Zuckerberg’s faux-lanthropy model is catching on in tech, and it’s troubling

Disconnect is a weekly column in which Tech in Asia’s Charlie Custer pokes at holes, plays devil’s advocate, or otherwise attempts to rain on the tech industry’s parade.

Crushing it: Facebook’s Mark Zuckerberg runs the three biggest social networks on the planet. Photo credit: Robert Scoble.

There are two things the tech industry loves, or at least loves talking about: making money and improving the world.

Doing the former is far easier than doing the latter, of course. Only the best companies ever manage to do both. Traditionally, wealthy individuals have separated the two goals: your company brings in the profit, and your charitable organization works toward your world-improving goals.

Bill Gates, Microsoft, and the Gates Foundation are great examples of this traditional approach. Microsoft, Gates’s tech company, certainly changed the world in the sense that it was at the center of the personal computing revolution. And it made Gates a wealthy man. But Gates realized that this for-profit company wasn’t the best vehicle for his world-improving ambitions, so he and his wife set up the nonprofit Bill and Melinda Gates Foundation. What Gates has done with that will likely have a more significant impact on the world than Microsoft.

People will have forgotten Steve Jobs, but there will be statues of Gates

Microsoft, ultimately, is just a computer company. Its products changed the world, but had Gates never founded it, it’s almost inevitable that some other company would have accomplished the same thing. The same couldn’t be said of the Gates Foundation, though. Through massive charitable donations, the Gates Foundation is already damn close to eradicating polio. This year, the world could see its last-ever case of the deadly disease, and while that’s not just Gates’s doing, his foundation has played a large role. But what the Gates Foundation is doing with malaria may be even more meaningful. That disease kills hundreds of thousands of people each year, and Gates is working to eliminate it and making real progress. There’s a good chance that by the time he dies, he’ll have seen both polio and malaria wiped from the face of the earth.

“I firmly believe that 50 years from now he’ll be remembered for his charitable work,” author Malcolm Gladwell said of Gates. “No one will even remember what Microsoft is, and all the great entrepreneurs of this era, people will have forgotten Steve Jobs. There will be statues of Gates across the third world […]”

The Zuckerberg way

Zuck going on a magic toboggan ride. Image credit: Facebook.

You may recall that last year Mark Zuckerberg and his wife made a pledge to donate much of their fortune (in the form of Facebook shares) in the interest of making the world a better place. But Zuckerberg didn’t create a nonprofit like Gates did. Instead, his Chan Zuckerberg Initiative is a for-profit LLC.

To be clear, there are some legitimate reasons for doing this, as long as the person at the head of the LLC is truly acting in the interests of the company’s mission. The for-profit structure allows the Chan Zuckerberg Initiative to dodge some of the requirements nonprofits must hold to (like donating five percent of their endowment to charitable causes). To put it simply, this structure gives Zuckerberg more control than he would have at a nonprofit.

Call it faux-lanthropy. Call it philanthrocapitalism.

Zuckerberg can do whatever he wants with his money, of course. One could argue that I should be grateful he’s created the Chan Zuckerberg Initiative with it, rather than (for example) building a giant golden statue of himself or buying up the world’s entire supply of grape-flavored chewing gum. And if the initiative is well led and sticks to its mission, it certainly could be as impactful as a nonprofit at accomplishing its goals.

Giving without giving