Zuckerberg’s ‘Charity’ Agenda

Why on Earth would someone worth $45 billion give away $44.55 billion?

That’s exactly what Facebook creator Mark Zuckerberg did this week. In an open letter to his newborn child that he posted on his social media site, he and his wife, Priscilla Chan, pledged to “give 99 percent of our Facebook shares — currently about $45 billion — during our lives.”

“Our initial areas of focus will be personalized learning, curing disease, connecting people and building strong communities,” he said in his letter.

[lz_ndn video= 30020696]

But shortly after the announcement, things got curious. Amid breathless media reports that Zuckerberg was going to “give” his money to “charity,” Facebook made a point to assert that Zuckerberg’s pledge was about philanthropy, not charity. He wasn’t giving away a cent.

The billionaire couple decided to form a limited liability corporation, called the Chan Zuckerberg Initiative LLC. It’s not a traditional nonprofit, but it will fund nonprofit organizations and make investments. It is as yet unclear if it will ask — or even qualify — for tax-exempt status.

The couple declared that any profits made from money invested by their initiative will simply be poured back into new causes. In other words, the mega-fund is a perpetually self-sustaining business model with implications for indefinite future returns. Of course, the Zuckerbergs have their own self-interested causes, and philanthropy is often tied to controversial political issues, so the question remains: What will his massive fortune really be used to fund?

Owning the Internet?
There are other examples of Zuckerberg’s “philanthropic” work. In 2013, Facebook partnered with six companies to start Internet.org, a foundation focused on ensuring affordable Internet access to the world. But since Facebook is the cornerstone Internet experience for an increasing number of global citizens, it’s a bit of a circular investment. Expand the Internet, and Facebook users will come.

Gaining an early advantage in underdeveloped regions ensure that the founders (Facebook, along with giants Samsung, Nokia, Qualcomm, among others) have the first footprint in the last great frontier for Internet-based businesses.

The fact that Zuckerberg is retaining his controlling interest in Facebook ownership indicates he isn’t done with his vision for the company. It also indicates that he still has a vested interest in the success of the brand. In contrast to Microsoft founder Bill Gates, Zuckerberg’s role as both businessman and philanthropist represents a conflict of interest, despite the incredibly generous donation toward solving world problems.

Dodging Taxes?
Possibly the more important question: How do billionaires like Zuckerberg and Chan reconcile the luster of philanthropic efforts with the corporate tax shell games that cheat governments out of millions or billions of dollars? As an example, Facebook has a presence in the UK. Employees there took home an average of $310,000 (U.S. dollars) in pay and bonuses. Yet the corporation only paid $6,500 (U.S. dollars) in 2014 taxes, which is less than what the average UK worker paid.

To be clear, this isn’t a practice unique to Facebook. Evading taxes through loopholes is common practice by nearly all major massive corporations. Microsoft does it. Google does it. It’s an ingrained part of the political system at this point, with lobbyist dollars funding political leadership to ensure the tax codes work in their clients’ favor.

And another question remains: How much of his philanthropic work would even be necessary if his corporation (and others) were to actually pay countries the taxes they owed instead of using corporate loopholes? The answer comes down to: Who can spend the money more effectively?

Or Doing Good?
Perhaps the whole scheme will turn out to be philanthropy of the highest order. Zuckerberg and Chan undoubtedly learned great lessons from the misappropriation of their $100-million donation to schools in Newark, New Jersey, which has been labeled a massive failure. Lessons we learn from failure can be more important than those from our successes.

By most accounts, Zuckerberg and Chan have always been earnest in their political beliefs, even standing by them when they skewed a little too conservative for their liberal friends. On the other hand, they have aligned in the past with controversial leaders on global warming and other liberal topics, so it’s uncertain exactly where his politics lie.

There’s also no question that the activities of his LLC will be heavily scrutinized based on the scope of the funds alone. Whether that scrutiny matters to the board of executives is another matter. It’s the prerogative of Chan and Zuckerberg alone to decide which are worthy. They are not elected officials. Unlike political leadership, there is no accountability.

Their personal beliefs certainly represent a wild card in the mix. Maintaining a healthy dose of skepticism about their ability to change the world is certainly worthwhile. After all, their wealth is a direct result of the very system that needs to change.