Mark Zuckerberg’s Philanthropy Doesn’t Seem Particularly Charitable

Mark Zuckerberg kicked off December with a promise to donate 99% of his Facebook shares to charity… sort of. The reality of this gesture may be starting to catch up with the social media mogul.

Zuckerberg’s donation isn’t to just any old charity. In fact, it’s not a traditional charity at all. The nearly $30 billion will be filtered into the Chan Zuckerberg Initiative LLC.  What is it, exactly? That’s a good question, and one that more and more people are asking. The Chan Zuckerberg Initiative Facebook page isn’t very clear on the issue. Launched in 2009, its purpose is purportedly to “advance human potential and promote equality.” But how will it do so?

The full description is longer, but no more clear. The LLC wants to “make long term investments” over the next 25 to 100 years, “engage directly with the people we serve,” and “build technology to make change.” So far, the Chan Zuckerberg Initiative is sounding a lot like, well, Facebook.

We must participate in policy and advocacy to shape debates. Many institutions are unwilling to do this, but progress must be supported by movements to be sustainable.

We must back the strongest and most independent leaders in each field. Partnering with experts is more effective for the mission than trying to lead efforts ourselves.

So in summary, the LLC’s stated mission is to engage with people, build new technology, support policy and advocacy, and back chosen leadership. If you think it doesn’t sound much like a charity, that’s because it doesn’t.

But maybe that’s the issue. After all, the Chan Zuckerberg Initiative isn’t a Non-Profit Organization, it’s a Limited Liability Company. There are some pretty big differences between the two, and they are pretty convenient ones if you’re going to donate most of your massive fortune.

First of all, an LLC has a lot more leeway in how the money is actually distributed. Not only does an LLC require far less disclosure than an actual NPO, but it can handily avoid the federal requirement that at least 5 percent of its annual endowment actually reach charitable efforts.

The Chan Zuckerberg Initiative is also free to invest its resources in for-profit enterprises and shore up the financial security of political causes with which Zuckerberg and his wife agree. He won’t have to disclose the details of the company’s financial affairs, and can even turn a profit in the process.

In response to increasing skepticism, the Facebook founder took to his public page. His clarifications, however, didn’t do much more than reiterate the LLC’s vague mission statement.

The Chan Zuckerberg Initiaitve 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.

And while Zuckerberg has promised that “any net profits from investments will also be used to advance this mission,” it’s not something he’ll need to prove, or which can be enforced. Besides that, the “charity’s” mission isn’t clear about anything except that it will be used to create new technologies — something that would directly benefit Zuckerberg himself — and to support people and ideas that he favors.

When Zuckerberg first announced his plans, he claimed that the Chan Zuckerberg Initiative would focus on “promoting equality,” but that too is a hollow sentiment. After all, his previous publicity-fueled exploits have done very little. And as Gabriel Zucman of the University of California has observed, Facebook isn’t exactly the poster child for civic responsibility. Facebook makes heavy use of tax shelters like the Cayman Islands to avoid putting money anywhere they can’t get it right back.

None of this makes a very compelling case for trusting in Mr. Zuckerberg’s goodwill. If the face of Facebook really wants to benefit the community at large, maybe he should start by paying his taxes.