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Seeding by Ceding (mackenzie-scott.medium.com)
69 points by RyanShook 11 months ago | hide | past | favorite | 68 comments

> we believe that teams with experience on the front lines of challenges will know best how to put the money to good use, we encouraged them to spend it however they choose

I think this is the key to a lot of good charity work today. We need to stop saying "I'm giving you this money so you can do the thing I think will help" and instead give money to the people who know what will help because they've dedicated their lives to trying to help.

It's about trusting that someone else knows more than you do, which seems to be more and more difficult in a world where the very basic facts about anything are available to anyone instantly.

I remember listening to an interview by an Italian man who did lot of volunteer work in Africa. He said when he was young, he went to Africa (I forgot which country) - he saw very fertile soil and thought "why aren't the locals planting anything here?". Acting smug, he went ahead and planted some stuff, the locals raised eyebrows but said nothing. One morning he goes to the field, the entire place is trashed, like a warzone. The night before, wild pigs had had a good time partying in his beloved field! If he had asked the locals first, they would've told him to take care of the wild pigs problem before planting anything.

He said that was the last time he assumed he knew more than locals because of his fancy degrees and elite upbringing.

This is also my main complaint with organizations like the Gates foundation. They do a lot of good, but they also act on the firm belief (arrogance?) that they know more than anyone else in the room, especially the locals. Examples below



> they would've told him to take care of the wild pigs problem

Why cant the locals take care of the pigs problems themselves?

Just hunt them or dig a ditch around the farm so that they cant cross it.

Wow, you read that post about not being smug and not assuming you know better than the experts on the ground ... and decided to throw in a couple of 3%-baked (at best) "solutions" complete with a "Just" to let everyone know how dumb they are not to see this obvious thing?

Hubris doesn't do it justice ...

Not sure why you thought I am smug. If you read OP's comment he said the locals wanted a solution for the wild pigs.

Instead of giving some constructive feedback about the solutions you just wanted to attack me.

I am not saying those people are dumb but as per your flawed argument no one else can come up with a solution to help those people so no-one should try. That is more like a crab mentality.

The locals didn't want a solution for the wild pigs; they were well aware of them, and already had ways of dealing with them.

You're not even solving the right problem. The shallowness of your comment is a perfect microcosm of Mackenzie Scott's giving philosophy.

What were the ways of dealing them?

Why were they not using the fertile soil if they had dealt with the pigs?

>You're not even solving the right problem.

What is the right problem then?

The NGO's and others alway have an option not to accept Mackenzie's money so I dont know why you are complaining?

They probably can, but solving that problem is not the point of the anecdote.

it is not as easy as it sounds. When your farming land is next to forests, you get these wild pigs. You can't hunt them at nights every day. And your digging option or building a 6 foot wall is not profitable.

In India, people just set up a thick aluminum wire around their farms, then energize around 6 pm. You end up seeing many pigs getting electrocuted. This has other affects: sometimes, even humans get electrocuted. I know someone, whose mom and whose sister got electrocuted by such a wire when these women went to collect some hay. Now people are afraid to walk around these lands after sunset.

> your digging option or building a 6 foot wall is not profitable.

If the other option is to not use the farmland then I dont see why you wont invest the time to dig a ditch or build a wall.

> You end up seeing many pigs getting electrocuted. ...

Hey, at least those farmers are getting some free bacon out of the deal. Must be worth the risks once you take that into account.

I have many family members who work in the development world. The Gates Foundation is a punchline of sorts and many people do not like them. Melinda is very christian and refused for years to fund contraception or abortions. Meanwhile melinda travels the world being fawned over as a feminist queen.

The other valid criticism of these development nonprofits is that they are propping up dictators. People won't rise up against their terrible governments if they have free everything from the US/Europe. Looking at you USAID.

>Melinda is very christian and refused for years to fund contraception or abortions.

Melinda Gates has called expanding access to contraception the cause of her life and has funded it to the tune of more than $1 billion.




That doesn’t actually overcome the problem, though. Vast swaths of these organizations are good at raising money and little else. Donors who don’t know how to solve the underlying problem don’t necessarily know who is best placed to solve it.

Think of it like VC funding. Why do VCs hire people with tons of experience in the specific domains in which they’re investing? Because otherwise you can’t tell good investments from bad investments. Social investment isn’t any easier, and in fact it’s much harder.

This is why Bill Gates’ approach is so brilliant. (But obviously hard to replicate.) Social enterprises need skilled allocators of capital just as much as private enterprises do. That’s something Gates brings to the table that Scott doesn’t.

It sounds like her strategy given her words and this list, is to look for teams who have executed well and not give much thought into what they are actually doing. There is not 1 ounce of effective altruism in this post, and this list of charities wouldn't likely fair well in expected impact.

This is in sharp contrast to the Gates foundation or Musk's work, where they think a lot about what they can do to build a better future, then work from there.

I'm pretty skeptical looking at this list that this teams-first approach will deliver as much results. For example, if she gave $10M to Cal State Fullerton, a state funded institution with a back of the envelope funding of $300m/year, it's hard to think how that would deliver much. And maybe that is the point, she's hoping it might contribute somehow to 100-10,000 additional productive members of society. But all these bets seem similar. It will be very hard to know if it did any good for the world.

I'm trying to not be too critical, I think philanthropy has a role ideally to fill the white space between government and for profit industries. And her money is enough to really do clear good in the world. I am really hoping she becomes a new mega-force for good.

> where they think a lot about what they can do to build a better future

What they're really doing is thinking about the future that they personally want and selectively funding that in a way that they ensure they also continue to gain wealth. That's my interpretation, at least. I don't like "effective altruism".

Yeah, I don't understand why we as a society trust billionaires to decide what our most important problems are, much less how best to solve them.

The people who have the big bucks to give, usually made that money by being "right" a lot. I would wager that it is very difficult for those same people to relinquish control, when doing so flies in the face of everything they have taught themselves to get to that point.

You are correct, they need to trust the people who know how to help. My guess is, that is a very difficult thing to do.

It also eliminates so much overhead if you don't require the recipient to explain and justify exactly how they are going to use all the money, and then document the proof they used it in exactly the ways they said they would (or explain why they didn't).

Unfortunately, due diligence is an essential element of any monetary transaction. Do you know how much time the world would collectively save if products just worked the way manufacturers claimed? If companies were straightforward with everything they do?

So I don't know what sort of reporting requirements Scott's giving has, if any. I am interested to learn this.

Regardless of what sort of reproting requirements she has as the giver, the recipients, especially if 501-c-3's, will still have standard reporting requirements for their tax exempt status, they can't use it in blatantly corrupt ways even if the giver were fine with that.

I think what you are saying is that if there isn't sufficient "due dilligence" (whatever that is) the money might be "mis-used".

There is an alternate question: What percentage of philanthropic money can be used on applying for that money, and documenting and reporting how it was used, before we consider that "mis-use"? 20%? 50%? 75%? There is definitely some number.

Why is the giver more qualified to decide what "mis-use" is than the recipient? If some % of the money is "mis-used", will that be significantly less than the money saved begging for and justifying to philanthropists that the money was used how the philanthropists would prefer?

Again the pull-quote from Scott:

> we believe that teams with experience on the front lines of challenges will know best how to put the money to good use, we encouraged them to spend it however they choose"?

Are you suggesting that's an irresponsible approach?

Again, I don't know what sort of application or reporting requirements Scott has, if any, and I am curious to learn more.

But I am confident that this philosophy will lead to a lot less time spent begging for money and documenting the proof that you used it exactly how you begged for it, and that this will make the money go much further.

What does"due dillegence" mean, are there differnet ways to do it and why is it an "essential element" of philanthropic giving? What are the possible consequences if you don't make recipients spend enough time explaining exactly how they will use the money and documenting they did so? What are the consequences if you make them spend too much time? Who gets to decide the "correct" balance? I don't think it's irresponsible for Scott to decide she shouldn't get to make all the decisions around that just because she is one of the richest people on the planet.

To answer basically all of your questions: you glossed over charities using the money fraudulently or irresponsibility (e.g. hiring their friends for no good philanthropic reason) by simply claiming they have to fill out reports. Filling out a report is not a sufficient check on power. If you don’t like that answer, then I hope you treat all endeavors with the same disregard for the possibility of human corruption and indecency.

You HOPE I do that? why would you hope that?

i don't think you're paying attention to what I am writing. Right, when I said "misuse", I understand that as including using the money fraudulently or irresponsibly.

I am not sure what you mean beyond "filling out reports", "reporting" is the word that means documenting how you spent the money in the philanthropic world.

Do you have much experience with non-profits and charitable giving and how it works?

There is obviously a continuum of degrees of how much time recipients (or philanthropists) spend on making sure the money is spent non-fraudulently and responsibly, right? It's not all or nothing.

If 95% of philanthropic money were spent making sure the other 5% were being used responsibly and non-fraudulently, we would agree there was a problem, right? (or maybe we would not?)

If we found that 5% of the total philanthropic money were being spent "irresponsibly", but to reduce that further, it would take spending 25% more of the total on "oversight" -- would that be an appropriate trade-off, even though it actually results in net 20% less to "responsible" uses?

So it's a question of the "appropriate" balance, and who gets to decide what that is and what it looks like and what "responsible" spending of the money looks like.

And if, in your hypothetical, assisting philanthropists in doing proper research into the usage of funds takes less than 5% of their time, then it’s a net benefit.

What is the appropriate balance? Luckily you nor I get to decide. People donating their money get to choose what level is appropriate for them. And the overwhelming number of experienced philanthropists do research into whether or not the organizations they donate to are doing what they claim to do.

Again, I hope you apply this same flippancy to the possibility of human misbehavior in the rest of your life. Do you buy Dell computers with no research because they claim to be the best? Do buy whatever item on Amazon has the highest rating? Do you invest in bloodwork startups because they say they have nationwide deals with Walgreens? If you do, then cool, you’re just a really trusting person. And that’s fine. But if not, you’re giving a free pass to some people and not to others, and I cannot fathom what makes some organization formed around a non-profit structure inherently more trustworthy than one formed around profitability.

The trade off, of course, is that while someone else may be more knowledgeable, they don’t necessarily share the same incentives as you. Mackenzie may want to have her grant support the arts in underprivileged communities, but the head of that program may prefer handing out five new high paying jobs to her family members instead.

If we take Scott's words at face value and assume good faith, this is a significant political statement:

"Putting large donors at the center of stories on social progress is a distortion of their role. Me, Dan, a constellation of researchers and administrators and advisors — we are all attempting to give away a fortune that was enabled by systems in need of change. In this effort, we are governed by a humbling belief that it would be better if disproportionate wealth were not concentrated in a small number of hands, and that the solutions are best designed and implemented by others."

Actually, I'm going to make this a top-level comment.

Would one of the people claiming that she's just doing it for the tax benefits please explain to me, in excruciating detail, just how you would legally end up with more money by donating billions?

Firstly, you should specify what it means to have “more money.” For one, her wealth is (to an approximation) all Amazon stock at a zero basis. She can’t spend Amazon stock, so in reality, she doesn’t have the amount of money that say Forbes claims she has. She has a massive tax lability before she can turn this wealth into money. So, you should be asking “how does this minimize her net monetary position after liquidating Amazon stock?”

To that, I don’t think it’s true. Yes, she can “double count” the donation, but that would require her taxes be over 50% to come out ahead. Given she has mostly zero basis long term cap gains, I don’t think she’s even close to that rate.

By donating appreciated stock, you can deduct it from income, twice.

So approximately, if someone donates half their wealth she'll pay 0 income tax, which may be more than her tax burden on the whole amount.

Getting this exactly accurate requires detailed accounting, as well as tax sheltering, deductible spending on first class travel as part of her charitable work, deductible payments to children and the value of buying favors and making her personal brand marketable, etc.

Granting your premise that you can pay zero tax by donating half your wealth (which I'm guessing assumes you have zero cost basis for your assets), wouldn't that still leave you with... half your money? It doesn't seem worth it unless you're paying 50% in income/capital gains/whatever tax.

And yet I wonder how much $ Jeff Bezos has given out ever since this tweet [1] 4 years ago, when he was seeking ideas publicly on how to expand his "philanthropic strategy" ??

[1] https://twitter.com/JeffBezos/status/875418348598603776

Apparently he created a $10B charitable organization to fight climate change last year.

Just to dodge tax. Bezos is good business man he will only invest for something in return.

Please explain to me in excruciating detail how you legally end up net better off by donating ten billion.

You create a charitable remainder trust, which is a pretty wild tax instrument that allows you to control the assets, “donate them” (~1% a year of the principal) and collect tax benefits on the total amount at the start of the program. https://www.google.com/amp/s/www.wealthenhancement.com/blog/...

For carries of founder stock who have zero cost basis for their stock this can allow you to actually make more money depending on current interest rates.

From a brief skim, you’re irrevocably giving the money away and you still pay taxes on any money you get back from the trust, so I think more explanation is needed. How do you come out ahead, and compared to what?

Is this a way of getting a different tax rate?

One nice thing is you can sell without taxes becoming due immediately. Pretty handy if you want to move between a concentrated holding to a diversified holding. Getting the tax deduction upfront and making the donation later sounds nice too, although I'd guess with real investment choices, chances are good the donation is bigger than the deduction.

But all of these things really only grant you more utility than just paying the taxes if you get (non-economic) utility out of the donation or (non-economic) utility out of the feeling of paying less taxes. Of course, you could get economic utility out of the donation, but that is likely to be less than legal.

OTOH, I could see a possible way to make donating apprechiated assets work out to have economic utility. If the tax rates are high enough, and assuming zero cost basis and high ordinary income, you avoid X * Y% tax by donating, and you reduce tax on other income by X * Z%, where X is your donation, Y% is your total (marginal) capital gains tax rate, and Z% is your total ordinary income tax rate. If Y + Z is greater than 100%, that's a real savings.

IIRC, top federal capital gains rate is 20 + 3.8 (net investment income tax), and if you live in california, 13.3 state tax = 37.1%

Top federal ordinary income is 37%, if in california that ends up with 50.3% tax rate.

Adding those up we get 87.4%, so a donation of apprechiated assets with zero basis doesn't quite create value, but it's close. Maybe some other state has a higher top tax rate.

I'm not sure I agree with the premise myself, but I find the argument plausible: if it goes into a new charitable organization today, that's $10B off his taxable income this year, whether or not the money goes to actual efforts this year. If he directs donates the money later, then he gets that exact amount as a deduction later.

Given that he's stepping down as CEO this year, the difference between a $10B deduction on his taxes this year and the same amount of money deducted across multiple future years when he has less income can be substantial.

(This argument assumes that he intends to spend $10B on charitable donations at some point in his life anyway; it's not an argument for why spending $10B is better for his taxes than not spending it at all.)

Oh I agree completely that there are better and worse ways to structure donations. And maybe there's even some perversity in the tax code that lets you make a few thousand bucks by making some very specific donations under convoluted circumstances. I just think there's no legal way you can donate 10 billion and come out with more money than not having donated.

"These new philanthropists bring to charity an “entrepreneurial disposition”, Hay and Muller wrote in a 2014 paper, yet one that they suggest has been “diverting attention and resources away from the failings of contemporary manifestations of capitalism”, and may also be serving as a substitute for public spending withdrawn by the state.

Essentially, what we are witnessing is the transfer of responsibility for public goods and services from democratic institutions to the wealthy, to be administered by an executive class. In the CEO society, the exercise of social responsibilities is no longer debated in terms of whether corporations should or shouldn’t be responsible for more than their own business interests. Instead, it is about how philanthropy can be used to reinforce a politico-economic system that enables such a small number of people to accumulate obscene amounts of wealth. Zuckerberg’s investment in solutions to the Bay Area housing crisis is an example of this broader trend." [1]

Although with your "in excruciating detail" it sounds like you've been presented with the evidence before, yet you are somehow unwilling to admit the failings of the system. This last part is meant as an observation and not as a negative value judgement.

This video with Anand Giridharadas is also great: https://www.youtube.com/watch?v=d_zt3kGW1NM, as well as his book 'Winners Take All: The Elite Charade of Changing the World'.

[1] https://www.theguardian.com/news/2018/may/24/the-trouble-wit...

Yea how dare people engage in behavior the tax code is deliberately designed to incentivize. The nerve of them!

You clearly have no idea how the US tax system works.

I just figured it was a tax dodge.

There is no way to end up ahead by giving away money in order to pay tax on that money.

So long as the marginal tax rate is <100%, you will always lose more money by giving it away than by keeping it and paying tax on it.

Except for potentially things like moving money into your own foundation, then spending the money on your own interests rather than charity. (Not that that's what's happening here.)

As long as rich people are giving money away I'm fine.

Depends on what charity/non profit does. Many waste money on fund-raising activities, scams, illegal activities and politics. [1][2][3]

[1] https://www.charitywatch.org/charity-donating-articles/chari...



It’s not that simple.

Read Matt Yglesias or David Shor on the damage some progressive non-profits have done to the communities they intend to help, and their broader cause.

I see many such orgs on Scott’s list. Negative ROI.

Interested in learning more. Could you please list one or two orgs from her list and why you doubt them?

Thanks. I'm sure it's complicated. Will take some read.

Could you explain what's negative about Scott's giving?

I'd rather do it via tax so that it's not an indirect subsidy for assholes.

What a thoroughly empty statement. There is almost no content to this, it consists of blandly repeating the mantras of the day.

This reinforces to me just how much the current fashion - constant obeisance to "equity" if not "equality" - is a replacement religion.

Utterly empty, pure signalling.

Edit - for instance:

"Discrimination against ethnic and religious minorities has been deepening..."

Since when? Measured how?

Notice that every claim - which aligns with the religion of the day, genuflection to equity - is made as if it were an ironclad fact instead of a questionable opinion, while being juxtaposed with fake unending humility.

"I don't know anything about how to solve inequity, so I worked with <progressive groups that claim to do so>, because I absolutely know that every one of their arguable political claims are true."

She even claims Jeff's money was made through a "system that needs change" - how so? Almost all his money was made through stock appreciation.

He made the actual dollars she is now giving away from investors in Amazon stock, not "black and brown bodies" or whatever the current victim group is.

Edit: another instance I couldn't miss:

"Over 700 million people globally still live in extreme poverty. To find solutions, we [...] prioritized organizations with [...] leaders of color, and a specific focus on empowering women and girls."

There is no nobility in spending money someone else earned on a bunch of silly virtue signaling.

Good for her for marrying well, but let's not pretend this is about anything more than her desire for attention.

Sounds very dismissive, did Bezos earn it or did (do) Amazon's workers? Besides from my understanding she was very supportive when he decided to leave his "cushy" well paid job...etc etc...also beyond the debate here (which I find very interesting) whether her donations will be effective... I think, hope, that her giving may open the floodgates of giving (especially seeing there's so much unrealized profit from stocks etc and... unpaid taxes)

The article from Time below suggests her giving could actually be disruptive, let's hope effective too... One quote I liked particularly "Inside Philanthropy called her methods “simultaneously exciting and troubling to behold.” If all philanthropists worked the way she did—acting alone without a foundation or an obvious way of being contacted—grantmaking might be more efficient, but it would be less transparent, and possibly less diverse in its interests and approaches. (There might also be fewer jobs in the philanthropy business.)"


She outright spits on the way Bezos made his money, when he has one of the most honest and efficiency-enhancing paths to earning his fortune.

Is the world a better place because Gates used blatantly illegal monopolistic practices to stifle innovation in the OS space? Or because Facebook is willing to engage in dirtier data-sharing, growth, and addictive product design?

Whatever one thinks of those, Amazon created a market for the long tail of books, media, and then goods that simply didn't exist. And then followed it up with one of the most important platforms in the history of the tech and startup ecosystem.

He's done more good with those than she'll ever do by giving his earnings to whatever is most fashionable at the moment.

Everyone here is so cynical. She has the money. She's giving it away. Who cares why?

Because billions of dollars can change the landscape of businesses or governments? This is going to directly change the lives of thousands of people, and since it's directed, it's sure to have far-reaching effects. It's totally OK to hold someone accountable for that.

Then we shouldn't let people accumulate billions of dollars in the first place! They can do (and in fact do) so much more damage with billions of dollars in ways other than charitable giving.

A little too quick with that.

Probably people resent how equal the wealthy are, in terms of dictating public policy. There's a degree of wealth, at which point the government is merely a performance.

I care why because it is a complete and ideologically rationalized tax dodge: LET US NOT tax the rich because they are morally superior (proven by their meritocratic rise) so we can count on them to donate some of their money and that redistributes wealth! Which is to say, that which you call cynical, is merely resisting western ideological assumptions that pull our subconscious strings.

In my opinion:

A progressive tax structure would have made this the people's money to spend. You spend it on what seems fit to the people (via your elected representative) - health care for example.

You have lost control of your money This money is now beholden to a group of individuals who can decide what works best for them. It could be malaria or it could be building a spaceship to Mars. The decision is not yours.

And these people could have decided to keep that money or like her former husband spend it on 100 million dollar boats.

She decided to donate it instead. That’s something to celebrate.

While I'm glad this one person has decided to do what in my opinion is "the right thing" it's also a prime example of how horrifyingly unbalanced our system is. As a result it's difficult to feel celebratory since the ends do not typically justify the means.


And yet she has it, and is doing good with it while we're reduced to snarky, unevidenced comments on a niche website. The horror.

I’m very irritated about Scott’s foray into funding ethnic activist organizations. Her basic strategy is to give to organizations with expertise in an area, and she projects that onto giving money to identity-based organizations, on the theory that those organizations are “experts” in the ethnic groups they purport to speak for.

> Because community-centered service is such a powerful catalyst and multiplier, we spent the first quarter of 2021 identifying and evaluating equity-oriented non-profit teams working in areas that have been neglected. The result was $2,739,000,000 in gifts to 286 high-impact organizations in categories and communities that have been historically underfunded and overlooked.

But if you look at the list of say Asian organizations funded by Scott, many are Asian progressive activists. I’m a card carrying Asian and I’ve never heard of any of them. As Matt Yglesias has pointed out, progressive activists are unrepresentative of the minority groups they purport to speak for: https://www.slowboring.com/p/yang-gang

For example, one organization Scott funded tries to teach Asian kids to dismantle the “model minority myth.” As far as I can tell, what they define as a “myth” is just how my Asian parents socialized their children to be.

The problem is that selecting particular Asian identity groups for funding is itself an exercise in using wealth and privilege to pick winners and losers. In this case, Scott is showering Amazon bucks on one side of a debate within the Asian community itself, distorting that debate.

I believe it’s also an indirect way of voting with your dollars. While they probably don’t owe that much $$$ to the IRS, I suspect this will likely cover some of it while letting them decide where their tax should go (I don’t really have an opinion on this strategy/system, just thought it could add to the discussion)

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