Some of you may have heard about the birth of Facebook Founder Mark Zuckerberg’s daughter Max. This is his and his wife Pricilla Chan’s first child.
Some of you may have also heard that upon Max’s birth, Mark and his wife pledged to give away 99% of their Facebook shares during their lifetime (currently valued at about $45 billion). Yes, $45 billion, not million.
As expected, there has been a lot of buzz on social media regarding this topic. Unfortunately, much of it coming from negative feedback.
But how can people be upset about someone giving away most of their money to charitable causes? Isn’t that what we want to see billionaires do? No comment.
Below is what you need to know about the pledge so you can be smarter and more informed than most.
-Much of the uproar comes from Mark and Pricilla deciding to create an LLC instead of a charitable foundation for these shares that they plan on giving away. An LLC, short for Limited Liability Corporation, is a common business structure used in the U.S.
This structure provides several benefits as far as control and flexibility. An LLC also provides access to investing the way Mark and his wife feel most comfortable with and allows them to also distribute money the way they want.
On the flip side, traditional foundations can’t invest in for-profit businesses nor can they give money to political causes.
Why don’t people like this? Traditionally, philanthropists have chosen to give away their fortunes through charitable foundations. Most people don’t know what those are, but since the Zuckerberg and Chan aren’t doing the same thing, people are choosing to be ignorant. Don’t be ignorant.
-Mark and Pricilla did NOT make a $45 billion donation. Instead, they have pledged to give away 99% of their shares throughout their lifetime. This will be no more than $1 billion per year for the first few years and it is not clear how much it will be after that.
-Mark is NOT leaving Facebook and he is actually making sure that he holds the controlling votes. He wants to stick around for as long as he can as he is only 31.
-Many people think that they are doing this to avoid a giant tax bill. They actually DON’T get any true tax benefits by doing things this way.
-This is not the first. Mark and Pricilla have already given away a lot of money.
• $100 million to Newark public schools in 2010.
• $990 million to the Silicon Valley Community Foundation.
They have made it clear that they want to give to causes that align with their mission.
The point is, regardless of how they are choosing to structure their pledge, they are doing what THEY want to do with the money that THEY have earned.
If Mark had chosen to do things that people were wanting him to do, such as graduating college instead of dropping out, not taking the risks of starting a company (most startups fail), and monetizing Facebook quicker than he did, he would not have started one of most revolutionary companies in the world.
He would also NOT have $45 billion to use for “personalized learning, curing disease, connecting people, and building strong communities.”
The lesson here-if you want to give $45 billion away in a different manner, go make $45 billion before you start suggesting how others should give away their money.
You can read Mark’s full letter to his daughter here.