A week ago, Mark Zuckerberg and his wife Priscilla Chan announced that they would be giving away 99 percent of their Facebook shares to philanthropic causes over their lifetime. This announcement came after the birth of their first child, a daughter, named Max.
According to the current market price, the shares amount up to $45 billion. This makes this donation the largest in history, the previous largest being the $30 billion gift which Warren Buffet gave to the Gates Foundation. There are a number of wealthy people who took similar step in the past. What sets Zuckerberg apart is that he is the youngest of them all, as he is only 31.
The announcement sent shockwaves throughout the world. The social media erupted in praise, with #ThankyouZuckerberg becoming the hash tag of the day. Commentators of several newspapers including Bloomberg, Fox News and Wall Street Journal praised the size and percentage of the donation.
However, what most people failed to understand is that decision would actually help Mark Zuckerberg the most. Instead of setting up a traditional non-profit organization, Zuckerberg announced that the company in charge of this huge money will be provisioned as an LLC, or Limited Liability Company. This means that no one would be able to know where this huge amount of money would be spent.
“An L.L.C. can invest in for-profit companies (perhaps these will be characterized as societally responsible companies, but lots of companies claim the mantle of societal responsibility). An L.L.C. can make political donations. It can lobby for changes in the law. He (Zuckerberg) remains completely free to do as he wishes with his money. That’s what America is all about. But as a society, we don’t generally call these types of activities ‘charity.’” explained Jesse Eisinger in the New York Times.
“What’s more, a charitable foundation is subject to rules and oversight. It has to allocate a certain percentage of its assets every year. The new Zuckerberg LLC won’t be subject to those rules and won’t have any transparency requirements.”
Zuckerberg immediately responded to these criticisms. He defended his decision for setting up an LLC company by stating that all he wants is freedom in his charity dealings, nothing more nothing less.
“The Chan Zuckerberg Initiative is structured as an LLC rather than a traditional foundation. This enables us to pursue our mission by funding non-profit organizations, making private investments and participating in policy debates, in each case with the goal of generating a positive impact in areas of great need. Any net profit from investments will also be used to advance this mission.” Zuckerberg wrote on his public Facebook profile.
I agree that maybe, it’s too early to criticize Zuckerberg’s charity plans. But it would be a novelty to forget how wealthy people used similar tactics for their own benefit by ditching taxes or using their money for unlawful or other purposes. We can only hope that this charity won’t prove to be a failure like his previous $100 million donation to Newark school system was.