The limits of Zuckerberg’s charity

04 December 2015 3:20 pm

There’s been a lot of focus the last few days on Mark Zuckerberg’s announcement that he and his wife Priscilla Chan will donate 99 percent of their Facebook shares — valued at close to $45 billion — over his lifetime in the name of their new daughter Max.

Sounds good. But read the fine print.

As Forbes points out, the Chan Zuckerberg Initiative has been set up as a Limited Liability Company, a type of legal entity enabled to operate for profit. It operates as a charity which, under the tax system, is different from philanthropy. Charitable donations are tax deductible.

And Facebook is likely to make money out of the charity.

“The big question is whether the Chan Zuckerberg Initiative’s operation will have implicit or explicit economic benefits for Facebook’s operation,’’ says Forbes. “For example, in their letter to Max, Mark and Priscilla state they would like to “connect the world so you have access to every idea, person and opportunity,” and make a strong emphasis on the advancement of the “internet” and “personalized learning.” Considering that Facebook’s future success depends highly on more and better internet connections and further personalization of the online experience, then the IRS will have to wonder whether Facebook will be indirectly making money from the Chan Zuckerberg Initiative’s success.

“For instance, if the Chan Zuckerberg Initiative invests money in, or makes donations to, increasing the number of computers, laptops, tablets, and smartphones across the world, and improving and expanding internet connectivity worldwide, then Facebook will benefit from thousands or millions of new devices on which to show Facebook Ads. So, all of a sudden, Facebook would be making more money directly as a result of the Chan Zuckerberg Initiative’s operation.

Chris Lehmann at Al Jazeera goes even further and says the initiative is unlikely to do any good at all.

“If you just add laptops, wireless connections or Facebook accounts to unevenly developed societies with yawning inequalities rooted in grotesquely distorted economic and political histories, those bedrock conditions will remain unchanged — and in more than a few cases, worsened. This is, indeed, the whole trouble with the Silicon moguls’ pet cause of “effective philanthropy” — their measures of effectiveness have everything to do with the moral vanity of the charitable giver, and nothing to do with the far more unpredictable and unmanageable living conditions of the recipient.”

But my favourite response is from Max herself, written up in the terrific UK tech mag The Register. The letter to Daddy is a hoot.

“There’s this thing that’s bothering me. It's called Facebook,'' says Max.

“And not just Facebook, it’s the way Silicon Valley companies like yours pile up huge wealth by destroying value in every other part of the economy, as if technological progress were a zero sum game. It’s the way you strip-mine individuals so they have no ability to be autonomous economic agents, owning and trading the stuff we make, so all we have to live on is some feudal digital plantation - and we have to be grateful for it. It's the way some Valley firms place themselves above the law and try to block the work of elected officials who want to defend human rights.

“Not you of course, Daddy. Just some of your friends.

“I mean, come on. There's a lot to teach children in this modern world I've just been born into. But one thing we've got to learn is that just because you can do something, it's not necessarily morally acceptable to do it. Who's going to teach me that in Silicon Valley?

“It’s way cool that you want to bring Facebook to people who can’t afford it, Daddy. That’s the most unselfish thing I’ve heard anyone say in my very short life so far.

“But there’s also 1.6 billion people on the planet who don’t have access to electricity, while 2.8 billion people rely on smelly and noxious biomass for cooking and fuel. How about we get them modern electricity grids and cheap reliable energy first? What’s that Daddy? You think that’s a good idea too?"