Everyone was calling it the good deed of the year last week. Following the birth of his first child, Facebook founder Mark Zuckerberg and his mate, Dr. Priscilla Chan, announced that they would also sink 99% of their Facebook stock holdings (approximately $45 billion at todayâ€™s rates) into global good causes.
Many were awestruck by what seemed to be an overly generous gesture from one of Americaâ€™s 1-percenters. However, the cheers of â€śWay to go!â€ť and â€śAtta boy!â€ť were quickly replaced with raised eyebrows and outright shade once details on the Zuckerbergsâ€™ donation became clearer.
You see, the Zuckerbergs arenâ€™t â€śgivingâ€ť away $45 billion, point blank. This is no Christmas Carol in which a newly awakened and soft-hearted Scrooge realizes money means little in the long run and merrily tosses gold doubloons in the air to rain down on the poor. Instead, Mark Zuckerberg has made a deliberate and calculated move of putting his vast fortune to good use â€” aÂ way that can really help poor and disadvantaged people around the world.
The Zuckerbergs are creating a limited liability company (L.L.C.) they have named the Chan Zuckerberg Initiative, rather than just donating their money. Forbes observed how such a setup is a shrewd tax move. â€śSince Mr. Zuckerberg will get credit on his tax return for the market value of what he donates, he can use that to shelter billions of other income,â€ť writesÂ Robert W. Wood for Forbes.
His use of an L.L.C structure allows him control over who gets his money. Many in Europe, already critical of Facebookâ€™s tax evasiveness, also took the young tech founder to task. From Londonâ€™s Daily Mail: “There is a dark side to this trend. For behind it lies the sanctimonious hypocrisy of billionaires who build vast fortunes with firms that avoid the taxes paid by the rest of society, then arrogantly think they are best placed to solve the planet’s problems.”
However, if we take a moment to stop beating up on Zuckerberg, it becomes clear why his move is beneficial, especially for those who really need help around the world.
Zuckerbergâ€™s strategy is similar to Bill Gatesâ€™ the Bill and Melinda Gates Foundation. Itâ€™s currently the largest private foundation in the world, with an endowment of $44 billion. Through control via his foundation, Gates is ranked as one of the most (if not the most) giving philanthropists. Through grants and investments, his foundation has done incredible work such as providing healthcare in developing nations, combating malaria, addressing drought, pushing the efforts of diversity and inclusion in STEM, and much more. The Gates Foundation is undoubtedly committed to improving the lives of the disadvantaged and underrepresented around the world.
The wealthy are increasingly launching private, charitable foundations. According to the Huffington Post, this allows them to maximize what they can give to causes instead of donating en masse to nonprofits. The LLC structure of the Zuckerbergâ€™s foundation allows him to have more flexibility in where his charity goes because he is not required to give 5% of his foundation’s value away every year in taxes.
The Zuckerbergs are a young couple and have a lot of time to evolve and grow the foundation. In a blog post, Zuckerberg wrote that he was committed to making investments in science and research to fight disease, to promote clean energy, and to fill the digital divide—ensuring most have access to the Internet.
â€śMy hope is that our work inspires more people to invest in these longer-term issues. If we can do that, then we can all really make a difference together,â€ť he wrote in the post.
Instead of looking for nefarious reasons why Zuckerberg chose to set up his charity the way he did, he should be applauded for even wanting to make the world a better place. It would be so easy for him to keep all of the cash to himself, safely ensconced within Silicon Valley. And that might be a bit more side-eye worthy.