On December 1 2015, Facebook founder and CEO Mark Zuckerberg committed to donating 99% (equal to around $45 billion) of his Facebook shares to charitable causes.
The news was made public by the man himself and his wife Priscilla Chan in an open letter to their newborn daughter Max Chan Zuckerberg expressing their wish to see Max and other children of her generation “grow up in a world better than ours”.
Ever since, the news has made headlines, and yes, in the most deserved way, keeping in mind this is the world’s eighth-richest man bestowing almost his entire fortune to charity.
And of course this is not the first time Zuckerberg and Chan are making a donation. Over the past decade, the couple has given out more than $1.6 billion to various humanitarian projects across the world, including $25 million to CDC to end the Ebola crisis, $120 million to support education in the Bay Area, and $100 million to the Newark Public School System, driving the just cause of MDGs and SDGs forward.
A Whole $45 Billion At Once?
According to an SEC filing, the $45 billion will be given out in phases (for better management perhaps). Zuckerberg and Chan have limited themselves to not giving anything more than $1 billion worth of Facebook stock yearly for the next three years, which means Zuckerberg is going to remain in control of the giant company for the foreseeable future.
Philanthropists all across the world have come out to congratulate Zuckerberg for his exceptional step to pledge such a huge portion of his fortunes to the less fortunate.
Bill and Melinda Gates applauded this generosity and U2’s lead singer, Bono, is yet another philanthropist who could not hide his excitement at Zuckerberg’s announcement, which he describes as “life-affirming”.
“The scope of their commitment will be stunning to many, but to their friends it is not surprising. This is who they are,”
Five years ago a number of tech billionaires signed the “Giving Pledge” pact to give away the majority of their wealth at one time in their lives. It looked unrealistic at first, but Zuckerberg’s pledge, if lived up to, is likely to set the pace for more and more huge donations towards charitable causes.
It was obviously not destined to go down well with every one: Zuckerberg’s $45 billion pledge to charity, because the Facebook founder is already under fire for… what?
The (Not So Positive) Reactions
Barely a fortnight since Zuckerberg and Priscilla pledged 99% of their Facebook shares for humanitarian and charity works through an open letter to their newborn daughter Max, the couple is receiving all sorts of reactions from all sorts of people for, well, all sorts of reasons. On the whole, people don’t seem to fancy this move.
Firstly, he made it public, and that aches someone. How? A good number of people think the donation would still reach and help a poor lad somewhere with or without the open letter, which at least according to Michele Hanson on The Guardian, makes it more ‘show-offy’ than openhanded. Shared by many a thought, but to many others still, trivial.
Here’s the bombshell: Zuckerberg, with his Facebook, is running away from taxes. Someone came up with this brainwave and now the whole of Twitter and Facebook, yes, Zuckerberg’s Facebook, are running wild.
The thing is Zuckerberg did not come up with a traditional charitable foundation (the Bill Gates way) or even choose to fund an established one like most would expect. He created a nonprofit limited liability company (LLC) instead, and that, according to the famed Jesse Eisinger on his New York Times post, has absolutely nothing to do with charity. He calls it an investment vehicle (one which cannot be taxed); a way to move money from one pocket to another.
Zuckerberg in Response
The criticism must have poked Zuckerberg out of his haven as he has since taken to social media to try and clear the air and hopefully bring the matter to head.
Here’s an excerpt of his recent Facebook post:
“By using an LLC instead of a traditional foundation, we receive no tax benefit from transferring our shares to the Chan Zuckerberg Initiative, but we gain flexibility to execute our mission more effectively. In fact, if we transferred our shares to a traditional foundation, then we would have received an immediate tax benefit, but by using an LLC we do not. And just like everyone else, we will pay capital gains taxes when our shares are sold by the LLC.
What’s most important to us is the flexibility to give to the organizations that will do the best work — regardless of how they’re structured. For example, our education work has been funded through a non-profit organization, Startup: Education, the recently announced Breakthrough Energy Coalition will make private investments in clean energy, and we also fund public government efforts, like the CDC Ebola response and San Francisco General Hospital.”