Zuckerberg Just Hacked the Third Sector

Everyone’s got a hot take on Zuckerberg’s plans to wind down and spread out his wealth via the Chan Zuckerberg Initiative LLC.

Here’s mine:

He just hacked the Third Sector and nobody really knows what that means.

He’s disrupting the Nonprofit/Foundation Industrial Complex that as a whole is outdated, not always all that effective, and frankly due for some disruption.

I’ve spent my entire career in the Third Sector and now what I do is help people start their nonprofit. I help social entrepreneurs decide whether it’s best for them to launch their venture as a non-profit or a for-profit. It’s always either A or B. The only real reason that the line between the two exist is that IRS is as big and slow as you think it is.

He’s eschewing the veneer of charitable good to get stuff done.

What Mark Zuckerberg has done with the Chan Zuckerberg Initiative frees it to pursue any type of venture that moves the needle in the direction he chooses without breaking any rules.

When I work with founders, I often ask them what is their exit strategy?. If their exit strategy is to be able to sell what you create, be a for-profit. If they don’t care about truly owning what they create then they should be a non-profit

What we don’t yet know is what the Chan Zuckerberg Initiative’s exit strategy really is. How does one spend $45B? Who’s going to make those decisions? We have some very broad strokes from Mark but he is still in Beta and he has plenty of time to learn and iterate. A plus to not being a foundation is not being forced to give away 5% a year if you are not ready to.

One of the mainstays of all the hot takes from the pundits is Newark. He blew $100M in Newark. He got hustled by consultants. But when you’re planning on spending $45B, a $100M is really just an alpha test.

Where and how he has already made charitable gifts, especially the ones that didn’t work were huge learning opportunities. He learned how fun partnering with the governement is and how consultants willingly treat nonprofits. I bet consultants won’t get much love from the Chan Zuckerberg Initiative’s much bigger pot in the future.

The Chan Zuckerberg Initiative could buy gun companies just to shut them down.

One of the best reasons not to be a 501c3 is that if you are a nonprofit you are hamstrung because your ability to lobby lawmakers or even support certain candidates is severely or altogether limited. Look at the Gun Lobby and look at all the Anti-Gun nonprofits and tell me who is winning that policy debate. The Chan Zuckerberg Initiative has the freedom and funds to buy congressman like any other company.

If he wanted to he could easily outspend the Gun Lobby or what the hell the Chan Zuckerberg Initiative could buy the gun companies just to shut them down. Like the way Sam Simon of the Simpsons buys zoos and circuses just to free the animals.

I guess the big question behind all the negative hot takes is can you really trust the Initiative?

That’s the the gut reaction but it’s ridiculous— even if he created a foundation it doesn’t mean that a foundation couldn’t be evil. He’s eschewing the veneer of charitable good to get stuff done. What stuff that will be is still unknown and even if he doesn’t get everything right, the sheer act of forming an LLC has and will be disruptive to the Third Sector.