Zuckerberg, Gates, Buffett and the triumph of competitive philanthropy

2 Dec 2015 | Author: | No comments yet »

Facebook CEO, now a father, will give away most of his money.

MANY people take to social media to share major life events. Talk about birth announcements: Facebook CEO Mark Zuckerberg and his wife say they’ll devote nearly all their wealth — roughly $45 billion — to solving the world’s problems in celebration of their new baby daughter, Max.

SAN FRANCISCO — Mark Zuckerberg’s pledge to give away Facebook stock worth $45 billion puts him at the forefront of a philanthropic class that has promised to donate most of their fortunes.McKinsey & Co. bought a stake in the property e-commerce unit of Ping An Insurance (Group) Co., marking the U.S. consultancy’s first investment in an overseas company in its more than 80-year history. The move could have even broader effect as an inspiration to others – especially young people – to invest their wealth back into the community, philanthropy experts say. The elite list includes three men — Microsoft co-founder Bill Gates, stock market sage Warren Buffet and Oracle co-founder Larry Ellison — who are wealthier than Zuckerberg, according to Forbes magazine’s latest rankings. McKinsey has advised Ping An for more than a decade, helping shape strategies that grew the Shenzhen-based insurer into a conglomerate spanning banking, trust, securities and real estate.

The e-commerce unit, set up in May last year, has signed brokering agreements with dozens of China’s biggest developers and new-home sales on its pinganfang.com online platform may exceed 300 billion yuan ($47 billion) next year, Chairman Nok Chong said in the statement. The announcement stunned the charity world. “It’s incredibly impressive and an enormous commitment that really eclipses anything that we’ve seen in terms of size,” said Phil Buchanan, president of the nonprofit Center for Effective Philanthropy. Ping An has hired former McKinsey consultants for senior management roles, including former President Louis Cheung and Gregory Gibb, who now runs the insurer’s online wealth management and peer-lending unit Lu.com. By comparison, the Bill and Melinda Gates Foundation has an endowment of just over $41 billion, which includes wealth donated by the Microsoft founder and his friend, the businessman Warren Buffett.

The new initiative will be organized as a limited liability company, however, rather than as a nonprofit foundation. “They want the most flexibility and they are going to use a wide variety of activities to achieve their mission,” Rachael Horwitz, a Facebook spokeswoman, said via email. “So in that way this is not a foundation nor is it entirely charitable.” The notion of investing money in companies that tackle social issues isn’t new, but it has gained more currency among a younger generation of philanthropists, particularly in the tech world. Successful tech entrepreneurs, who have made fortunes designing solutions to change the status quo, bring a more critical eye to philanthropy. “I see them doing their own independent research and thinking about how they can change the world. In 2010, Zuckerberg launched Startup:Education, a grantmaking organization, with a high-profile gift of $100 million over five years for schools in the Newark, N.J., area. He led other prominent Silicon Valley figures in forming a group, FWD.us, that lobbied and gave donations to congressional candidates in an unsuccessful effort to promote immigration reforms. More recently, in November, the couple pledged their commitment to the Giving Pledge, an organization that invites wealthy individuals and families to pledge their wealth to good causes either over a lifetime or as part of a will.

Depending on how much of the new effort is devoted to lobbying, it could raise new questions about the influence of money in today’s politics, some experts said. In the letter to their daughter, Zuckerberg and Chan described their goals as “advancing human potential and promoting equality.” They added: “We must make long term investments over 25, 50 or even 100 years.

Last year the San Jose Repertory Theatre, a 34-year old theatre group in Silicon Valley, filed for bankruptcy after it was unable to raise enough in donations. He and Chan, a 30-year-old pediatrician, have previously donated $100 million to public schools in Newark, New Jersey, and pledged $120 million to schools in poor communities of the San Francisco Bay Area. On behalf of future generations, I thank them.” “Our lists of the top donors are usually dominated by people in their 70s or 80s,” Stacy Palmer, editor of the Chronicle of Philanthropy, told Reuters. “This is a message to other young people who are deciding what to do with their great wealth.” Their initial letter said their efforts would initially focus on personalised learning, medical research and two causes that sound suspiciously “on brand” for Facebook: “connecting people and building strong communities”. Because Mr Zuckerberg has made his vast fortune by creating one of the most valuable and in-depth repositories of people’s personal information online, people should be sensitive to his charity lobbying for regulations and promoting policies that advance his firm’s interests.

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