastation,” said Rick Cohen, chief operating officer of the U.S.-based National Council of Nonprofits. “Some are facing skyrocketing demands for their services, others are seeing funding dry up, and some are seeing both at the same time.”
Recipient organizations include the Food Bank Council of Michigan ($297,000), Texas-based community health group Dia de la Mujer Latina ($415,000), and the Reform Alliance ($10 million) to deliver protective equipment and coronavirus relief aid to prisons and jails across the country. Reform Alliance CEO Van Jones called the donation “an absolute game-changer.”
“Focused on Real Impact”
Commenting on Bay Area billionaires’ stinginess while fearing a more unequal and dystopian post-COVID-19 San Francisco, the Times’ Manjoo wrote, “This isn’t a problem that will be solved by flying cars; it will be solved by better zoning laws, fairer taxes and, when we can make it safe again, more public transportation. We will have to commit ourselves to these and other boring but permanent civic solutions.”
The problem, as IP’s Philip Rojc noted while reporting on the Omidyar Network’s efforts to build worker power, is that for the most part, billionaire tech donors aren’t particularly interested in supporting initiatives that threaten their economic interests or the kind of unglamorous, in-the-weeds work that Manjoo advocates.
So far, it doesn’t appear as if a global pandemic will significantly alter billionaires’ penchant for economic self-preservation and headline-grabbing moonshot initiatives. Assuming these trends hold, Callahan argues that the big question in the months and years ahead is “how can we encourage the super-rich to give much more in ways that meet the pressing needs of the most vulnerable people in America and the world, don’t further amplify their already outsized influence, and help to shift who has power in society?”
So far, Dorsey may not be embracing the kinds of legislative solutions that critics like Manjoo are calling for, but his initial grantmaking is aimed at meeting the needs of many vulnerable people—notably, by supporting small, under-resourced organizations. Dorsey described to Yang the “electricity when I give and when I know that these organizations that we’re giving to are focused on real impact and doing things that are bigger than all of us, and especially me.” At the time of this writing, Start Small’s spreadsheet indicates it has $1.47 billion in funds it has yet to disperse.