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Jeff Bezos is A/B Testing Philanthropy. Here's What He'll Find.
Funders who want to improve the giving process can give social impact organizations breathing room to grow and thrive with these five strategies.
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For many years, Amazon Chief Executive Jeff Bezos took heat for his glaring absence in the world of public philanthropy. Then, in 2018, just a year after being named the richest man in the world, Bezos finally made his philanthropic debut.
He began with two major initiatives — and, more interestingly, two radically different approaches to giving. In doing so, Bezos is pitting a traditional, highly structured funding model against a much looser approach that gives social impact organizations free rein.
What this all means is that Jeff Bezos is, in effect, A/B testing philanthropy.
Should philanthropists insist on shorter leashes and greater oversight of the organizations they fund? Or should nonprofits be given a wider berth to do their work independently? Bezos is implicitly asking this very question by funding the two pieces of his initiative in such widely divergent ways.
Here's what we think he'll discover.
Half of the $2 billion Bezos has committed will go toward building early childhood education programs in underserved communities. This portion of the initiative will be managed closely by Bezos himself, who has developed something of a reputation as a micromanager. (It’s a strategy that has apparently served him well, if the success of Amazon and his own personal pocketbook are any indication.)
This hands-on management style is also in keeping with the predominant approach toward philanthropy today. The conventional wisdom is that more oversight makes for safer social impact investments. This is why social impact organizations must often complete exhaustive applications and agree to provide thorough reporting in order to receive even the most paltry grants.
Bezos is already in the process of dispersing the other half of the $2 billion in funding to a number of nonprofit organizations that serve homeless families. And the level of oversight around these major, one-time grants is so low that even the organizations themselves have admitted to feeling bewildered. Bezos reportedly handpicked the first 20 organizations to receive funding based on an advisory board’s expert recommendations. His team approached the organizations out of the blue and asked them to complete a spartan application. The hardest-hitting question? A 500-word description of how the organization would spend $5 million in nearly-no-strings-attached grant money. The funds were delivered in a lump sum with no restrictions and no reporting requirements.
This de facto test is still in process. But we have a hunch about what might happen. Jeff Bezos's career at Amazon, which has effectively disrupted the entire consumer goods ecosystem, proves he’s no stranger to disruption. And we believe he’ll find that the more disruptive path — in this case, “long-leash” philanthropy — is once again the way to go.
Philanthropists and funders are eager to make good investments when it comes to the programs and initiatives they support. They want to know the money they put toward social impact organizations will be used wisely. And they want it to yield the highest possible impact. These are very good and understandable desires. Ones that naturally lead to highly structured giving protocols, restricted funding, and extensive oversight of the organizations that receive money.
The problem is that this short-leash approach has unintended consequences that hamper a nonprofit’s ability to make an impact. Here's why:
Many funders understand the shortcomings of short-leash philanthropy and chalk them up as necessary evils. But here’s the thing: If you require that much rigor and oversight in order to trust your funding investment is safe, then you aren’t funding the right organizations.
It’s true that Jeff Bezos is taking a risk by funding organizations with so little oversight. It’s a bold approach because it requires trust and, perhaps more to the point, because it requires funders to relinquish some of their control. This doesn’t mean that all forms of vetting, funding restrictions, and reporting should be scrapped entirely. The leash should be lengthened, not tossed out the window.
Funders who find ways to streamline the giving process can give social impact organizations the breathing room they need to grow and thrive. This may mean:
One thing’s certain: When the richest man in the world starts A/B testing philanthropy, those in the philanthropic and social impact spaces can’t help but take notice.
