Hey Zuckerberg: We don't want your charity
Every dollar in Mark Zuckerberg's private charity is a dollar wrested from public coffers and from democratic control, writes Jason Farbman, in an article published at Jacobin.
THE MEDIA-as-public-relations-machine was in full swing last week, abuzz over Mark Zuckerberg and Priscilla Chan's public letter to their daughter that contained a $45 billion pledge to establish the Chan Zuckerberg Initiative.
The mainstream media produced an avalanche of praise. "Mark Zuckerberg Philanthropy Pledge Sets New Giving Standard," announced Bloomberg Business, which declared that Zuckerberg and Chan were "setting a new philanthropic benchmark by committing their massive fortune to charitable causes while still in their early 30s." From the Wall Street Journal came more praise: "Mark Zuckerberg and Priscilla Chan to Give 99% of Facebook Shares to Charity."
But when BuzzFeed revealed the Chan Zuckerberg Initiative was not a nonprofit, but a for-profit limited liability corporation (LLC), which has no obligation to actually engage in charitable activity, the tenor of some of the commentary became more negative. Was the donation to a Delaware-based LLC nothing more than a way to duck California taxes?
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THE TRUTH is that both nonprofit and for-profit charities can and do serve as tax shelters for the obscenely wealthy. Nonprofits themselves have few restrictions around them, and only require that 5 percent of a foundation's assets each year be spent towards its stated charitable goals, including expenses and lobbying.
Still, in the last few years, we've seen the growth of ventures like Google.org, the charitable but largely for-profit division of Google created in 2006 with $900 million worth of Google stock. Freed from even the limited guidelines to which nonprofits are held, some of the projects Google.org has poured money into have happened to also generate mountainous profits for Google.
For example, the One Laptop Per Child initiative's stated mission to get $100 computers into the hands of "each and every one" of the world's poorest children also captures lucrative data from millions of new computer users in almost entirely untapped markets.
Similar to Google.org, the Chan Zuckerberg Initiative chose a form that would allow them to invest in profit-making initiatives, including ones that could bring new profits to Facebook. Chan and Zuckerberg's pledge to give everyone on earth access to the Internet, like the One Laptop Per Child initiative, will both provide real services for a great many people, while simultaneously creating millions of new potential Facebook users (although they do perhaps overstate with the claim, "If our generation connects them, we can lift hundreds of millions of people out of poverty").
At the same time, Chan Zuckerberg can take advantage of its status as a tax-qualified charity to save huge sums of money. As Forbes observed:
This generosity is also incredibly tax efficient...Donating appreciated stock is a much better tax move than selling it and donating the sales proceeds. After all, by donating the stock, the gain he would have experienced on selling it is never taxed...since [Chan Zuckerberg] is a tax-qualified charity, if it sells the stock it pays no tax regardless of how big the gain. And since 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.
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OF COURSE, sizable donations to charity frequently receive glowing press coverage, which is also quite valuable. The transformation of Bill Gates's reputation--Zuckerberg's childhood hero--after creating the Bill and Melinda Gates Foundation is instructive.
Throughout the 1990s Microsoft's hyperaggressive business practices resulted in a 2000 Justice Department verdict that Microsoft was a monopoly. Several billion dollars in fines from myriad U.S. and European regulatory bodies followed and Bill Gates was widely painted as a bully in the popular press.
The PR turnaround afforded by the Bill and Melinda Gates Foundation might be the most effective--and expensive--in history. Today, Bill Gates is treated by the media as an important thinker in the fight against disease and the debates around education "reform." He is regarded as a humanitarian with something to say about making the world a better Hey Zuckerberg: We don't want your charity | SocialistWorker.org: