Mark Zuckerberg: A Masterclass in Philanthropy

Rohan Singh '17, Staff Writer

On December 1, Facebook CEO Mark Zuckerberg announced some big news: his baby was born. Is it truly an announcement from a billionaire, though, if it has nothing to do with money? Zuckerberg coupled the birth of his daughter Max with a pledge to her: he will donate 99% of his Facebook stock over the course of his life. At face value, this looks like a great philanthropic effort, and it coincides perfectly with the holiday theme of giving. This is not the Harvard dropout’s first charitable venture. In 2010, he made a $100M donation to Newark public schools, which turned out to be a failed effort. He’s also given millions of dollars to combat Ebola, provide Internet to more schools, and aid a San Francisco general hospital. No one is questioning Zuckerberg’s good intentions, but the donation is not quite stripping him of his wealth.

This gift has an estimated valuation of $45B. Zuckerberg’s net worth is about $46.8B, and while it may seem like he is losing everything, he will still be a billionaire when it’s all said and done. The Chan Zuckerberg Initiative, LLC (co-founded with his wife Priscilla Chan) is the medium through which Zuckerberg will be making his donations. Notice how this is a Limited Liability Corporation, not a foundation like the one created by Bill Gates. Mark Zuckerberg will be in charge of all executive decisions at this LLC, and he will also regulate how much he will donate. In Facebook’s latest SEC statement, a spokesperson said, “He plans to sell or gift no more than $1 billion of Facebook stock each year for the next three years and he intends to retain his majority voting position in our stock for the foreseeable future.” If Zuckerberg sells too many stocks, he will lose his voting power in Facebook, which is currently at 60%. Regardless, he has pledged to give away billions of dollars for causes of his choice. That is truly noble.

What won’t be in the billions, however, are Zuckerberg’s taxes. Staying true to his financial genius, Zuckerberg will be selling appreciated stock, meaning that he will not be taxed for any of the profits on the stock after it is sold. He is creating profits for Facebook and himself, while still doing good works throughout the country. Zuckerberg is a great exception to Bernie Sanders’ stereotype of billionaires. He is evading the government to solve the problems that he believes they cannot fix. Criticizers of this pledge believe that Zuckerberg is disguising his tax-reducing motive under a veil of philanthropy. Either way, it is a very big announcement for anyone in the financial world.