Is Mark Zuckerberg's philanthropic initiative self-serving?

This week, Facebook CEO Mark Zuckerberg and his partner Pricilla Chan announced a major gift to mark the birth of their daughter, Max: to donate 99 per cent of their Facebook shares to charitable purposes through their newly-launched Chan Zuckerberg Initiative. The amount is estimated to be about $45 billion US.

They're promising to promote better health care, education, and of course, internet access.

But Zuckerberg's critics say this is a way to increase his net worth, boost his profile, and qualify for tax-exemptions.

Brent spoke to Linsey McGoey, the author of No Such Thing as a Free Gift.

This interview has been edited for length and clarity.

Brent Bambury: When you heard that billions of dollars in Facebook stock is going to be given to 'save the world' as a birthday present for a newborn, what did you think?

Linsey McGoey: My first reaction was that this is an interesting development. There were some interesting propositions put forward with quite positive mission statements, such as, the idea that all lives have equal value. I mean that exact phrase was also in the mission statement of the Gates Foundation so I'm curious if there might be a little bit of a philanthropic envy being generated. But I was mostly eager to see how it unfolded. And then I noticed later on that it wasn't actually a gift that had occurred, but simply the transfer of stock announced from Facebook to a new limited liability corporation that Mr Zuckerberg is setting up.

BB: Let's talk about these limited liability companies. At its most basic, how is this entity different than what most people think of as a charity?

LM: It's different in a number of important ways. It's not entirely unprecedented, but it is relatively novel. Essentially it is not philanthropy or a charity in any sense of those words. It's another company, it's an investment vehicle. It will in some respects be subjected to tax if it earns revenue, but it will be able to off-set those tax liabilities through deducting any possible charitable grants that it makes from the L.L.C. But it's actually under no obligation to make any grants to a non-profit or a charitable recipient at all because it's an L.L.C. It's simply an investment vehicle. So for example, the stocks are donated at their current market value. Later on, if they appreciate, if he were to donate appreciated shares to any charitable recipient, he can claim the fair market value at that time. So the appreciated gain. And yet not suffer any tax liability for that increase. So some media have suggested it's like he's transferred money from his left pocket to his right pocket. 

BB: But isn't this a very cynical way to look at it because he does say this money is committed to charitable funding, whether it stays in the L.L.C. for a number of years or decades or not. So whether we're talking about for-profit or non-profit, if money is ultimately going to a good cause, what's wrong with that?

LM: Sure, I hope to give a hundred million that I hope to make from an entrepreneurial venture say 20 years from now. Should that entitle me to public favor and acclaim? If the claim comes true, great. But currently I think the cynicism is quite warranted because he's announcing a vast gift that isn't actually a gift. 

BB: Do you think there's accountability issues when somebody uses this limited liability corporation to endow other foundations or to give to charity?

LM: I think the accountability issues are definitely magnified in a way that's already problematic when it comes to private foundations, but that's exacerbated when you have a L.L.C. doing the giving. And those accountability issues are quite simply that a private foundation in the U.S. is subjected to a number of disclosure requirements. It's mandated to provide public access to every grant that it's issued either on a website or upon request. No such requirements are placed on an L.L.C.. So we'll never know where the money's going, unless we're told by the Chan Zuckerberg Initiative. And there's no legal onus on them to tell us. 

BB: There are also limitations on a charity, on how they can use the money in terms of lobbying or political involvement. Are those limitations the same for L.L.C's?

LM: No, especially since the Supreme Court decision surrounding Citizens United. There's actually no limit on what can be contributed from private funds to a political campaign. And so the L.L.C. can donate what it wants. A private foundation, in order to qualify for its tax privileges, is limited in the amount of direct lobbying it can carry out. It can't carry out any direct partisan lobbying, but it can advocate in general for certain social causes.

BB: The people who praised this initiative by the Zuckerbergs say, this is a 31-year-old putting a lot of resources toward trying to change the world. Isn't he setting a good example?

LM: I think in a way that's a commendable perspective. And I think on this point I defer to a great comment by Martin Luther King Jr. He said charity is commendable, but it should never cause us to overlook the structural inequalities that make philanthropy necessary in the first place. So I think we can praise charitable giving to a certain extent, I think most of us generally do like to give individually to charities, but what's happening in this case is the establishment of a for-profit company. 

BB: If we do accept that this is ultimately - or eventually will be - a large charitable donation, how do these kinds of efforts by the very wealthy stack up to what the rest of us give?

LM: I think this is where the media acclaim surrounding these large gifts is slightly misleading because proportionately in the U.S. and U.K. the poor - those at the lower end of the economic spectrum - give more of their take-home income to charity on a per capita basis than the rich. 

BB: If Mark Zuckerberg was listening into our conversation today, where would you tell him to put his money?

LM: I wouldn't tell Mr. Zuckerberg anything. I would suggest to the rest of us that it's our job to convince the government that potentially there needs to be more regulations, more oversight, of L.L.C.-giving or foundation-giving. Because I think the onus rests on us more to question our uncheckered praise of this type of giving, rather than Mr. Zuckerberg listening to us because I don't know that that's going to happen.