Giving like a billionaire…
On 1 December 2015, I woke up to news of the birth of Mark and Priscilla Zuckerberg’s first daughter, Max. The couple chose the milestone as an opportunity to announce the creation of the Chan Zuckerberg Initiative, a Limited Liability Company (LLC) with the mission to “advance human potential and promote equality”. They plan to capitalise the LLC with $45 billion, a hefty sum made-up of 99% of the Facebook founder’s shares. The announcement has drawn wide spread public reactions — from accolades of philanthropic brilliance, generosity and Silicon Valley-type charity disruption, to criticism around potential tax loopholes (or lack thereof), exclusion of funding for public institutions, accusations of potential wastage with emphasis on the $100 million Mark gifted to the Newark school system in 2010 with limited positive outcomes thus far.
To marginally join in on the debate, I must commend Mark and Priscilla for their desire to change the world and make it a better place for Max and future generations to come. As clichéd as it sounds, Mark wants to invest (or spend) the $45 billion on big, bold, audacious ideas that quite frankly, will either fail woefully or become hugely successful over 25, 50, or even 100 years. His ‘Giving Initiative’ has the flexibility to focus on high-risk projects that may not be economically viable using today’s financial assessment tools, but may have significant positive social impact. At 31, Mark has decided to start now, while still working, and give away his vast fortunes. The thought behind his announcement, though incomplete, must be applauded.
Reading further into Mark’s announcement sparked a question for me — do I have to be a billionaire before I give towards big, bold, audacious ideas that advance society? Put another way, can I employ some of the principles relayed in Mark’s letter to Max to reallocate some of my existing philanthropic activities towards ideas and initiatives that are high-risk and long-term? The Chan Zuckerberg Initiative, while controversial and still lacking much detail, highlights a different approach to philanthropy (philanthrocapitalism as some have dubbed it), which I believe need not be left alone to billionaires and the ultra-wealthy, but can also be adopted by professionals and salary earners with extra income and a desire to join in efforts to solve both local and global issues. Perhaps salary earners can also setup mini Giving Initiatives, LLCs, non-profit organisations (or whatever structure), with primary focus on investing in big, bold, audacious ideas that seek to maximise ‘social returns’.
How might this work? The first step would be capitalizing the Giving Initiative. Even with 99% ‘given away’, Mark will retain 1% of his wealth, leaving him and his family with ~$450 million change to play with. Many of us are unable to give up to 99% of our wealth without quickly jeopardizing the survival of ourselves and the individuals that depend on our salaries. However, perhaps the answer is not 99% from day one, but to start from a low base and gradually increase the percentage as earnings increase and number of dependents reduce. Ten percent comes to mind as a starting point, similar to the concept of the Tithe familiar to many Christians, where 10% of gross monthly earnings are given to the Church or donated to the less privileged. Ten percent (or more) personal contribution can be further magnified by pooling friends together with similar interests to capitalize the Giving Initiative. Pooled capital is then built up over time with firm commitments to increase giving percentage and all monetary profits generated are simply ploughed back into the organization (monetary profits should not be the objective, but might be a by-product of the organisation’s activities).
As a next step, the Giving Initiative should articulate focus areas to guide its activities. Mark’s letter identified personalized learning, curing disease, connecting people and building strong communities as core areas the Chan Zuckerberg Initiative will focus on initially. As a Nigerian, my focus areas would probably be centered around issues my future daughter (or son) may face when I decide to settle in my home country. Low levels of investment in public infrastructure have created funding deficits across power, water, transportation, healthcare, and education sectors. Growing inequality and poverty are key concerns, with corruption and mismanagement being significant impediments to the efficient allocation of public resources. As such, my Giving Initiative might tackle one or more of these localized issues towards creating a better Nigeria for my unborn child. Each mini Giving Initiative would address one or more of the issues, and the cumulative effects of many set up to address various topics would only add to existing public and private efforts towards arriving at solutions.
I was encouraged by Mark’s letter emphasizing keenness to support experts versus try to develop in-house knowledge. Experts can take the shape of researchers in local universities, ambitious social entrepreneurs, impact investment managers addressing particular issues. For example, food insecurity is a key risk across various countries on the African continent, as the agricultural sector remains largely driven by subsistence farming methods. A Giving Initiative might seek to provide funding and professional assistance (no matter how little) to an expert, researcher, policy advocate focused on developing efficient farming systems, drought resistant seeds, and/or policy papers, leading to the overall improvement of performance within the agriculture sector. The bulk of funds may or may not provide the full funding required, but the objective would be to participate in the promotion and advancement of the agriculture agenda.
Critics may argue that setting up a Giving Initiative is a waste of time and its more efficient to simply write a cheque to government agencies, charities, existing non-profit organisations that are already addressing some of these issues. That may be suitable for many, but the reality is that I would be more involved in championing a cause, when my activities extend beyond just writing a cheque. While I am not advocating ending such charity donations, I am exploring avenues to pool resources with like-minded friends / partners towards philanthropic activities that seek ambitious social returns. In here probably lies the attractiveness and some of the controversy behind the Chan Zuckerberg Initiative. Mark’s LLC is still very much in his control to do as he pleases. In making a pledge to give away his fortunes during his lifetime, he has essentially chosen to do so at his and his wife’s full discretion. The method he has chosen to give is not novel in nature, but I believe the Zuckerbergs’ announcement is a call to arms for many (and not just billionaires) to take a more active effort in giving away earnings, and getting more involved and more purposeful about improving the world for future generations!
