Last Thursday, the CEO of Amazon, Jeff Bezos, announced that he will be starting a $2 billion fund to build preschools and fight against homelessness.
The philanthropic effort comes almost a year after Bezos asked his Twitter followers for ideas on spending his fortune for a good cause. But even after creating the generous fund, most people aren’t happy with the billionaire executive – who also happens to be the richest man in the world.
World’s Richest Man Gives Back
In his twitter announcement last Thursday, Jeff Bezos, the billionaire CEO of Amazon, said that he and his wife MacKenzie Bezos have decided to give away $2 billion from their vast fortune to improve living and educational standards for the less fortunate. Jeff currently tops Forbes’ list of richest men in the world with a net worth of $112 billion.
Almost a year ago, after growing criticism from the public regarding his lack of interest in philanthropy, Jeff Bezos took to Twitter to ask his followers what kind of charitable efforts they’d like to see from him. The CEO has finally listened to the general advice and started a philanthropic organization. But many experts are seeing a big problem with this move.
While many believe that the announcement is a good start to Bezos’ plan to give back to the community, there are many confusions regarding the new fund that need to be cleared by the richest person in the world.
The announcement does explain the priorities of the organization, but people still want to know how Bezos plans to grow this effort and whether he will put more money into the fund in the future. Here are some of the biggest questions that have been raised about Jeff Bezos’ ‘Day One Fund’.
Jeff Bezos has yet to reveal how he plans to structure his Day One Fund. This is extremely important because the way it is structured will hold it to different transparency and regulatory standards.
If the fund classifies as a private foundation, the Amazon CEO will have to spend 5 per cent of its value every year. An LLC, on the other hand, will give him more freedom to choose how and when he spends the money.
After determining the fund’s structure, the next step will involve hiring a fund manager or a team that is responsible for running the initiative and overseeing its operations.
Being more open about the grant-making process will ensure more transparency in his fund. It’s highly unlikely that Bezos’ fund alone will solve the pressing issue of homelessness or lack of education, but being more open about his efforts will make it easier to gain public’s trust.
Why only $2 billion?
After Bezos announced the creation of a $2 billion fund, people started questioning, ‘Why $2 billion?’ If Bezos funds the effort with his personal fortune, he’ll be eligible for an attractive tax deduction, depending on its structure.
If he chooses a private foundation, thirty per cent of the money will be tax-deductible. On the other hand, a donor-advised fund will mean a fifty per cent tax deduction.
Many are questioning why the richest man on the planet decided to give away just $2 billion while other high net worth tech titans have given more in the past. Take Bill Gates or Mark Zuckerberg, for example, both of whom have pledged a large chunk of their fortune toward philanthropic work. In a recent interview, Bezos hinted that he might add an additional $2 billion to the fund once the initiative starts to expand.
For how long?
Most philanthropic funds that have been created in the past tend to run in perpetually, although, Bezos hasn’t given a timeline for the distribution of his $2 billion fund. If he chooses a private foundation structure, he will be required to make a 5 per cent annual expenditure until the money runs out, but other structures like donor-advised or LLC don’t have strict timeframe for payouts.