It’s the season for giving and Mark Zuckerberg, the founder of Facebook announced at the beginning of December that he and wife Priscilla Chan intend to advance human potential and promote equality for all children in the next generation through their charitable foundation, the Chan Zuckerberg Initiative. The initial focus for the Initiative will be personalized learning, curing disease, connecting people and building strong communities. Zuckerberg went on to say that the couple will give 99% of their Facebook shares — currently worth about $45 billion — during their lives to advance this mission.
However, as all good Business Management students understand, giving away 99% of shares in a company also means relinquishing control of that business and Zuckerberg clearly does not intend this for this to happen any time soon. In a Securities and Exchange Commission filing after his Facebook post, Zuckerberg gave more details on his plans for his charitable giving. He will control all the shares and allocations of shares in the Chan Zuckerberg Initiative, so Zuckerberg is creating a charitable trust that is totally entirely under his control. In fact, the Chan Zuckerberg Initiative is not actually a charitable trust at all, but was set up as a limited liability company (LLC is the US).
While charity will certainly be one of the money’s destinations, it will be not be the only one. The money will go to “philanthropic, public advocacy, and other activities for the public good”. This may include any private investment. A Facebook release stated, “The Chan Zuckerberg Initiative will pursue its mission by funding non-profit organizations, making private investments and participating in policy debates, in each case with the goal of generating positive impact in areas of great need”. It said. “Any profits from investments in companies will be used to fund additional work to advance the mission.”
Zuckerberg has already donated millions of dollars in his local area. He gave $20 million in November to Education Super Highway to bring better wireless Internet to schools, and earlier this year donated $75 million to San Francisco General Hospital. He is also part of Bill Gates’s new Breakthrough Energy Coalition, a multi-billion dollar initiative to back clean energy.
In my previous post on Social Enterprise, I reflected on the range of ways that businesses can be set up, and run, to help social causes or to enhance public welfare, or their owners can help improve the life chances of groups of individuals. Zuckerberg’s approach is just one approach. The creation of a true charitable foundation, set up with the intention of donating all of its funds to charitable causes is the approach taken by Bill Gates, the co-founder of Microsoft.
The Bill & Melinda Gates Foundation is a long standing and highly success example of philanthropy in practice. The foundation supports initiatives in education, world health and population, and community giving in the Pacific Northwest. Launched in 2000, the $43.5bn trust is the largest philanthropic organisation in the world and is committed to the eradication of malaria and polio, and controlling the spread of tuberculosis and HIV. Investor Warren Buffet joined the foundation as a trustee in 2006 with a £30bn pledge. In 2008, Bill Gates resigned as chief software architect at Microsoft, the technology company he built, to focus solely on the work of the foundation. In total, the fund has given $32.9bn in grants to health programmes around the world, focusing on prevention, immunisation and vaccination. Since the turn of the century, partly thanks to the work of the foundation, four countries have eradicated malaria.
Gates also contributes to charitable causes in a number of other ways that help create a stir on social media and attracts interest in causes close to his heart. For example, over 120,000 users from more than 150 countries signed up for Reddit’s seventh annual Secret Santa gift exchange, with one lucky participant chosen to receive a present from Bill Gates. This was Gate’s third year participating in the site’s holiday tradition. Gates is known for tailoring his choices based on information he gathers from his partner’s profile and this year was no different. Redditor NayaTheNinja, who is an avid hiker, not only received a set of new outdoor adventure equipment – including a tent, mosquito net, camping chair and personalized playlist – but also a donation in her name to the charity Malaria No More.
Bill Gates and Warren Buffet are also signatories to the Giving Pledge which is a promise by the world’s wealthiest individuals to give away at least 50% of their net worth to charity during their lifetimes. The campaign specifically focuses on billionaires and was made public in 2010 by Warren Buffett and Bill Gates. In April 2012, 81 billionaires committed to giving at least half of their fortunes to charity. By August 2015, 137 billionaire or former billionaire individuals or couples had signed the pledge; a significant majority, like Buffett and Gates, are US citizens. Not only are billions of dollars going to worthy causes, but also visionaries from the worlds of technology and finance, including Warren Buffet, Michael Bloomberg, and Elon Musk, are coming together to discuss how to apply money and resources to some of the world’s most serious and complex problems.
Clearly tapping the world’s wealthiest individuals is a significant source of finances for good causes. However, some argue that other potential givers are being inadequately targeted. The Huffington Post commented that segments of the global economy who could, and would like to, make charitable donations are not being given the opportunity, or the correct incentives, to do so. Charitable giving is a $316.23 billion sector of the U.S. economy. However, charities only anticipate that 10 – 20% of this amount will stem from online donations. The Internet is the ideal place to create scalable fundraising models that cross cultures and leverage a powerful combination of factors. The success of crowdfunding sites, such as Kickstarter, demonstrates that demographic groups not traditionally known for giving, such as young adults, can and will donate if it is sufficiently easy and they can see the impact of their contributions in an immediate way. Transmission of appeals through social networks, secure and payment processing through secure sites like PayPal, and attractive incentives to give, such as gamification or prizes would appeal to popular taste, and the capacity for donors to track their social impact.
- Huffington Post
- BuzzFeed News
- Time Magazine
- Pixabay image