Twitter and Square founder Jack Dorsey surprised everyone last week with a $1 billion commitment to fund COVID-19 relief efforts. Dorsey has said that some portion may be dedicated to other initiatives once the pandemic subsides, so even if the entire amount isn’t allocated to relief efforts, the pledge instantly elevates Dorsey’s philanthropic status from basically nonexistent to among the most significant in the country.

Dorsey made his announcement at a time when billionaires are under increased scrutiny regarding philanthropy. One line of criticism, which will be familiar to readers of IP, is that the super-rich don’t give nearly as much as they can or should. As we’ve reported, even those billionaires who are committed to philanthropy don’t part with more than a sliver of their wealth annually. Nearly all the signatories of the Giving Pledge, for example, have grown far richer in recent years—they simply aren’t giving away their money fast enough. Overall, one study found, the wealthiest Americans gave away an average of just 1.2% of their assets in 2017.

But another line of criticism—which will also be familiar to readers of IP—is that the rise of a new class of billionaires making bigger gifts than ever before poses a threat to democracy as America’s far-upper class uses philanthropy to convert their wealth into influence.

So which is it? Is more billionaire giving a good thing or not?

That sticky question has come into more acute focus with the nation and the world staring down the double barrel of a prolonged pandemic and potential Great Depression. The need for billionaires to step up to the plate has never been more pressing. But worries about their power are only growing—especially the influence of a tech elite whose companies and reputations may actually benefit from this crisis.

So in the wake of Dorsey’s remarkable commitment, it’s worth asking two questions: First, does this gift portend an era of larger philanthropy—particularly tech philanthropy? His $1 billion pledge amounts to 28% of his estimated net worth. That sets a high bar for other billionaires to follow. Will they heed the call?

And second, is that something we actually want to see? The avalanche of attention and praise that followed Dorsey’s gift is a reminder that when billionaires embrace high-octane philanthropy, they attain more status and influence. The more one gives, the more one is likely to receive, in terms of social capital. If Dorsey’s bold move uncorks a new gusher of charitable wealth, what will be the long-term consequences? More immediately, if we now look to that billionaire class to save us during a moment of crisis, what does that mean for their future entrenchment within our society?

An Inspirational Gift

Until recently, billionaire giving for pandemic relief efforts had been lackluster, including just a small handful of $100 million pledges from Bill Gates, Jeff Bezos and Michael Dell. Bezos and Gates are the two richest people in the world, according to Forbes, each with a net worth in excess of $100 billion. And Michael Dell is worth $28 billion. So those $100 million gifts, while eye-opening in absolute terms, are quite small relative to the overall wealth of the givers. The commitments from most other billionaires offering relief have been far more modest compared to what they’re worth, while most billionaires have publicly announced no new pledges at all.

Then, earlier this month, Gates announced that he may spend billions to construct factories to accelerate the production of the seven most promising candidates for a vaccine to COVID-19. That commitment—or potential commitment, since the Gates Foundation subsequently seemed to backtrack on his remarks—came from a very unsurprising source. Bill Gates has been confronting global health issues for decades, and his 2015 TED Talk presaging the current pandemic illustrates his years-long, frontline participation on this issue.

But Jack Dorsey’s $1 billion gift is unexpected, given that he hasn’t been a major force in philanthropy. By his own account, Dorsey has given away $40 million to various causes over the years. Not an eye-popping figure, given his $3.3 billion net worth. Then, out of nowhere, the Twitter and Square founder stepped up with his $1 billion commitment—an amount that comprises nearly a third of his total net worth. If Gates were to make the same degree of commitment, we’d be talking about a $28 billion pledge to COVID relief efforts—more than the GDP of some small countries.

In Dorsey’s tweet announcing the gift, he explains his motivation. “Why now?” he writes. “The needs are increasingly urgent, and I want to see the impact in my lifetime. I hope this inspires others to do something similar. Life is too short, so let’s do everything we can today to help people now.”

The part about inspiring others is what’s most consequential here. After all, billionaires can inspire one another. Gates was the first to announced a $100 million commitment, then Jeff Bezos and Michael Dell followed suit with that exact number. Perhaps they felt the need to match Gates’ benchmark? Now that Dorsey has raised that bar by a factor of 10, will other billionaires follow suit and commit $1 billion of their own? It’s too early to say, but as super-rich donors play a larger role in handling the greatest national emergency since World War II, their actions deserve close scrutiny.

The Transparency Question

Dorsey’s gift is taking the shape of a share transfer. He is moving 20 million shares of Square into his LLC, Start Small. Dorsey also announced that once the pandemic subsides, a portion of the money will likely go to “girls’ health and education,” as well as the promotion of a universal basic income.

Billionaire philanthropists have been criticized in the past for using LLCs as charity vehicles. Some are skeptical about this vehicle because LLCs help donors evade the public disclosures that traditional foundations are required to make. Most famously, Dorsey’s fellow social media billionaire Mark Zuckerberg bore the brunt of public criticism when he announced that the Chan Zuckerberg Initiative would take the shape of an LLC. Other tech billionaires with philanthropic LLCs include Pierre Omidyar and Laurene Powell Jobs.

To his credit, Dorsey addressed the transparency concern by pledging to reveal all donations made on a public spreadsheet. While the spreadsheet does offer some measure of transparency, it isn’t a legal document, and Dorsey must therefore be taken at his word when it comes to assessing the number and dollar amounts of grants made by Start Small. LLCs are also immune from the 5% payout rule, which means Dorsey could theoretically hold onto his money indefinitely. That isn’t likely, since the whole reason Dorsey made such a large grant in the first place is to achieve an immediate impact. But still, other than Dorsey’s spreadsheet and perhaps a press release with confirmation from grantees, we won’t know how much or even if any money is moving out the door.

Another important factor about LLCs is that the money in their coffers can be used for any number of purposes, including political donations and for-profit investments. So, part of Dorsey’s $1 billion for COVID relief efforts could take the shape of lobbying politicians, or even private equity-style investments into companies that are ostensibly targeting pandemic and/or recession-based needs. Will such efforts—if they come to fruition at all—be included on Dorsey’s transparency spreadsheet?

To be fair to Dorsey, none of the above concerns may materialize. All of the money he intends to give to COVID relief efforts may end up taking the form of easily traceable philanthropic grants. That said, part of the story here is whether Dorsey’s gift will influence other billionaires going forward. And even if his $1 billion announcement spurs others to give larger, the fact that Dorsey is leveraging an LLC may prompt others to adopt that vehicle as well, rather than a traditional foundation. This could further cement the billionaire donor class as an elite that operates in the shadows, and would likely embolden critics who are already calling for reform.

Potential Blowback

Billionaire philanthropists have long been criticized for making decisions that impact the public good, while simultaneously remaining private citizens, which shields them from public accountability. The money these unelected influencers give is money that the public has no say over. And had they not given it away, but instead realized it as income and paid the requisite taxes, a portion of that money would go to federal and state government, where elected officials with public accountability would be the ones making the decisions. (The degree to which that accountability actually translates into their decision-making is another story.)

It’s clear that Dorsey’s enormous pledge, coupled with the fact that the money is moving through an LLC, could provide the tech titan with significant influence: Every nonprofit, public official, scientist and entrepreneur working to fight COVID-19 is now a potential beneficiary of the largesse of a man who already commands a social media giant with 330 million users worldwide.

Giving by the billionaire class in recent years, as paltry as it’s been relative to their net worth, has already been working to magnify their power in society. So if more billionaires follow Dorsey and start really giving away billions, how much more power will they amass? And how might that power be used to further entrench their position? The tech industry in particular has been under scrutiny over a bevy of issues, not the least of which is data privacy. In fact, industry backlash appears to be one of the few issues that can garner bipartisan support, which makes Dorsey’s gift especially timely if he were thinking strategically about the gift.

That’s not to say Dorsey is thinking that way. We don’t know his exact mix of motivations—beyond what appears to be an earnest desire to do some good during a moment of crisis, and hopefully inspire others to do the same. But Dorsey’s pledge highlights the ambivalence that many feel with regard to billionaire giving. Their role in the pandemic is a window into a larger conundrum: On the one hand, we need their resources and flexibility during a crisis like this, when government is failing to meet society’s most basic needs. On the other hand, society’s growing dependency on a wealthy few is obviously problematic—and all the more so if that elite has grown so rich because of policies that starve government of resources.

As this crisis grinds on, how can the United States emerge as stronger and more fortified as a nation? To be sure, greater giving by wealthy Americans in a post-pandemic future could be an important ingredient of a better, more equitable society. But it will be far more important to ensure that government has the capacity to truly ensure the well-being of its citizens.