/ Social Sector / by Stefan Shaw

5 criticisms of billionaire mega-philanthropy, debunked

The response in Germany to the Zuckerberg/Chan grant initiative was mixed, to put it mildly. Among other critical voices, the general secretary of the "Bundesverband Deutscher Stiftungen" (Association of German Foundations) was quoted as saying: “Is that what he [Zuckerberg] is communicating as apparent giving actually giving at all? At the moment it doesn’t look like it.”

Well, if Zuckerberg/Chan do indeed deliver on their promise – and they sure are public with their pledge now – this would equate to around 40% of the cumulative capital of all foundations in Germany. Just by posting a letter on Facebook... This might explain why the representative of the majority of Germany’s foundations is quoted as criticizing one of the largest pledges of all times instead of hailing it as the shining example for giving that it is.

William MacAskill, author of the book Doing Good Better, also has his doubts regarding the public reactions to the pledge. With his permission and the permission of QZ.com we are reprinting his response to the cynical criticism that the Zuckerberg/Chan pledge has had to face.

5 criticisms of billionaire mega-philanthropy, debunked
by William MacAskill

“Couple decides to give majority of their earnings to charity” is hardly a headline that you’d expect people to take umbrage at. But when you replace “couple” with “Mark Zuckerberg and Priscilla Chan,” suddenly everyone goes crazy. Even though the majority of commentators have been positive, a significant proportion of people have reacted with anger or even condemnation to the news this week that the first couple of social media will be donating 99% of their Facebook shares (some $45 billion) to a new charitable initiative.

Even for the internet, the cynicism was astonishing — and also inaccurate. Here are some of the most popular criticisms, and why they’re wrong:

“It’s just a tax dodge!”

Some commenters suggest donating money on such a large scale is just a tax dodge that will make Zuckerberg and Chan richer than he would have been otherwise. But this is an extreme misunderstanding of US tax law. While Zuckerberg will get a tax reduction because he is giving away 99% of his money he will still be giving away close to 99% of his after-tax income as well.

There’s a legitimate question of whether all donations to non-profits should be tax deductible in this way, but that has nothing to do with the philanthropist. The public has chosen to make non-profit donations tax deductible in order to encourage more of them — and in this case Zuckerberg and Chan will be complying with both the letter and spirit of the law.

“It’s not really a donation.”

The couple are using a Limited Liability Corporation (LLC) as the vehicle for their donation, in order, it seems to retain more control over the disbursement of funds. Some have suggested that money funneled through an LLC instead of directly given to a charity or foundation shouldn’t be called a donation. This, however, is exactly the right move if you want to make the biggest difference possible. By giving to an LLC, Chan and Zuckerberg give themselves the option to do good by investing in for-profit companies as well as by donating to non-profits.

We already know you can have a big impact by investing in for-profits, whether in the field of solar energy, meat substitutes, or biomedical research. Indeed, insofar as there are 20 times as many businesses as public charities, philanthropists would be unnecessarily straightjacketing themselves by pledging to only donate money to charities.

“They should give it to the government.”

Others say that by giving all their resources to the Chan Zuckerberg Initiative (another example would be the Bill and Melinda Gates Foundation), the couple is presuming to know how to better allocate the money than the governments that exist to represent the needs and aspirations of the general public. If he really wanted to help the American people, why didn’t they give their money to the US federal government? The US Treasury accepts donations from anyone.

Do you choose to donate to the US federal government? I didn’t think so. Only $5 million was donated to it in 2014, which is just 0.001% of all US charitable giving, and 0.0001% of its budget. Perhaps Zuckerberg and Chan are wrong to think they can do more good with their money than Congress can — but in that judgement, they are apparently joined by 99.999% of the general public.

One key reason here is that the couple, like Bill and Melinda Gates, appear likely to allocate a large fraction of their wealth to people in extreme poverty, those scraping by on less than $2 a day. By targeting this demographic they can do more to reduce inequality and suffering in the world. Sadly, Uncle Sam chooses to spend less than 1% of its budget on people in such dire circumstances.

“Mega-philanthropy is non-democratic, because it involves a few individuals shaping the future.”

This complaint might be a reasonable if Zuckerberg and Chan were planning to sway political processes via their donations. But, as far as we can tell from his statement at least, they plan to use the money to alleviate disease, improve education, and fight poverty. These are goals that are unequivocally good: A healthier, richer, better educated populace allows the poorest in society to have more of a voice. Ideally, such donations are actually a force for democracy rather than against.

Moreover, what alternative do Zuckerberg and Chan have? Even if they somehow were able to allow the entire world to decide where the $45 billion were to go, this still wouldn’t solve the problem, because it wouldn’t give a voice to future generations (which they explicitly acknowledge the importance of).

Perhaps the ultimate democratic solution for a philanthropist is to simply transfer cash to the poorest people in the world, so that they can use the money as they see fit. Given his Facebook co-founder Dustin Moskovitz’s support for GiveDirectly, which runs exactly that program, this is not as unlikely as it may seem.

“They are still very rich, so they don’t deserve praise.”

It’s true that men and women who have achieved wealth on the scale of Chan and Zuckerberg will still be phenomenally wealthy, even after giving away 99% of their Facebook shares. Perhaps we want to encourage them to go even further with their donations. But, given that almost no one with comparable amounts of wealth donates as much as they do, surely we want to incentivize behavior like theirs rather than condemn it?

There’s a phenomenon psychologists call “anticipated reproach”. It explains why vegetarians and feminists get a bad reputation, even if they’re just going around trying to make the world a fairer place. The phenomenon is that, if someone does a moral action, you subconsciously worry that they’ll judge you negatively. We criticize these individuals to prove their moral character is not perfect — in comparison, the hope is, we won’t look so bad ourselves.

Yes, Zuckerberg and Chan are still among the richest people in the world. Yes, they could do even more than they’re planning to right now. But given that few of us would make the same decision were we in their position, I think we should have nothing but praise.

Reprinted with permission of William MacAskill and QZ.com
Originally, the article was published here.