How Mark Zuckerberg’s paternity leave affects the rest of us

7 Dec 2015 | Author: | No comments yet »

Chan Zuckerberg Initiative Savvy Enterprise for Fb’s Founder.

Facebook founder Mark Zuckerberg and his wife, Priscilla Chan, last week pledged to give away 99% of their Facebook shares — about $45 billion — within their lifetime. It wasn’t a huge surprise: The first millennial chief executive of a Fortune 500 company, Zuckerberg is part of a generation of men who place more value on work-life balance and taking time off with their children.Facebook CEO Mark Zuckerberg has answered critics who said his massive donation of wealth to a charitable fund was less was not as heartfelt and philanthropic as it may have originally appeared.

With a picture on his Facebook page of a car seat, a stroller and his dog, Mark Zuckerberg announced last month that he’d be taking two months of parental leave. Zuckerberg, however, is actually transferring his wealth into a limited liability company which, as the commentator Edward Luce points, out would not be considered a charity by the US Inland Revenue. His company offers four months of paid leave to both male and female employees, and workers can take their four months at any time during the child’s first year. I, too, believe it will help better the lives of millions, and if they invest in some type of scientific research, it could save or significantly better the lives of even more. “Giving” your fortune to a corporation controlled by you and, ultimately, your heirs is not the same as giving it to charity. In other words, Zuckerberg has engaged in some very effective tax planning, something that the titans of new technology have proved themselves pretty adept at.

His chief operating officer is none other than “Lean In” maven Sheryl Sandberg, who advocates not only for more women in leadership but also for more dads doing diaper duty. He did, however, display his savvy in navigating a dizzying tax code and has potentially set himself up to do plenty of good while receiving substantial charitable tax deductions down the road. But at the risk of sounding like the Grinch one has to pose the obvious question: would the businessman not be better off making a large payment to his country’s tax authorities? By doing so, he could ensure that more resources are devoted to the repair of America’s ageing infrastructure, or to the filling of gaps in an educational system from which he has drawn huge benefit. Still, it was a huge milestone — both in the national discussion about parental leave and in the ongoing debate over the gender gap and how to solve it.

The initiative announced at the birth of the couple’s daughter Maxima stands in contrast to the Bill & Melinda Gates Foundation, which is a nonprofit and makes regular financial statements that are available to the public. We have reached new depths of cynicism when a couple say in a letter to their newborn child that “our hopes for your generation focus on two ideas: advancing human potential and While it’s tempting to cast this move as a naked instance of tax evasion, I’m more inclined to view this as Zuckerberg feeling that he will be able to accomplish more good with the funds in his direct control. Zuckerberg and Chan registered their LLC last week before they announced they would be giving away 99 per cent of their fortune by donating up to $1billion each year. Personally, I have more faith in someone like Zuckerberg to use $45 billion effectively than if it were just dumped in the lap of various charities across the world.

However, Zuckerberg said on Facebook on Thursday that ‘any net profits from investments will also be used to advance this mission’ and that he would pay capital gains tax on any shares sold. But despite the idealistic rhetoric that accompanied his message, the founder of the world’s largest social media network never used the word “charity” in describing his and Chan’s new venture. Fans of these liberal and progressive icons — especially Bill Gates and Zuckerberg — act as if these billionaires have already divested themselves of their wealth. He said that the structure ‘enables us to pursue our mission by funding non-profit organizations, making private investments and participating in policy debates’, citing recent gifts to a non-profit in education and money given to Centers for Disease Control efforts against the Ebola virus.

Representatives working with the Chan Zuckerberg Initiative have even apparently reached out to some to reiterate that what they’re doing is not, in fact, charity work. It seems unlikely that he’ll be completely out of touch from Facebook (though neither are many professional women who step away for a few months to take care of a new child). The social network founder said that he receives no tax benefits from the set up, and that if he had donates to a traditional non-profit he would have been able to receive tax benefits from the gifts. Beer and sweets may rot the teeth or gut, but their providers did at least recognise their social responsibilities at a time when the State lacked the will and the capacity to meet the needs of the poorest.

Zuckerberg may have decided to set up an LLC after his experience in New Jersey in 2010 where he donated $100million to improve its public schools but the money had little impact on education. One suspects that Zuckerberg does not make a big distinction between venture capital type investment which creates employment and spreads wealth, and donations to good causes.

Research from ‘s Center for Work & Family found in 2011 that 76% of fathers are back to work within a week of a child’s birth or adoption; 96% return within two weeks. He said in his Facebook post that the LLC will be focused on ‘personalized learning, curing disease, connecting people and building strong communities. Though they’re hardly new or uncommon, LLCs are provided a degree of financial and legal protection under U.S. law that have been employed in the past for less than noble intentions. There has been an arcane, technical conversation brewing about whether going the LLC route is more selfish than creating a foundation or making donations outright. The has said that some types of LLCs have been used “for money laundering and other financial crimes” because of the flexibility and protection they offer their operators.

University of California economics professor Gabriel Zucman told that he took issue with the Facebook founder promoting ‘equality’ and starting the Delaware-based organization. It is relatively new for philanthropy, but it is being used by eBay founder Pierre Omidyar, Laurene Powell Jobs, widow of the late co-founder of Apple, and others.

Seeking to burnish their image, ease their consciences, head off their detractors or simply do some good, people of great wealth are opening the cheque book as never before. Bureau of Labor Statistics data show that only 13% of U.S. full-time employees had access to paid family leave in 2012 — much of which probably was maternity leave. And the once described LLCs as entities that “may also be vulnerable to misuse because they can be managed anonymously as there is no public disclosure of the members’ identities.” There’s even that some people in the U.S. without the proper documentation have used LLCs to work legally in the country without tipping off the government. That’s starting to change, of course, as more companies — even those outside the cushy confines of Silicon Valley — add more paid leave for fathers or come up with innovative solutions. Miller says LLCs in general have a significantly more multi-dimensional structure than what’s afforded to traditional public charities or private foundations recognized as 501(c)(3) tax-exempt entities by the IRS. “If you set up a 501(c)(3) foundation, the new foundation will be legally obligated to pursue a stated charitable purpose and to dedicate its income to that purpose,” Miller says. “A 501(c)(3) would be restricted with respect to its political activity, and a foundation like that would be restricted with respect to the types of investments it can make.” So under his new LLC, Zuckerberg is free to invest in, for example, for-profit tech firms.

But it has been attacked for its ‘technological style’ and ‘failure to deliver within the timescales originally delivered’, according to the web publication, SciDev net. Many other donors have adopted the acceleration approach favoured by Gates, but in October, Bill Gates himself acknowledged that ten years ago, he was “pretty naive about how long the process would take”.

In his view, “the Foundation underestimated the effort required to implement new technologies in countries without basic services, including clean water and reasonable medical care”. Such benefits serve two functions: They help attract employees, particularly younger ones, who are more interested in sharing parenting responsibilities and improving work-life balance.

Their billions can make waves. “Is a status update enough for the scale of the influence they will have on all of these spheres?” asks Janet Camarena, director of transparency initiatives at the Foundation Center, which collects philanthropy data. “There is no regulated transparency there.” While the Foundation has spent $1bn on global health research teams developing drugs to treat Aids and TB, Gates has acknowledged that it could be another decade before even the most promising initiatives bear fruit. In fact, real progress is taking place in Africa due to the adaptation at city district and village level of technologies, particularly mobile devices, developed elsewhere. If it makes other investments that didn’t qualify as charitable donations, then the tax features of that would flow through individually.” So basically, Zuckerberg gets no added benefit for transferring his shares over to the new LLC, but whenever this new entity makes a charitable donation, the billionaire is treated to a tax deduction.

In his latest annual letter, Bill Gates hinted at a different approach, with a particular emphasis on areas such as crop yield enhancement and the development of mobile-based banking. We will do our part to make this happen, not only because we love you, but also because we have a moral responsibility to all children in the next generation. The Microsoft co-founder clearly has been on a steep learning curve and it might be well worth the while for the 31-year-old Zuckerberg to start picking the brains of his elder and erstwhile rival.

Whether we like it or not, globalisation has resulted in a huge concentration of resources in the hands of global corporations and the people who control them. It would, of course, be nice if Facebook could be persuaded to cough up more than the measly £4,327 it paid the British taxman last year, but in the absence of dramatic immediate progress on the tax front , the next best thing would be a surge in corporate giving from that source of the type at least hinted at by Mark Zuckerberg this week.

Today, most people die from five things — heart disease, cancer, stroke, neurodegenerative and infectious diseases — and we can make faster progress on these and other problems. But over the long term, seeds planted now will grow, and one day, you or your children will see what we can only imagine: a world without suffering from disease.

Promoting equality is about making sure everyone has access to these opportunities — regardless of the nation, families or circumstances they are born into. Of course it will take more than technology to give everyone a fair start in life, but personalized learning can be one scalable way to give all children a better education and more equal opportunity. The internet is so important that for every 10 people who gain internet access, about one person is lifted out of poverty and about one new job is created. By partnering with schools, health centers, parent groups and local governments, and by ensuring all children are well fed and cared for starting young, we can start to treat these inequities as connected.

I will continue to serve as Facebook’s CEO for many, many years to come, but these issues are too important to wait until you or we are older to begin this work.

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