There’s been much ado about Twitter CEO Jack Dorsey’s pledge to give $1 billion to fight the coronavirus. Unlike most billionaire philanthropy, the pledge comes with a trace of accountability, as Dorsey’s expenditures will be recorded in an open Google doc; the first donation has been routed to America’s Food Fund, a food-security nonprofit founded last week by Leonardo DiCaprio. Even rarer is the scale of the gift: Dorsey’s billion, delivered in the form of shares in his company Square, equates to 28 percent of his wealth. But on Pivot with co-host Kara Swisher, NYU professor Scott Galloway explains why even such commendable giving should be viewed through a lens of scrutiny: “These tech billionaires, they want something in return. I think anytime you put a press release out for your philanthropy, it should immediately not become tax deductible.”
On Friday, Swisher and Galloway entered the ongoing conversation surrounding billionaire giving in an era of overlapping global crises, discussing the “halo effect” of philanthropy and how relying on ultrarich donors can undermine the very projects they’re hoping to advance.
Pivot is produced by Rebecca Sananes. Erica Anderson is the executive producer. It is also now on YouTube.
Kara Swisher: So there’s Jack Dorsey’s $1 billion. Apple has donated 20 million masks. Bill Gates says his foundation will spend billions to fund the construction of factories, which is critically important for developing promising vaccines to combat COVID-19. But should we be relying on rich people to pull us out of the drink when the government should be doing it?
Scott Galloway: When the rich guy on the block shows up with the best hose to put out your fire, it’s not saying he’s not a wonderful man. It’s saying we need to fund the fire department. A lot of billionaires, especially around tech leadership, are stepping into the void here. The fear is that this isn’t philanthropy. Philanthropy is giving without any sense or any expectation of anything in return. And then, there’s what I would call going in and buying Chanel Rouge Allure Velvet Luminous Matte Lip Color in La Romanesque. And that’s $28. And you spent some money to make yourself look better. And I think a lot of this philanthropy is not philanthropy. It’s lipstick.
I mean, let’s think about the scale here. So, one of the wonderful things about this is that they’ve reported the percentage of his wealth. And any individual who gives 28 percent of their wealth should be commended for giving.
But when Jeff Bezos gives a million dollars to defend wildlife after the wildfires in Australia, it’s the equivalent of the average household giving approximately somewhere between $2 and $6 to that effort. We need to start reporting what percentage of their wealth — because we think, Well, isn’t that wonderful. But the bottom line is, if you’re putting out a press release to give the equivalent of $6 away of your household total net worth, does it really warrant a press release? I would love to see a certain IRS metric that says, just as we evaluate different types of income, let’s evaluate different types of philanthropy. And if it’s less than 0.1 percent of your net income and you’re putting out press releases, it shouldn’t be tax deductible. So, there’s philanthropy and then there’s lipstick. And in this instance, I think, Mr. Dorsey, this is clearly philanthropy. What a lot of these tech people are doing now, when they give away 0.01 percent of their net worth, it’s not philanthropy; it’s lipstick.
Swisher: These tech titans do have enormous resources. But the question is how to put them to use without giving them enormous power. And I think that’s hard in our country.
Galloway: Governments have to be funded well enough such that they can make these sorts of tectonic moves. No amount of billion-dollar donations is going to help us around income inequality or climate change or figuring out a way to fund the agencies we need to ensure this pandemic doesn’t relapse.
Swisher: If anyone can afford to give more in response to the pandemic, it’s the richest of the rich with far greater assets than private foundations. In recent years though, giving by billionaire donors has amounted to only a tiny sliver of their wealth, and many billionaires barely give it all. There are no signs that this crisis will change that.
Galloway: Their wealth is unprecedented. So let’s talk about Dorsey. $1 billion, 28 percent of his net worth. There’s just no getting around it. This is wonderful. This is a testament to his character and his code as a person. Let’s just full stop now, but when you’re worth $4 billion giving away a billion, it’s just not going to impact your lifestyle. I’m not going to say it’s not giving, but he’s not doing anything that’s going to get in the way of his jet or his lifestyle.
The other thing is that these tech billionaires, they want something in return. I think anytime you put a press release out for your philanthropy, it should immediately not become tax deductible.
After the donation, everyone is tweeting at me saying, “Well, what do you think now?” Should he step down as CEO? And I’m like, “Absolutely, what does this have to do with anything?” This has nothing to do with your ability to serve as a good fiduciary for Twitter shareholders who had been repeatedly kicked in the nuts over the last five years while every other cell-phone platform skyrockets.
Swisher: It does have a halo effect; it certainly does.
Galloway: That’s the problem. All of a sudden he no longer is subject to the same scrutiny as every other CEO, because unlike most CEOs, he has $1 billion to give away. So you want to like him. So these guys wrap themselves in a philanthropic blanket.
Swisher: Are these donations the new tax?
Galloway: Yeah, but it’s not a tax because they get to put their names on things and they get to decide what they get to do. The very definition of tax is that you are redistributing income and you don’t get to decide where it goes. If it goes to the sixth fleet in the Gulf and you’re against wars in the Middle East, too damn bad, you have signed up, and now you have to join hands with other Americans and elect somebody different.
To a certain extent, this type of philanthropy is bypassing our democracy and our elections and our ability to make big decisions, because now these guys are doing an Enron around the government, around public policy, around foreign policy.
Swisher: I do think in some cases when the government doesn’t act, I do like that Bill Gates is building these factories because the government’s not doing it, and maybe he’ll make money. I think we need to have them built now instead of arguing about it. So I’m fine with his foundation spending billions of dollars to fund the construction of these factories; I think he’s a different case.
Galloway: The thought I think that we need to be left with is, Do we want to be dependent on the generosity of tech billionaires, or do we want to employ the same standards and a progressive tax structure where billionaires in the 1960s paid 40 percent of their taxes? In the 1970s they paid 60 percent; now they pay 21. Do we want to create the void that they need to step into, or do we want to close the void and decide that it’s not them but NASA who should put people on Mars, that the CDC should be our front lines of defense against these pandemics? Because if you want to talk about a good return on investment, the CDC gets about $11 billion. Well, what if we had taxed big tech an incremental 10 percent and then taken 10 percent of that and funded the CDC to the tune of $50 billion or $100 billion?
In that scenario, would we be talking about 50 to 80 percent of people who go on ventilators dying? There’s just no getting around this. We fucked up big time here, and if we had not made proactive — if we had made more forward-leaning investments, if we had been less narcissistic, if we hadn’t defunded the CDC, fewer people would be dead. We have to face those hard truths, and that all goes back to this system where we’ve decided that the new idols and the new kind of arbiters of truth and vision moving forward are tech billionaires or people who divide us, like the current president, and that has just got to stop, Kara. That’s got to stop.