Pretty much anything related to Facebook founder Mark Zuckerberg and his wife Priscilla Chan garners headlines. The announcement that they would be giving away 99 percent of their fortune – currently worth $45 billion in Facebook shares – prompted visions of a massive private foundation in the manner of Bill & Melinda Gates Foundation. Instead the couple said they were putting the fund into a Limited Liability Company (LLC) to be called the Chan Zuckerberg Initiative that would make grants, engage in political advocacy and invest in social enterprises. Welcome to a hybrid, post-charity world.
Pundits have made much of the announcement. An article in The Globe and Mail all but accused the couple of tax evasion, fuzzy thinking and questioned their motives related to public benefit. I’m not so judgemental. The announcement, which was made to coincide with the birth of their first child, seems sincere and altruistic. They made a public giving pledge about the allocation of their wealth: one percent for personal use and 99 percent for self-defined public benefit. Their child and her as yet unborn siblings will always know where they stands with their inheritance.
The announced LLC structure is interesting, and needless to say, vague. In their early 30s, Zuckerberg and Chan rightly want flexibility in terms of their ultimate mission. The desire for flexibility is consistent with almost any founder of a private foundation or donor advised fund. Create a legal container to receive the funds that is pliant enough to address future, as yet undefined public needs.
The triple purpose is post-charity and probably requires a variety of legal entities to achieve the goals. Partisan political activity is not charitable and the line is brightly drawn in U.S. law. If you subscribe to the notion that the government and political process are key influencers of change, then there are severe limits with a registered charity or U.S. 501c(3). Ditto with the social enterprise goal. If you believe that capitalism can provide solutions to the challenges of the world, selected investments in entities that produce a positive social or environmental outcome make sense. Also, an LLC is not restricted in terms of holding it’s founder controlling shares in Facebook, unlike a private foundation. Think of the three purposes as a balanced portfolio to achieve the deepest and broadest outcomes.
What will the couples wills look like? I suspect – and this is pure speculation – that there are at least two legal entities underneath the announcement: a private foundation and the announced LLC. The entities possibly have overlapping governance and ownership (to the extent possible). Expect to see funding during their lifetimes, particular over the next decade while Facebook is thriving. Their wills, or wills and trusts, may complete the giving not made during life. Of course, that assuming that the couple doesn’t divorce or have a change of heart or fortunes.