A few days ago a friend from junior high and high school posted a link to this piece about the charitable giving of MacKenzie Scott, the ex-wife of Jeff Bezos. She is an incredibly wealthy woman. Her charitable giving is unlike yours and mine, even if you are quite generous in this regard. Our giving is a drop in the bucket, one that we hope fills up with the collective giving of others. Her giving matters in itself. It is perhaps 5 orders of magnitude greater than what we give. The piece, as I read it, was meant at least in part as a critique about how most foundations give out their money, particularly that Scott doesn't require grant proposals and she gives out large amounts with no restrictions on how the money is spent. The recipients are identified with verifiable information about prior performance. (More on that idea below.) These are organizations that have proven themselves trustworthy.
Linked within that piece is an essay that MacKenzie Scott wrote, which describes the giving and provides a list of the recipient organizations that have received funds this year. In this post I'm going to offer a critique of that post. Before I do, however, I want to note that it is her money she is giving away. She can do with it what she'd like, with the proviso that for tax purposes the recipients must have the right status to receive charitable donations as given by the IRS. So my critique can be thought of as imagining a hypothetical where the funds were public monies instead, or a different hypothetical where I'm offering consulting advice to MacKenzie Scott that she doesn't seem to be getting yet from her team of advisers, for how she might modify the giving in the future.
For those who don't already know me, I'm retired now but was an academic economist for about half my career at the University of Illinois. I made a switch in the mid 1990s to educational technology and was a high level administrator on campus in that area until I retired. I stopped publishing in economics journals at around the time of the career switch, but I continue to write on economics and sometimes on economics and higher education, such as this recent very long blog post. (It is not peer reviewed. It reads as something of a combination between an opinion piece and an economic analysis, with its own hypothetical to consider.) Also, when I led the SCALE project on campus, from summer 1996 to summer 2000, I ran an internal grant program to support novel ed tech projects and I was also able to make "officer grants" that were smaller but could be given without the approval of our review committee. This is clearly not the same thing as what MacKenzie Scott is doing, but it does suggest I have some experience that may be relevant in considering the perspective of the donor.
Let me make one other caveat before beginning, by focusing on the various food banks that are on MacKenzie Scott's list. Recently I've been making donations to a food bank in my area, which did not make the list. Indeed, I searched the list for organizations from Illinois. There were 5 of them, but no food banks. I then searched Google Maps for food banks in Illinois. There are a multitude of them and it seems by their names that there are several different providers. I began to ask myself the question, should this sort of service be provided by a charity or should it instead be provided by government? Is there a way that economic theory can answer this question or is it simply a matter of individual preference? Let me note that the University of Illinois, considered a public university, gets its funding from a variety of sources. When I started here back in 1980, the bulk of the funding came out of State of Illinois tax dollars. That is no longer true. So one might want to consider the historical record on food banks and their equivalent. I have a vague notion (one I haven't tracked down) that soup kitchens during the Great Depression were funded, at least in part, by the New Deal. And the War on Poverty from when LBJ was President, amplified on these sorts of services - via Food Stamps, for example. Then, since Reagan, much of this was undone. So one might argue that Liberals have one answer to this question while Conservative/Libertarians have a different answer. On the supply of funds for such services, maybe that is far as we can get.
But there is a different argument for the Liberal side that the social safety net is needed in a just society a la Rawls, and should be considered a public good. Public goods should be provided by government. In the absence of government provision, private charities can take up some of the slack. But they may end up excluding a good segment of the population. There is also a supply side argument which, frankly, I don't know enough about to argue except by waving my hands. This is in regard to the geographic distribution of the food banks and their respective supply chains. Is that, perhaps, inefficient because of wasteful duplication? I want to observe there are two such food banks in the Champaign-Urbana area, which is what suggested the question to me. After all, we are a college town, not a major urban area. But maybe we are a large enough MSA to warrant two food banks. (Wikipedia lists us as ranked 202 in the U.S.) In any event, if MacKenzie Scott will be funding food banks in the future, some of those not yet on the list and perhaps repeat funding for some that already are on the list, then it behooves us to understand not just the good function of an individual food bank, but function of the entire system. Could things be made more efficient? Could hungry people who find access to be difficult at present be granted access by some other approach? These questions deserve an answer from looking at the system as a whole.
Now let me turn to my critique. I will begin with a brief mention of some small non-profits I'm aware of, either because I've made donations to them at the urging of a friend, or because I've had some other interaction with them.
- Montgomery's Kids - helping kids who live in foster homes in Montgomery County, Maryland.
- Imerman Angels - helping those with cancer via personal connections to others who have been through the experience.
- Fit to Recover - helping former addicts lead a healthy lifestyle through exercise.
- Spirit In Action - A micro-grant organization that makes some of its grants internationally.
- Universal Love Alliance Foundation - A U.S. charity that takes donations and funnels them to Universal Love Alliance, a human rights organization that focuses on the rights of marginalized people in Uganda. (I work for both ULAF and ULA and will elaborate about that some below.)
- BlaqOut - An organization to support and advocate for Gay Black males.
To complete the picture here, the first three on the list I know through friends. Universal Love Alliance has received several grants from Spirit In Action. BlaqOut provided funding for ULA to do a session about HIV prevention, testing, and treatment held at the ULA office. Also, none of the organizations listed above made MacKenzie's Scott list. Do they have even an epsilon probability of getting funded by her in the future? Or is that completely out of the question? Finally, I want to note that I tried to list the organizations by "edginess," perhaps not a well defined concept though I hope the reader gets the point. Would edginess matter in whether an organization receives funding or not?
There are two criteria that I want to challenge. One is how MacKenzie Scott is managing risk, trying to make sure that each grant has a high chance of success. For someone with limited funding, this may be right. But Scott isn't in this situation. If there is some positive correlation between risk and return, then minimizing risk does not produce the socially optimal solution. Consider this piece from more than a decade ago about cancer research during the previous 40 years. It argues that while progress has been made, the big breakthrough we've been hoping for has eluded us, because individual researchers have been too risk averse in their approach. But taking on risks means failure is more likely and in the presence of failure there are apt to be Monday morning quarterbacks who challenge the entire approach. In order to take on such risk, the funders must be secure from such external pressure. Turning away from cancer research and to organizations that MacKenzie Scott might support, edgy organizations that pioneer new ways of doing things and do so at small scale in some particular locale might produce a replicable model in the event they succeed. In this case the benefit would be far beyond the benefit created in their locale. This sort of thing should be encouraged, even if there are substantial risks at the get go.
The other criterion I want to consider is focusing exclusively on American organizations whose beneficiaries are also in the U.S. or Puerto Rico. Why not fund internationally, and particularly to organizations in Third-World countries, perhaps through U.S. based organizations that already do that, like Spirit In Action (or ULAF)? Is this too a matter of managing risk? Or is there some other consideration?
Having been involved with some scams in my ULA/ULAF work, I will concede that risk is there and perhaps is larger than with domestic non-profit organizations. But the need is enormous. Further there are large social/political factors that matter. Taking Uganda as but one example, it is worthwhile to watch the documentary, God Loves Uganda, which provides depth on American Evangelical Christians coming to Uganda, largely to spread homophobia. This needs a credible counter force. Where will that come from? Further the U.S. Department of Defense has given military aid to many African countries, Uganda included. The funds are diverted from their intended purpose by President Musuveni and then used to quash the political opposition. So, even if one's concerns are purely humanitarian, there is a need to show presence in Uganda; so that ordinary people there can have realistic hope of a better future.
Now I want to turn to the human rights work that ULA does. In 2018 ULA received a grant from the U.S. Embassy in Kampala to do workshops for religious leaders, teaching them about tolerance and acceptance of LGBTI people. While this might seem a strange thing from a U.S. perspective, Uganda is a very religious country and these religious leaders have important positions in their respective communities, as they guide the views and beliefs of other community members. The workshops were transformational and highly regarded by the Embassy members who sponsored the grant, some of whom attended for a day or two. Near to the end of the first workshop, video interviews were done with some of the participants; each interview has just one participant, who described what was learned. These videos are compelling to watch and speak to the strong impact of the workshop. Unfortunately, they can't be publicly shared. Doing so might put those who attended the workshop in danger. So we have credible information about workshop effectiveness, but we can't broadcast it. The best we can do is to rely on word of mouth, via the endorsement of sponsors. And, I'm not sure why this is, but Embassy personnel seem to turnover fairly frequently, as these people are assigned to other U.S. Embassies elsewhere around the globe. Based on this experience, my expectation is that others who do edgy type of work often can't share information about the effectiveness of the work, for similar reasons. This makes it harder to get future funding. Maybe the funders, such as MacKenzie Scott, should go looking for such projects, to counter these difficulties. Or they should go looking for organizations like Spirit In Action, which through their own funding have identified useful projects and organizations that would otherwise defy identification.
I want to make one other observation. I am the ghostwriter for ULA. I help them with grant proposals, training documents, and correspondence. I described what I do at some length in this blog post. The question for MacKenzie Scott is this: Can the ghostwriting function be replicated, performed by others and incorporated by different organizations? I'm going to guess at the answer here. It is not immediately replicable, but we can learn how to replicate it, so the service is provided by others and made available to organizations that have neither the skill nor the resources to devote to writing grants themselves. One impediment that surely must be overcome happens when the ghostwriter has substantially more formal education than the leaders of the organization that employ the ghostwriter, which seems likely to me. The ghostwriter must be a partner along with those leaders, but the ghostwriter can't act as a boss without the relationship breaking down.
If that guess is right, then MacKenzie Scott could fund a variety of pilots that would be aimed at replication. If some of those pilots are promising, the next step would be to scale up the approach, then "make a market" between the ghostwriters and organizations they support, by covering the full cost of the activity and developing a matching process that is effective. Viewed in its entirety, this would be a kind of hedge. It may be that other large foundations abandon their grant funding approach and embrace, instead, the approach MacKenzie Scott has already taken. But if there is a lot of inertia, the old ways will stick. The hedge then would accommodate that and yet make many organizations credible for grants from these foundations where in the past these organizations wouldn't have bothered to apply.
Let me close. As the Treasurer for ULAF, I dream for a very generous donor, or a small number of regular donors who make substantial contributions. Now it's a constant struggle to assure adequate funding for ULA to operate, especially given all the uncertainty in Uganda at present. On the other hand, I don't expect Santa to fulfill this wish soon. But I hope he can leave a note - keep at it, good things come to those who wait.
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