On Monday, Mark Zuckerberg was the world’s richest millennial. After a stunning announcement this week that he’s transferring 99% of his wealth to a new initiative aimed at improving the world, the world learned that Facebook’s founder is on his way to not even technically being billionaire anymore.
The comparisons are easy to make. At today’s value, Zuckerberg’s Facebook stock is worth $45 billion–a few billion larger than the trust endowment of the Bill and Melinda Gates Foundation, the largest charitable foundation in the world (if Facebook’s stock appreciates in the future, its value could end up much larger). And Zuckerberg is clearly inspired by Gates, one of his heroes both in business and charity: Zuckerberg was one of the earliest billionaires to join Gates’s Giving Pledge and commit to giving away the majority of his wealth.
But what Zuckerberg, 31, and his wife Priscilla Chan, 30, are doing is a bit more radical. First, it’s explicitly not charity–the two have set up an LLC, not a nonprofit, from which they plan to donate to charity, but also invest in private companies and participate in policy debates. Second, while the two are following a trend of rich people who want to be heavily involved in giving money away during their lives–not waiting until they die and setting up a foundation that lives forever, a la barons of the Rockefeller, Ford, and Carnegie age–what’s remarkable about the Chan-Zuckerberg Initiative is its sheer size, their extreme youth, and the example they set for other budding Silicon Valley titans.
Yet Zuckerberg isn’t planning to give away all that money at once. It’s all tied up in Facebook stock now–he’ll only sell off small bits at once (up to $1 billion a year for the first three years), which he’ll still control as the head of the LLC before he decides where to give (or spend) those funds. He’s adamant that he plans to remain the controlling stockholder of Facebook and its CEO for many years to come. But when the time does come for retirement, it’s very possible he’ll take a larger role in giving away his money (Gates retired as Microsoft CEO at age 45).
What the decision now gives is time for practice: “We have a lot to learn and giving, like anything else, takes practice to do effectively,” Zuckerberg wrote in the comments section to his letter. “So if we want to be good at it in 10-15 years, we should start now.”
Unlike the Gates Foundation of today, at least some of the Chan Zuckerberg Initiative’s early priorities–personalized learning, connecting people, building strong communities, and curing disease–are entangled with some of Facebook’s own. With Facebook’s Internet.org initiative, Zuckerberg has been the tech world’s major advocate of closing the digital divide and bringing Internet access to the entire world, a mission that also helps Facebook’s bottom line. Online education is also an area that Facebook has been interested in as a company, and some of his past education-related gifts have involved using Facebook engineers to help solve educational problems.
But if Zuckerberg does follow a path similar to Bill Gates (who offered a quote supporting the endeavor in the press release announcement), there’s also a good chance his philanthropy will evolve. In the first annual report for his foundation, Gates wrote that back in 1997, he and Melinda were most focused on “helping to close the digital divide.” Today, Gates says it’s “a joke” for tech billionaire do-gooders to prioritize Internet access before ending diseases like malaria.
Zuckerberg is right, he does have a lot to learn in giving. Though he and Priscilla have already committed $1.6 billion in their philanthropy, including $120 million to support education in the Bay Area and $25 million to help fight Ebola, not all of their previous charity has been successful. Their $100 million gift to the Newark, New Jersey school system is largely regarded as a failure.
“With youth comes a certain impetuousness–consider the Newark education-reform grant,” says Tony Proscio, associate director of the Center for Strategic Philanthropy and Civil Society at Duke University. “It will interesting to see if that continues to be true of their new venture, or if the planned ‘experts and advisory boards’ add a layer of reflection and deliberation. …I’m surprised, frankly, that [their letter] does not bear more hallmarks of the strange, disruptive, and crazily youthful milieu of Facebook.”
The announcement of the Chan Zuckerberg Initiative emphasizes the two do want to learn and lean heavily on outsiders. They plan to keep their staff lean, without much back office. And their LLC structure is specifically intended to provide the greatest flexibility for the most impact. The LLC isn’t necessary, however, for them to invest in private companies as part of their programs–nonprofit foundations like Gates and Rockefeller already invest in privately-led R&D efforts, with profits in all three cases going back to the organization.
What’s more unique is two things. Unlike say the Gates Foundation, which is a 501(c)(3), the door is open for the Chan Zuckerberg Initiative to make political donations–which could easily become part of its aim to participate in policy debates. (Zuckerberg hasn’t donated to any presidential candidates yet, his staff said).
And as Jane Wales, vice president of philanthropy and society at the Aspen Institute points out, another advantage is that an LLC doesn’t have the tax requirement of most foundations to give 5% of its value away each year. The new initiative’s spending strategy, she says, can be driven by “the urgency of the problem they seek to solve and the strategy they choose to pursue.”
Or as Zuckerberg wrote: “We must make long term investments over 25, 50, or even 100 years. The greatest challenges require very long time horizons and cannot be solved by short term thinking”
Is Zuckerberg the next Bill Gates? The answer is no, definitely not now. Anything can happen–and if Facebook goes the way of MySpace or Friendster, Zuckerberg’s world-changing ambitions for his wealth won’t go too far in the future. But, still, there’s plenty of potential he could evolve into a new version of his role model–especially when one day freed of the responsibilities of running a company.
Zuckerberg is setting a precedent. The question is whether he’ll inspire others. Or as Michael Bloomberg commented in the announcement: “The traditional approach to giving–leaving it to old age or death–is falling by the wayside, as it should.”