Charitable giving: Follow Mark Zuckerberg’s strategy

10 Dec 2015 | Author: | No comments yet »

The gifts of the moguls.

THE month of December began with something to like: a post on Facebook in which its founder, Mark Zuckerberg, and his wife, Priscilla Chan, promised to use the vast majority of their vast fortune to support charitable causes. (More than 1.5m people responded with a thumbs-up.) In celebration of the birth of their first child, the pair announced the creation of the Chan Zuckerberg Initiative, which will eventually receive 99% of the shares they own in Facebook, a pile currently valued at $45 billion.SAN FRANCISCO (AP) – Facebook CEO Mark Zuckerberg is offering words of support for Muslims who fear retaliation for the recent violent attacks by Islamic extremists in Paris and San Bernardino.

In the wake of those attacks, Zuckerberg wrote on his personal Facebook page Wednesday that he wants to assure Muslims they are welcome on Facebook and that “we will fight to protect your rights and create a peaceful and safe environment for you.” Republican presidential candidate Donald Trump has proposed barring all Muslims from entering the United States. Zuckerberg did not refer specifically to any proposal, but the co-founder of the world’s biggest social network said, “As a Jew, my parents taught me that we must stand up against attacks on all communities.” The first concerns how such a staggering fortune could ever have been accumulated; the second whether philanthropy can salve the sting of the increasingly unequal distribution of wealth that it exemplifies. Research* by Emmanuel Saez and Gabriel Zucman of the University of California, Berkeley, suggests that the share of American wealth held by the richest 0.1% of households rose from 7% in 1979 to 22% in 2012; that of the richest 0.01% (about 16,000 households, with average wealth in 2012 of $371m) jumped from 2% to 11%.

That, in turn, could lead to political crises—a point made most recently by Thomas Piketty, an economist at the London School of Economics, in his book “Capital in the Twenty-First Century”. But another fear is that unequal wealth may be a sign of inefficiency, accumulated not just through economically beneficial innovation, but also by exploiting market power. In recent years the gap between the haves and the have-nots seems to have grown among individuals in part because it has been growing among companies. A recent paper by Jason Furman, Barack Obama’s chief economic adviser, and Peter Orszag, a former lieutenant of Mr Obama’s now at Citigroup, a bank, notes that the return on investment at the most profitable non-financial firms in America is at record levels.

Tech titans are often supported by network effects—the fact, for instance, that a social network becomes more valuable to potential users as the user base grows. Facebook’s users (like Uber’s drivers and passengers, and Amazon’s buyers and sellers) benefit from being on the same platform as everyone else. Consequently, Facebook’s technology and strategy only needed to be a bit better than the second-best social network to push it into the market-dominating position it now occupies.

Many businesses have become more concentrated in recent years: ten of the 13 sectors into which government statisticians divide American industry were more top-heavy in 2007 than in 1997. Facebook has acquired a number of popular social networks, such as Instagram and WhatsApp, turning their owners into moguls while defusing competitive threats. Gifts of extraordinary size are increasingly common, thanks largely to the efforts of Bill and Melinda Gates, whose foundation is supported by a $44 billion trust.

It chooses its donations carefully; as a result, the $5 billion it gave away in 2014 was less than the $7.4 billion it accumulated thanks to new contributions, investment income and rising asset values.

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