In an astonishing philanthropic gesture, Facebook Founder and CEO Mark Zuckerberg announced – along with his wife Priscilla Chan – that the two billionaires will give away 99 percent of their company stocks over their lifetimes. This amounts to $45 billion in charity.
The tech leader had already contributed significant sums of his vast wealth to issues ranging from education to combatting the ebola outbreak in Africa. Socially minded CEOs and business leaders have forged a new identity, pressuring other successful and well-off individuals to follow their philanthropic paths. As Bill Gates stated in a speech at Harvard, “From those to whom much is given, much is expected.”
Billionaires such as Gates, Warren Buffett, and George Soros have donated large sums to a variety of causes and nonprofit enterprises. This generosity is essential for the day-to-day operations of a number of institutions working to close the achievement gaps in US schools, protect the civil liberties of disenfranchised people, and improve health conditions around the globe. Now, Zuckerberg has raised the bar even higher, opting to dedicate his immense wealth in the name of his newly born daughter rather than retain it for her inheritance. This generosity is real and should be applauded.
But there are concerns about the nature of these massive gifts, and what they mean for democracy, philanthropy, and the prioritization of social causes over others.
Massive gifts such as Zuckerberg’s deprive the government of a vast pool of taxable resources. The money will go into a newly formed entity known as The Chan Zuckerberg Initiative, which will be able to invest and grow its endowment without the application of the capital gains tax that Zuckerberg’s wealth would have otherwise received.
Ultimately, this sequesters an incredible sum of money permanently from government taxation, contributing further to the government’s debt and inability to secure stable sources of revenue. Factor in the tax credits that the couple will receive on future earnings, and the US taxpayer is left subsidizing Zuckerberg’s philanthropic priorities. And, as we’ve seen in the past, a single billionaire’s priorities do not necessarily entail successful philanthropy. Zuckerberg, for example, contributed $100 million to a controversial attempt to reform the Newark, New Jersey public school system. While still ongoing, the program is considered a failure.
Furthermore, The Chan Zuckerberg Initiative will not be set up as a charity, but as a Limited Liability Corporation. This increasingly common practice is fully legal, as long as the entity in question is dedicated to charity. But unlike nonprofit filings, this status permits an unparalleled degree of secrecy and greater leeway for making endowment investments, leading critics to decry the lack of disclosure behind such organizations. Additionally, these organizations can legally pay for political advertisements, consequently increasing the individual policy sway that Zuckerberg commands.
These criticisms aside, Chan and Zuckerberg’s largesse provides a powerful example to other successful individuals. Rather than ostentatious expenditures and limitless luxury, the two have instead chosen a pro-social application of their wealth. To whatever ultimate degree, this charity will certainly change lives.