When Mark Zuckerberg announced the birth of his daughter, the announcement went well beyond the joys of being a first-time parent. In an open letter to his newborn daughter, Zuckerberg pledged to donate 99% of his Facebook stock to form a philanthropic organization to "advance human potential and promote equality."
Zuckerberg's stake in Facebook is worth about $45 billion and people were quick to praise the magnanimous gesture with his wife, Priscilla, to form the Chan Zuckerberg Initiative. The announcement racked up 1.5 million Facebook "likes" and heaps of positive press. The potential for the initiative is huge, as Zuckerberg is the seventh-richest man in the U.S., according to Forbes.
For anyone to give up a large chunk of their net worth is laudable, but how much praise does he deserve for the decision? A series of tweets from John Herrman, editor of online publication The Awl, suggests Zuckerberg's wealth was something of a burden that inevitably needed to be given away because it was impossible to spend otherwise. Here's what it means and why you should care.
The Man Who Won Unlimited Gorditas
(Read Herrman's entire story here.)
Herrman asks us to imagine a person who won a Taco Bell sweepstakes for one gordita a day for life. The lucky sweepstakes winner devises a way to keep on winning gorditas, racking up 100,000 lifetime supplies . This is an overwhelming amount considering only a few can be safely eaten each day, so guilt begins to form. What to do with all these gorditas? Even giving away lifetime supplies to friends isn't enough to lessen the burden of them.
With all this guilt, fellow people rich in gorditas (Warren Buffet, perhaps) say that the only thing you can do is give almost all of these lifetime supplies away. Deciding who to give them to is a challenge, but a plan is formed, "which was was forged during your years as a Taco Bell sweepstakes entrant."
In an open letter to the person's newborn daughter, the gordita hoarder says he has to make a difference.
After the big announcement, some members of the press quickly pounced on Zuckerberg for allegedly having ulterior motives beyond helping other people. Even the left-leaning New York Times talked about how the move benefits Zuckerberg.
Instead of forming a nonprofit organization, which is subject to stringent rules and standards, Zuckerberg opted to create a limited liability corporation to give the Chan Zuckerberg Initiative more flexibility and freedom. According to The New York Times, such a decision gives him a generous tax advantage and a too much power in how specifically the money will be spent.
"Instead of lavishing praise on Mr. Zuckerberg for having issued a news release with a promise, this should be an occasion to mull what kind of society we want to live in," writes the author. Who should fund our general societal needs and how? Charities rarely fund quotidian yet vital needs."
In Herrmann's parable about the Taco Bell sweepstakes winner, this character deals with similar questions. "Why, a citizen might wonder, must this man who has won 100,000 lifetime supplies of gorditas be the one who decides who eats them," asked Herrmann.
What Herrmann writes is that the move to make a donation was inevitable, as the alternative was throwing the extras away or using them to curry favor with politicians.
Down to Business
When it comes to billionaires giving away their wealth, Zuckerberg is following the example of Bill Gates and Warren Buffett. Maybe it's because they've both been into philanthropy for a long time now, but the two richest men in America escaped the sort of scrutiny Zuckerberg is receiving.
Gates and Buffett pledged back in 2010 to give at least half of their fortunes away to charitable causes, and recruited fellow billionaires from around the world to join them in their pledge. Despite their commitment to philanthropy, both these men stayed involved in their companies.
Gates eventually stepped down as CEO back in 2014, and the past few years have been especially kind to Microsoft as the company has steadily grown. After five years since the pledge, the company's stock price has doubled in value. Gates remains an adviser to the company he co-founded.
At Berkshire Hathaway, Buffet remains CEO and his letters to investors are still highly regarded. The conglomerate managed to weather the economic recession and regularly makes worthwhile investments under Buffet's knowledge of the market.Zuckerberg will follow their lead and stay on as head of his company for years to come. In the SEC filing about Zuckerberg's planned sale, he will retain his majority voting position "for the foreseeable future."