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2020 Giving Reports Raise Questions of Transparency and Accountability

2020 Giving Reports Raise Questions of Transparency and Accountability

The year 2020 was a record year for charity as many donors made monumental gifts to help deal with the pandemic. According to a report published by the Chronicle of Philanthropy, the 50 largest donors in 2020 collectively donated almost $25 billion to charity—about 56% more than in 2019.

This list was topped by Jeff Bezos, with his ex-wife, MacKenzie Scott, taking the second spot and Michael Bloomberg coming in third. This total of giving is an incredible jump from the prior year, when the top donors collectively gave only $16 billion. In 2020, the top donors gave away incredible amounts of money, including a $10 billion pledge to the Bezos Earth Fund by Bezos and nearly $6 billion in gifts to hundreds of nonprofits by Scott.

As in 2019, 2020 saw five gifts of more than $1 billion each. Aside from Bezos and Scott, Jack Dorsey of Twitter earmarked $1 billion of stock to fund responses to the pandemic. Nike founder Phil Knight and Mike Bloomberg also gave away billion-dollar gifts.

While these gifts are notable, they also highlight a growing problem in American philanthropy: the lack of transparency. Lack of transparency makes it difficult to address questions about the role that philanthropy should play in a democracy, and the best approaches to solving long-term issues like income inequality.

The Issue Raised by the 2020 Chronicle of Philanthropy Report

The Chronicle of Philanthropy monitors gifts each year so that its report provides the insights necessary to inform policy debates and create meaningful discussion. However, this work has limits. The staff at the Chronicle speak to the aides of philanthropists and monitor public records, but many questions still remain. Many donors aren’t wholly transparent about their giving, often because they don’t have to be.

The 2020 report highlights the transparency issue because no giving records would have been broken without the $10 billion commitment from Jeff Bezos. While Bezos announced the commitment in February last year, he has failed to answer any questions about the structure of the gift or even provide any details aside from the amount and the recipient. Currently, it is unclear whether the money has been irrevocably set aside.

This lack of transparency comes from the fact that donors often target charitable vehicles rather than nonprofits themselves. For example, donors often give money to foundations that in turn donate to nonprofits, rather than providing direct funding. The Chronicle often focuses more on donations to foundations and other charitable vehicles rather than nonprofits, in order to avoid double-counting.

This year, the Bezos pledge counted as a donation to a vehicle. However, no one seems to know where the $10 billion is. Bezos has not revealed whether it is in a foundation, a limited liability company, or a donor-advised fund—which begs the question of whether the pledge is more of a rhetorical promise, rather than a literal donation. 

How This Problem Plays Out in Media Representation

If Jeff Bezos’ gift is rhetorical, it should not have been counted as part of the Chronicle of Philanthropy list. Unfortunately, representatives for Bezos have declined to share any information about the Earth Fund and its structure.

If the Bezos pledge was not included in the report, the headlines about billionaire generosity during the pandemic would look very different. Real or not, Bezos’ pledge has radically shaped how billionaires are viewed in the current economic and social climate.

Part of the problem is how to define and classify giving, but the more pressing problem is the publicity involved in giving without accountability. A high-profile philanthropic pledge comes with a lot of publicity upfront but usually avoids accountability down the line.

Alternative Ways to Report Philanthropic Giving

One solution to the problem would be to focus on how much money nonprofits receive, rather than how much donors give to charitable foundations and similar vehicles. A report structured this way would look very different.

For example, the Earth Fund would get credit for the $790 million it donated to climate groups, but the Jeff Bezos pledge of $10 billion would disappear. However, not all the numbers would go down with this approach. For example, the $350 million donated by Mark Zuckerberg and Priscilla Chan to support the election would count, and Bill and Melinda Gates would get credit for the $5 billion their foundation has doled out this year. Under the current accounting system, they were credited with just $160 million in donations to their foundations.

This alternative approach has advantages and drawbacks. Forbes uses this approach in its philanthropy rankings, which helps it be more consistent in representing the work of philanthropists over time, rather than having them jump in rankings when they make a major foundation donation. At the same time, it raises questions of who gets credit for a donation when it comes from a foundation with multiple funders.  

Changing how the Chronicle of Philanthropy accounts for philanthropic gifts seems like a minor, niche issue, but it could dramatically affect how philanthropists are represented in the media—and therefore how we think about giving in a democratic society and the power these individuals have. The other point is that more transparency and accountability would simply eliminate much of the confusion in reporting on donations.

6 Predictions for the Evolution of the Philanthropy Sector in 2019

6 Predictions for the Evolution of the Philanthropy Sector in 2019

The ways in which both prominent philanthropists and ordinary people donate has changed rapidly in the past few years. Moving into 2019, strategies and trends will continue to shift. Understanding the changes that will likely occur and the issues underlying the new approaches to giving can help nonprofits more effectively appeal to donors and help… Continue Reading