Mark Zuckerberg's pledge to devote 99 per cent of his Facebook shares to philanthropic causes was immediately notable for its size - $45billion at the current stock price - but the way he has crafted the promise may ultimately be as significant as the amount.
By creating a limited liability company to use the money for political activism and for-profit investing, as well as traditional giving, Mr Zuckerberg revealed how a new generation of Silicon Valley entrepreneurs may approach the philanthropic world.
Established donors lined up to praise the 31-year-old Facebook founder’s initiative and to urge other tech entrepreneurs to follow suit, while philanthropy consultants said Mr Zuckerberg’s use of an LLC would give him wide latitude to pursue his goal to “advance human potential and promote equality for all children”.
Mr Zuckerberg and his wife Priscilla Chan announced their plans on Tuesday along with the birth of their first child, Max, and wrote a public letter to their daughter promising to make long-term investments, build new technologies and shape public policy to solve the world's biggest challenges.
In an accompanying video filmed sitting on a couch at home, surrounded by family photographs, and posted on Facebook, Mr Zuckerberg said that improving education, advancing science and strengthening communities involved “big complex systems” and that “it is hard to move these things in the short term”.
His announcement came a day after he joined the Breakthrough Energy Coalition, a group of billionaires promising to invest in clean energy technology to bridge a "near impassable valley of death" between promising concepts and viable products.
In contrast to traditional foundations, LLCs are able to engage in public policy advocacy and for-profit investments that can also advance their favoured causes. The structure will also allow the Zuckerbergs to keep direct control of the Facebook stock that is contributed to the company, to be called the Chan Zuckerberg Initiative. The couple say all investment profits will be ploughed back into additional philanthropic work.
Chan Zuckerberg Initiative
“The Chan Zuckerberg Initiative will pursue its mission by funding non-profit organisations, making private investments and participating in policy debates, in each case with the goal of generating positive impact in areas of great need,” Facebook said.
Their letter to Max, meanwhile, also talks of the benefits of connecting people to the internet and, through the internet, to each other — key aspects of Facebook’s business and in-house philanthropic work.
"The melding of the toolkit is the most promising outcome of all of this," said Kimberly Dasher Tripp, a philanthropy consultant. "It is similar to millennials wanting to go to work and have it mean something. Their work and their giving are coming together."
The US gives generous tax breaks for donations to charity which can be used to limit capital gains liabilities in particular, although their value depends on the vehicles used and the timing of gifts and share sales.
Other Silicon Valley philanthropists to have set up LLCs include Laurene Powell Jobs, wife of the late Apple chief executive Steve Jobs, and Dustin Moskovitz, Mr Zuckerberg's co-founder at Facebook. Their emergence coincides with increased interest in "impact investing", which aims to produce a social good as well as an investment return.
Mr Moskovitz and his wife, Cari Tuna, also plan to give the vast bulk of their Facebook fortune away in their lifetime, and have made for-profit investments in artificial intelligence, grants to promote immigration reform and support for homelessness charities.
Silicon Valley is approaching philanthropy the way that tech entrepreneurs take on any challenge: using data and trial and error tactics - A/B testing in an engineer's language - to come up with ambitious and at times unusual answers to perennial problems. Sean Parker, an early investor in Facebook, who set up his own foundation earlier this year, called it "hacker philanthropy".
Mr Moskovitz and Ms Tuna have supported work by a venture called GiveWell to rank the impact of different potential investments or grants. "There are really strong arguments for giving as soon as we can, balanced against our knowing that the more we learn, the better we'll get at this," Ms Tuna said. "We are trying to share as much as we can about what we are doing and what we are learning for the benefit of other people who are trying to learn, too."
Mr Zuckerberg echoes the sentiment in his video, saying he expected some of his philanthropic projects to falter. “Like doing anything you want to well in the world, it just takes practice, you are not going to be perfect at it the first time,” he said.
Darren Walker, president of the Ford Foundation, said the Zuckerbergs' plan for their Facebook fortune was a "clarion call to a new generation of millennials" to encourage them to use their wealth for social justice.
Michael Bloomberg, the billionaire media owner and former New York mayor, said that Mr Zuckerberg had shown "30 is the new 70" when it comes to philanthropy. "The traditional approach to giving — leaving it to old age or death — is falling by the wayside, as it should," he wrote. "The question is: how many of his peers in Silicon Valley and beyond will join him?"
