Be­zos an­nounces $2-bil­lion fund

World’s rich­est per­son and his wife say ef­fort will help the home­less and preschool­ers.

Los Angeles Times - - BUSINESS BEAT - By Molly Schuetz Schuetz writes for Bloomberg. The As­so­ci­ated Press and Wash­ing­ton Post were used in com­pil­ing this re­port.

Jeff Be­zos and his wife, MacKen­zie Be­zos, are launch­ing a $2-bil­lion fund to help home­less fam­i­lies and cre­ate a net­work of non­profit preschools in low-in­come com­mu­ni­ties.

The move cat­a­pults the world’s rich­est per­son into a rar­efied group of bil­lion­aire mega-donors at a time when his com­pany, Ama­zon.com Inc., faces grow­ing scru­tiny over its ris­ing power and ef­fect on the econ­omy.

The Be­zos Day One Fund will fo­cus on two ini­tia­tives, the bil­lion­aire an­nounced in an on­line post Thurs­day. The first will fund ex­ist­ing non­prof­its and is­sue an­nual awards to or­ga­ni­za­tions do­ing “com­pas­sion­ate, nee­dle-mov­ing work” to shel­ter and sup­port the im­me­di­ate needs of young fam­i­lies. The sec­ond will op­er­ate a net­work of high-qual­ity, fullschol­ar­ship Montes­sori-in­spired preschools. The fund’s vi­sion state­ment comes from non­profit Mary’s Place in Seat­tle: No child sleeps out­side.

“We’ll use the same set of prin­ci­ples that have driven Ama­zon,” Be­zos wrote. “Most im­por­tant among those will be gen­uine, in­tense cus­tomer ob­ses­sion. The child will be the cus­tomer.”

With a per­sonal for­tune of $163.8 bil­lion, ac­cord­ing to the Bloomberg Bil­lion­aires Index, the Ama­zon.com chief ex­ec­u­tive had been largely in­vis­i­ble in the world of phi­lan­thropy. His net worth has risen by $64.7 bil­lion this year alone as Ama­zon’s shares have surged. Be­zos’ rel­a­tive si­lence was a stark con­trast to peers such as Bill Gates and War­ren Buf­fett, who have vowed to give away the ma­jor­ity of their wealth.

Be­zos’ for­tune has en­abled him to pay for side ven­tures, in­clud­ing start­ing space ex­plo­ration com­pany Blue Ori­gin and buy­ing the Wash­ing­ton Post.

Last year, he so­licited ad­vice from the pub­lic via Twit­ter, ask­ing how he could best use his wealth to help peo­ple “right now.” At the time, he said he was in­ter­ested in fund­ing projects to help peo­ple at the in­ter­sec­tion of ur­gent need and last­ing im­pact. He got a frenzy of re­sponses from ev­ery cor­ner of the world, in­clud­ing pleas to sup­port health­care and loan for­give­ness and even ap­peals to back a leather fetish mu­seum.

Un­til now, Be­zos, 54, had taken only small steps into phi­lan­thropy. The Be­zos Fam­ily Foun­da­tion, best known for its sup­port of chil­dren’s ed­u­ca­tion, has been largely funded by his par­ents from Ama­zon hold­ings they ac­quired as early in­vestors in their son’s en­ter­prise. Out­side of that, Be­zos and his fam­ily’s known do­na­tions have in­cluded gifts to Prince­ton Univer­sity and Seat­tle’s Fred Hutchin­son Can­cer Re­search Cen­ter, ac­cord­ing to the Chron­i­cle of Phi­lan­thropy.

It’s not sur­pris­ing that the world’s rich­est per­son “is fi­nally get­ting se­ri­ous about phi­lan­thropy,” said David Cal­la­han, founder of the web­site In­side Phi­lan­thropy. “With big fortunes like that, the only thing you can re­ally do is give it away — un­less you want the gov­ern­ment to take half of it through es­tate tax.”

The stag­ger­ing fortunes of the likes of Be­zos, Gates and Face­book Inc. CEO Mark Zucker­berg have cre­ated a sec­ond Gilded Age in the United States and “a new gen­er­a­tion of mega-givers,” Cal­la­han said. “It was only a mat­ter of time be­fore Be­zos would join this new era of big phi­lan­thropy.”

The Be­zos gift is one of the big­gest sin­gle do­na­tions ever an­nounced for preschools, if not the big­gest, said Avo Makdessian, di­rec­tor of the Sil­i­con Val­ley Com­mu­nity Foun­da­tion’s Cen­ter for Early Learn­ing.

As with most in­vest­ment de­ci­sions by the Ama­zon founder, this one was prob­a­bly grounded in data and sci­ence. Re­search shows 90% of a child’s brain de­vel­op­ment oc­curs be­fore age 5, yet most char­i­ta­ble gifts pegged for ed­u­ca­tion tar­get older chil­dren, Makdessian said.

De­tails about Be­zos’ preschool plans are scant. It’s un­clear how many chil­dren the schools will serve, where they will be and when they will open. Na­tion­wide, 58% of 3-year-olds and 34% of 4year-olds were not en­rolled in nurs­ery school, preschool or kinder­garten in 2016, ac­cord­ing to a re­cent Ed­u­ca­tion Depart­ment re­port.

Some of the world’s rich­est peo­ple have be­gun giv­ing away their wealth while still run­ning com­pa­nies, while oth­ers em­brace phi­lan­thropy full time af­ter step­ping away from day-to-day busi­ness. In­creas­ingly, the wealthy want to see their char­i­ta­ble giv­ing put to work on im­me­di­ate needs.

Gates didn’t fully throw him­self into phi­lan­thropy un­til he stepped down as CEO of Mi­crosoft Corp. in 2000. Since then, he and his wife have built the Bill & Melinda Gates Foun­da­tion, which had an en­dow­ment of $51 bil­lion at the end of 2017 and pledges to spend all its re­sources within 20 years of its founders’ deaths. Zucker­berg, 34, and his wife, Priscilla Chan, said in 2015 that they planned to give away 99% of their Face­book stock. Zucker­berg’s shares in the so­cial net­work are val­ued at about $61 bil­lion.

About 184 of the world’s wealth­i­est in­di­vid­u­als and fam­i­lies, in­clud­ing Tesla Inc.’s Elon Musk and the co­founders of Airbnb Inc., have joined the Giv­ing Pledge, a com­mit­ment started by Gates and Buf­fett to give away at least half their wealth. Michael Bloomberg, who owns Bloomberg News’ par­ent firm, has also signed.

Amer­i­can bil­lion­aire phi­lan­thropy is spread­ing else­where. In places such as China and the Mid­dle East, where pub­lic acts of char­ity are less com­mon, the wealthy are start­ing to for­mal­ize their giv­ing. This month, Jack Ma, Alibaba Group Hold­ing Ltd. founder and China’s rich­est man, an­nounced plans to step down and fo­cus more on a new foun­da­tion that he said was in­spired in part by Gates’ ex­am­ple.

While Be­zos was think­ing about where best to put his own money, Ama­zon stepped up its cor­po­rate giv­ing, fo­cused on grow­ing in­equal­ity in its home­town of Seat­tle. Some ac­tivists and politi­cians have partly blamed the city’s prob­lems on Ama­zon.

In 2016, Ama­zon ren­o­vated a va­cant ho­tel on land des­ig­nated for its new head­quar­ters so it could be used tem­po­rar­ily by the non­profit Mary’s Place to shel­ter 200 home­less fam­i­lies. Ama­zon is des­ig­nat­ing 47,000 square feet of space at its new cor­po­rate of­fice for a per­ma­nent Mary’s Place shel­ter.

How­ever, this year, un­der pres­sure from Ama­zon and other large em­ploy­ers, Seat­tle’s City Coun­cil re­pealed an em­ployee head tax de­signed to pro­vide hous­ing and ser­vices for the home­less. In a state­ment, Ama­zon called the vote “the right de­ci­sion for the re­gion’s eco­nomic pros­per­ity. We are deeply com­mit­ted to be­ing part of the so­lu­tion to end home­less­ness in Seat­tle and will con­tinue to in­vest in lo­cal non­prof­its” that work with the home­less.

A week ago, Sen. Bernie San­ders (I-Vt.) in­tro­duced a Se­nate bill — the Stop BE­ZOS Act — that would re­quire large em­ploy­ers such as Ama­zon and Wal­mart to pay the gov­ern­ment for food stamps, Med­i­caid and other fed­eral as­sis­tance re­ceived by their work­ers.

The bill’s name is a dig at Be­zos and stands for Stop Bad Em­ploy­ers by Zero­ing Out Sub­si­dies Act. San­ders said it would es­tab­lish a 100% tax on gov­ern­ment ben­e­fits re­ceived by work­ers at com­pa­nies with at least 500 em­ploy­ees.

Ama­zon has fired back against San­ders’ claims that thou­sands of Ama­zon work­ers use fed­eral ben­e­fits to make ends meet, call­ing his fig­ures “in­ac­cu­rate and mis­lead­ing.”

Em­manuel Dunand AFP/Getty Im­ages

AMA­ZON CEO Jeff Be­zos, pic­tured in 2011, had largely been in­vis­i­ble in the world of phi­lan­thropy be­fore his an­nounce­ment Thurs­day. The move comes as Ama­zon faces scru­tiny over its power and ef­fect on the econ­omy.

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