The Backlash Begins: Critics Question Motives Behind Bezos' New $2 Billion Charity

Amazon CEO Jeff Bezos is the world's wealthiest man. He was also - until very recently - widely considered the least generous billionaire. To wit, the Bezos Family Fund - the only major philanthropic endeavor bearing his name - was established with money earned by his parents, who were early private investors in Amazon.

But for whatever reason (maybe it was the intensifying political pressure from Bernie Sanders' "Stop BEZOS" act, or positive PR ahead of Amazon's much-hyped HQ2 announcement, or even the fact that Amazon Web Services is jockying for an immensely valuable DoD contract), Bezos decided that he wanted to improve his public image.

So earlier this week, he took his first tentative step toward establishing a reputation for philanthropy by unveiling the "Bezos Day One Fund." The fund, according to an announcement tweeted by Bezos, will help finance organizations dedicated to helping the homeless (several months after Amazon killed a Seattle employment tax to fund resources for that city's burgeoning homeless community) and establishing a network of preschools that will serve children from low-income families.

Bezos

But unfortunately for Bezos and his PR team, the unveiling of the "Day One Fund" elicited more questions than answers. After pointing out that Bezos has historically been one of the most parsimonious members of the uber-rich, one expert quoted by CNBC wondered: "Why now?"

Brad Fulton, who teaches nonprofit management at the University of Indiana, suspects the focus on homeless families "probably has something to do" with the payroll tax bill Amazon opposed in Seattle. And while Bezos has been working on this fund for over a year, the timing of the announcement certainly comes at an interesting time, he said.

"It's unclear why he made the announcement now, except that it comes on the heels of Sanders' critiques, and Bezos apparently no longer liked being known as the least generous billionaire," he said.

The BBC took it one step further by pointing out the irony in Bezos establishing a fund to help the homeless while some workers at Amazon's fulfillment centers reportedly live in tents.

But far from being universally applauded, the Amazon founder's pledge was met with fierce criticism.

James Bloodworth, a writer who went undercover to expose working conditions at the company's fulfilment centres, said there was "something slightly ironic" about Mr Bezos's plan.

"There have been credible reports of Amazon warehouse workers sleeping outside in tents because they can't afford to rent homes on the wages paid to them by the company," he told the BBC.

"Jeff Bezos can tout himself as a great philanthropist, yet it will not absolve him of responsibility if Amazon workers continue to be afraid to take toilet breaks and days off sick because they fear disciplinary action at work."

Another critic argued that Bezos' donation did little to tackle the "deep and complex root causes" of homelessness.

But according to Anand Giridharadas, Mr Carnegie's approach helped give rise to mass inequality.

Mr Giridharadas, whose book Winners Take All tackles the so-called "charade" of modern philanthropy, characterises Carnegie's approach as "extreme taking followed by extreme giving".

The super rich, he argues, stop short of "transforming the system atop which they stand".

While Mr Bezos's donation is admirable, he says, it does not tackle the "deep and complex root causes" of homelessness and poverty in the US - which include Amazon itself, as the firm has been a beneficiary of the new world of precarious employment.

Meanwhile, CNBC pointed out that Bezos' announcement left many unanswered questions, including what would be the structure of the fund, why he only committed $2 billion of his massive $160 billion fortune and - of course - "why now?"

Here's a summary of the most glaring unanswered questions, courtesy of CNBC:

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What's the structure?

One of the biggest questions is how Bezos plans to structure the fund. Depending on how it's structured, it will be held to different types of regulatory and transparency standards. For example, if it's a private foundation, Bezos will be required to spend 5 percent of the fund's value every year, while an LLC structure will give him more flexibility.

Once the structure is determined, Bezos will have to hire a leadership team to run the initiative and put in proper oversight measures, like more details about the grant making process, which will all help add transparency to his fund, Camarena said.

"No foundation or billionaire can solve the world's most pressing problems alone," Camarena said. "The more you're open, the more you're trusted."

Why did Bezo only give $2 billion?

Without knowing the exact structure of the fund, it's unclear where the $2 billion will come from. If it comes straight out of Bezos's own pocket, which many assume it will, he will be eligible for steep tax deductions. Thirty percent of the gift will be deductible if he sets up a private foundation; 50 percent if it's a donor-advised fund.

The bigger question is the size of the fund, which is smaller compared to what other high net worth individuals in the tech industry, like Mark Zuckerberg or Bill Gates, have pledged to give back. Bezos hasn't joined the Giving Pledge either, a popular campaign that has some of the world's richest individuals commit to giving away the majority of their wealth.

Bezos, however, hinted in an interview Thursday that he could potentially add more to the $2 billion commitment as the initiative grows. Leslie Lenkowsky, a philanthropic studies professor at the University of Indiana, said Bezos's idea of starting small before expanding, commonly known as an "acorns to oaks" approach, is not uncommon among wealthy individuals.

"There's a good argument to start with a relatively smaller amount, and then when you see it's successful, expand it," Lenkowsky said.

Over what period of time will the money be disbursed?

In theory, most philanthropic vehicles can run in perpetuity. Bezos hasn't disclosed how long his fund will run or the timeline for distributing the $2 billion. If it's set up as a private foundation, it must expend at least 5 percent of net assets value annually, but other forms, like an LLC or donor-advised funds, don't have a required payout.

One way to ensure the fund is used more effectively, in a shorter period of time, is to follow a "sunset model," in which a spending deadline is put in place, typically over a 10 to 20 year period, according to Brent Copen, who teaches financial management of nonprofit organizations at Berkeley.

"While you want to put money to work, you also want to do it in a way that's thoughtful and responsible," he said.

Why focus on the homeless and preschools?

Camarena at the Foundation Center said that it would be interesting to know how Bezos ended up choosing homelessness and early childhood education as the fund's priorities. While Bezos has actively supported early childhood education programs, he is less known for having an interest in solving homelessness issues.

Bezos said during an interview at an event in Washington, D.C. Thursday that he's received over 47,000 ideas over the past year, and that he's interested in "helping the world in many different ways." For the preschool initiative, he said he'll be actively involved, "operating" those schools.

One very important difference in Bezos's approach is how he's focused on more near-term issues, as opposed to other super rich people who tend to support more ambitious projects, like curing cancer, said Lenkowsky.

"It's a much more realistic approach," Lenkowsky said. "He is doing philanthropy in a way that we have not seen people of his wealth do it in a long time."

And - last but not least - why now?

Plans for the new fund come at a time when politicians like Senator Bernie Sanders are stepping up their criticism of Bezos for worsening income inequality. Amazon, meanwhile, was one of the most vocal opponents of a new payroll tax proposal in Seattle that would have helped build affordable housing.

Brad Fulton, who teaches nonprofit management at the University of Indiana, suspects the focus on homeless families "probably has something to do" with the payroll tax bill Amazon opposed in Seattle. And while Bezos has been working on this fund for over a year, the timing of the announcement certainly comes at an interesting time, he said.

"It's unclear why he made the announcement now, except that it comes on the heels of Sanders' critiques, and Bezos apparently no longer liked being known as the least generous billionaire," he said.

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With questions about Amazon's mistreatment of workers at its distribution centers, subsidiaries and even its subcontractors once again working their way into the headlines, we imagine Bezos and his team will swiftly furnish answers to the most pressing questions, because it would be such a shame to waste $2 billion and accomplish little in the way of rehabilitation.