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The donation is part of Dorsey's commitment to give $1 billion, or 28 percent of his net worth, to coronavirus relief, education for women and basic income experimentation through his company called Start Small. Humanity Forward is giving one-time, and recurring, basic income payments to people and families who stand to be most affected by the coronavirus crisis, according to its website.
Dorsey announced the donation on a Wednesday episode of Yang's podcast, "Yang Speaks."
"We're doing $5 million for Humanity Forward, and...I really appreciate who you are, first and foremost, but also what you're doing," Dorsey said. "I think this idea is long overdue, and I think the only way that we can change policy is by showing case studies of why this works."
The contribution will go toward Humanity Forward's COVID-19 assistance program in the form of 20,000 individual micro-grants worth $250 each to those affected by the crisis.
Yang thanked the Twitter founder on his podcast and in a press release published Thursday.
"Not only will Jack’s donation directly impact tens of thousands of people in need during the current economic downturn, it will help Humanity Forward and our movement continue to make a case for [UBI] in the United States. We know UBI for every American is possible, and this $5 million from Start Small is going to help demonstrate what is possible for families across the country," Yang said in a statement.
Dorsey's original $1 billion donation is worth $1.5 billion after he put it into the market and into people's hands, he said on the podcast.
"We did move $200 billion into the [donor advised fund], and they sold it on the market, and we now have $200 million in cash to work with. We've now granted over $86 million of the $200 [million] so far," Dorsey said. He added that only he and his assistant are in charge of moving the funds in an effort to keep the operation small.
He and Yang went on to discuss their mutual belief that UBI will shape Americans' trust in government and help the overall economy.
"You know, Jack, I believe that [UBI] is essential to a restoration of trust," Yang said. "If society actually invests in you in a real way and says, 'Hey, look, here's money,' then you actually become more trusting and optimistic, where you're like, 'OK. You actually do value me, care about me, you'll invest in me and my future, you'll invest in my kids and my future.' "
People can't believe it when they receive money without any strings, the same way Americans were surprised when the Trump administration delivered stimulus checks worth $1,200 to every American as part of the Coronavirus Aid, Relief, and Economic Security Act, he said.
"No one believed it until it was in their account," Yang said. "There's so much built-up distrust and skepticism that when you actually get that money, it diffuses it."
Dorsey said he is happy to give away some of his wealth, saying that his conception of money has changed over time and he has discovered how much of a difference a little extra cash can make in a person's life.
"Part of gratitude is not just saying, 'I'm grateful,' but actually doing it," he said.
While the idea of universal basic income may seem radical to some, the concept is becoming a more widely accepted idea among U.S. politicians and citizens, particularly after Yang gained popularity as a presidential candidate and campaigned on the controversial idea.