The Logic Behind Zuckerberg’s $45 Billion Donation

Charitable giving is self-serving, not just altruistic: here’s why.

Imagine the world’s wealth, in any given second, is represented by an enormous chocolate cake. From moment to moment the size of the cake, and the way it’s divided, change as the world’s economy, population size and wealth distribution all shift. This way of looking at wealth helps explain why it’s sensible, rather than sacrificial, for billionaires like Mark Zuckerberg to give the lion’s share of their money away.

The Gift of Giving

Giving is not just an antidote to overconsumption. It’s a source of pleasure, healing and personal validation in its own right.

Red Hot Chili Peppers frontman Anthony Kiedis sums up this idea beautifully in his autobiography Scar Tissue. He writes about a previous girlfriend giving him a much-loved jacket as a gift. Reminiscing about this experience Kiedis writes:

“It was such an epiphany that someone would want to give me her favorite thing. That stuck with me forever. Every time I’d be thinking ‘I have to keep,’ I’d remember ‘No, you gotta give away instead.’ Every time you empty your vessel of that energy, fresh new energy comes flooding in.”

Zuckerberg and his wife say their philanthropy is motivated by a wish to make the world a better place for their daughter to grow up in. Is this a naive dream? Yes and no. Parents, no matter how rich or well-intentioned, can’t buy their kids a life free from suffering. But investing in schemes that improve infrastructure, and that tackle inequality, curb the threat posed by issues such as terrorism which blight the lives of even the most privileged children.

It’s still not clear exactly how the Chan Zuckerberg Initiative will spend its $45 billion endowment. The couple’s previous donations have focused on improving education, health care services and opportunities for unregistered immigrants in America. It seems likely future spending will continue in the same vein.

But to be clear, Zuckerberg is no saint. Facebook has come under scrutiny for aggressive tax avoidance. The company only paid £4,327 in corporation tax in the UK last year. And there’s been speculation that the Chan Zuckerberg Initiative has been designed to limit the amount of tax the couple pay when they sell their Facebook shares. A claim Zuckerberg denies.

Tax vs. Charity

So why doesn’t the tech billionaire just pay his taxes, like everyone else, rather than making exuberant gestures of generosity?

Silicon Valley tycoons justify minimising their tax bills — while donating to charity — on the rationale that they can put their money to better work than the government can. As a man who’s built a $300bn company in a little over ten years, Zuckerberg is certainly able to deliver return on investment.

Plus ego may play a part. In the biopic ‘The Social Network’ Zuckerberg is portrayed as an unpopular outsider who’s unsuccessful with women. Giving on a vast scale allows Facebook’s founder to carve out a new image for himself.

Business Logic

There’s a lot of scepticism about Zuckerberg’s philanthropy. But fundamentally it boils down to this: Zuckerberg is pledging to give enormous amounts of money away because he’s smart, not because he’s kind.

Mark Zuckerberg and Priscilla Chan are effectively taking out a $45bn insurance policy to protect their daughter against suffering caused by preventable wars, diseases and environmental damage. More than anything else, it’s a shrewd investment.