Sideways Puppet,” Steven Zolneczko

August 12, 2019; Vox, “Recode”

An article in Vox reveals an absolutely shocking fact: grant recipients of Jeff Bezos’s Day One Families Fund are being left to do what they elect is necessary and best with the money they have received. That is, the grants contain no restrictions.

This, of course, violates the norms of what Clara Miller once called “The Looking Glass World of Nonprofit Money.” In nonprofits, it’s the norm to have a great deal of money whose sources limit and restrict their use, creating an extra set of problems in managing budgets.

In this case, these gifts, around $100 million each, are game-changing funds for the nonprofits they’re supporting. Investments of that size are rare, of course, but having that money be free of restrictions is almost inconceivable.

One of the biggest challenges with philanthropy is that nonprofits are often hamstrung by the perspectives and success measures of their donors that, often, know far less about the issue they’re funding than the nonprofits do. Enabling the nonprofit leaders, expert in their field, to determine how best to invest the money makes good sense. The more we equip successful nonprofit leaders with proven social impact models with unrestricted funds, the more likely we are to make progress on our social ills.

It’s disappointing that this Recode article immediately points to the conjured image of “fat cat” charity leaders paying themselves large salaries and spending on extraneous overhead as a result of these gifts. As Clara Miller points out, “fungible” cash is typical at for-profits, so there is some precedent for managing under such radical circumstances.

Still, there are a few dimensions that are problematic with Bezos’s approach. First, and fundamentally, Bezos has outsized power in choosing the issues that receive investment. As NPQ has shared in the past, billionaire philanthropists limit democratic control over community investment where funds are distributed based on what issues appeal to the donor versus what might be the strongest need in a community. Amazon in particular has come under fire for avoiding taxes, which would send money into public coffers to address some of the issues Bezos appears to be supporting.

Second, a gift of this size distributed in windfall fashion, while incredibly powerful for the grantees, can cause significant strain on the organization. Leaders need to identify how to invest and spend the funds, need to staff up quickly to execute on a larger scale mission, and need to respond to public and media interest in their goals for a high-profile gift. While these are solvable problems, donors need to ensure that they’re selecting organizations that can thrive from a gift of this nature.

All of which is to say that it’s critical that Bezos arm himself with the knowledge and support of industry experts in the issue areas and geographies. In his recent announcement of these grants, he praises his Day One Fund advisors, which include philanthropic, nonprofit and public sector leaders, for supporting his decision making. Hopefully, their guidance to him was much more hands on than the hands off approach he’s blessedly taking with his grantees.—Danielle Holly