Did Zuckerberg and Chan Just Become the World’s Biggest Impact Investors?
Much like a cheery Facebook status update, millions of people immediately clicked the “like” button when they saw the announcement by Mark Zuckerberg that he and his wife, Dr. Priscilla Chan, plan to give 99 percent of their Facebook fortune toward somewhat vague social, environmental and health causes. The announcement, which came in the form of a letter to their newborn daughter, seemed to have had something for everyone, including the social enterprise community, which picked up on this line: “Can we cultivate entrepreneurship so you can build any business and solve any challenge to grow peace and prosperity?”
But after it sunk in that the happy couple would be placing most of their (as of now) $45 billion in Facebook stock into a limited liability company (gasp) that could invest in companies that generate profits (double GASP!), the excitement cooled just a bit. In fact, many might have reached for an “unlike” or at least an “uneasy” button on the Facebook dashboard (if one existed) when they learned from news sources like The New York Times that:
“An L.L.C. can invest in for-profit companies (perhaps these will be characterized as societally responsible companies, but lots of companies claim the mantle of societal responsibility). An L.L.C. can make political donations. It can lobby for changes in the law. He remains completely free to do as he wishes with his money. That’s what America is all about. But as a society, we don’t generally call these types of activities ‘charity.’”
And as reported in DevEx:
“… Zuckerberg and Chan are also positioned to gain from this gift. The vehicle for the $45 billion is an LLC, which will allow Zuckerberg and Chan to transfer their private assets into a family foundation without paying capital gains taxes. The move could also lead to tax benefits of as much as $333 million on the first $1 billion transfer.”
Many critics pounced, with some railing against the notion that we as society have now turned to the mega-rich, instead of government, to cure social ills. Others, including Jessie Spector, executive director, Resource Generation on Huffington Post, took it as another sign of rich protecting rich interests:
