Rhodri Davies, Programme Leader, Giving Thought

Rhodri Davies

Head of Policy

Charities Aid Foundation

The role of giving


3 December 2015

Philanthropy made it right to the top of the headlines this week, with the news that Facebook founder Mark Zuckerberg and his wife, Priscilla Chan, have pledged to give away 99% of their shares in the company over the course of their lives. The shares are currently worth around $45 billion, so by any standards this is a vast donation.

Zuckerberg and Chan made the announcement on their Facebook page (naturally), in the form of a letter to their new baby daughter Max in which they make a series of promises about what they will do to try to make the world a better place by the time she is grown up. As the father of two small girls myself, the only promises I can recall making are more along the lines of “I promise daddy will stop crying if you go to sleep…”, so it’s pretty impressive that they can manage that kind of perspective at this point.

The Chan Zuckerberg initiative

The letter outlines the couple’s plans to channel their money through a new organisation, the Chan Zuckerberg Initiative (which sounds curiously like a chess gambit to me), which will initially focus on “personalized learning, curing disease, connecting people and building strong communities”. Intriguingly, this organisation is not actually a non-profit, but rather a Limited Liability Company. As the New York Times notes, this is almost certainly a conscious decision based on a desire to avoid limiting their options in terms of what they can fund and how:

By using a limited liability company instead of a non-profit corporation or foundation, the Zuckerberg family will be able to go beyond making philanthropic grants. They will invest in companies, lobby for legislation and seek to influence public policy debates, which non-profits are restricted from doing under tax laws.”

It is interesting to see another major technology philanthropist shy away from traditional non-profit structures, after Google’s Larry Page comments last year about the advantages of for-profit structures when it comes to achieving social good. I wonder whether it suggests that the long-term viability of the foundation as the vehicle for philanthropy is in doubt? It certainly raises questions about the legitimacy of philanthropy, if donors are deliberately starting to avoid regulated structures in order to circumvent the rules limiting what philanthropic money can be spent on. A fascinating question, which I plan to come back to in another blog post soon.

Dissenting voices

What I wanted to focus on here, however, is the reaction to Zuckerberg and Chan’s announcement. Whilst much of the coverage has been largely positive, with many congratulating the couple on making such a large commitment, there have also been plenty of dissenting voices. Some of this can be written off as cynicism from people who would never acknowledge that wealthy people can ever do anything good, but some of it is also more considered criticism of Zuckerberg’s particular approach and of philanthropy in general.

A lot of this criticism follows three broad arguments:

  1. Zuckerberg’s philanthropy is irrelevant because the damage he does through his approach to business outweighs any good he might do through giving
  2. Philanthropy by people like Zuckerberg can never address the real causes of social inequality, because it is a product of that inequality in the first place
  3. Even if Zuckerberg’s stated intentions are good, there is a real danger to society in letting a small number of extremely wealthy people dictate the course of policy and social progress

It is interesting to see these arguments coming to the fore once more: in my forthcoming book about the role of philanthropy I have a whole chapter looking at “criticisms of philanthropy”, and these criticisms are ones that we can see being leveled at big donors throughout history. For instance, two of the biggest names in philanthropy, Carnegie and Rockefeller, were subjected to a barrage of criticism on all three grounds highlighted above.

Criticism in the past

Carnegie came under fire for his attitude towards employment, and the frankly awful way he treated many of his workers. He was noted for using strong-arm tactics against trade unions, including violent action to break strikes, and did not have a particularly saintly reputation when it came to his business dealings more generally. Carnegie himself robustly defended his philanthropy in this context, arguing that his responsibility was merely to maximise the amount of money he could make and then choose how to give it away. In doing so, he exhibited some pretty unappealing attitudes towards the poor and towards his own employees:

“Workingmen on both sides of the Atlantic questioned whether the Pittsburgh steelmaker’s huge charitable donations would have been better spent on higher wages, improved working conditions, and an eight- rather than 12-hour workday. Carnegie responded in a speech in Pittsburgh that he kept wages low to remain competitive, and that even had it been possible for him to share some of his profits with his workers, it would have been neither “justifiable or wise” to do so. “Trifling sums given to each every week or month … would be frittered away, nine times out of ten, in things which pertain to the body and not to the spirit; upon richer food and drink, better clothing, more extravagant living, which are beneficial neither to rich nor poor.” The lower the costs of labor, the higher the profits. Far better, in his view, to squeeze money from workers’ paychecks, aggregate it, and give back to the community in the form of public libraries and concert halls.Nasaw, D. (2006) Looking the Carnegie Gift Horse in the Mouth: The 19th century critique of big philanthropy

Rockefeller, meanwhile, came in for the same sort of criticism of his business practices; and also for criticism of the role that his philanthropy allowed him to play in shaping the direction of policy and social spending. An early 20th century US Senate Commission (the Walsh Commission) was particularly dogged in its criticism of Rockefeller, and its chairman, Frank Walsh even came to the conclusion, having studied Rockefeller’s philanthropy, that foundations “appear to be a menace to the welfare of society”.

Zuckerberg funding schools

Mark Zuckerberg will be well aware of this sort of criticism of the way in which philanthropy can distort public policy and spending priorities because he has already been subject to some of it himself. His first major venture in philanthropy, in which he put $100m into supporting public schools, met with a strong chorus of disapproval from many within the education world who felt that Zuckerberg’s focus on charter schools was damaging to the broader picture of public education. This project is generally reckoned to have been a failure, and the whole fascinating story was detailed in a New Yorker article last year, which is well worth reading.

Interestingly, Zuckerberg himself has acknowledged that his approach was flawed, and has claimed to have learned the lessons from getting his fingers burned in this previous philanthropic foray. It is noticeable that the letter containing the announcement of Zuckerberg and Chan’s new commitment contains phrases like “We must engage directly with the people we serve. We can’t empower people if we don’t understand the needs and desires of their communities,” and “we must back the strongest and most independent leaders in each field. Partnering with experts is more effective for the mission than trying to lead efforts ourselves.”

These are pretty positive statements to my mind, which encapsulate some key principles of how philanthropy should be done, so it is encouraging to see them set out up front. It does suggest that Zuckerberg has developed that most precious gift for philanthropists, humility, and taken on board the need to engage with those on the ground before deciding how best to help them. Of course, how that pans out in practice remains to be seen.

Philanthropy addressing inequality

Unlike the first two criticisms outlined above, the third one- that philanthropy cannot be used as a tool to address inequality – is not really aimed at anything specific that Zuckerberg is doing, but rather at what he is, or represents i.e. a fully paid-up member of “the 1%”. I have written about the thorny relationship between philanthropy and inequality in the past, and it is definitely a major challenge for philanthropists who want to achieve real social change.

However, those who simply claim that philanthropy will always be part of the problem rather than the solution are guilty of failing to engage with the world as it is, rather than how they would like it to be. The reality is that capitalism is the principal system within which we are operating today, and whilst there may be those who would ideally prefer to see it replaced by something else in the future, anyone who wants to deal with the immediate problems facing the world right now needs to accept that the pragmatic course of action is to look for ways of addressing social inequality within our current framework. Philanthropy can be one tool for doing this, although the lesson we must take from the criticism leveled at it is that we need to think very carefully about what form that philanthropy should take if it is to be an effective tool.

The kind of utopian socialist thinking which leads people to decry philanthropy has a rich tradition. George Orwell, for instance, argued that:

“[W]ith admirable, though misdirected intentions, [philanthropists] very seriously and very sentimentally set themselves to the task of remedying the evils that they see. But their remedies do not cure the disease: they merely prolong it. Indeed, their remedies are part of the disease… They try to solve the problem of poverty, for instance, by keeping the poor alive; or, in the case of a very advanced school, by amusing the poor. But this is not a solution: it is an aggravation of the difficulty. The proper aim is to try and reconstruct society on such a basis that poverty will be impossible. And the altruistic virtues have really prevented the carrying out of this aim… [M]en who have really studied the problem and know the life – educated men who live in the East End – [are] coming forward and imploring the community to restrain its altruistic impulses of charity, benevolence, and the like. They do so on the ground that such charity degrades and demoralises. They are perfectly right. Charity creates a multitude of sins.” Orwell, G. (1909) The Soul of Man Under Socialism

And critics of philanthropy today continue to echo this sort of argument. The philosopher and cultural theorist Slavoj Žižek, for instance, cited Orwell approvingly in a talk he gave for the RSA back in 2010. And some philanthropists have even leveled the criticism at themselves: Peter Buffett, the son of famed philanthropist Warren Buffett, argued something along these lines in an opinion piece for the New York Times back in 2013.

Power to influence social progress

Philanthropists, and those who think philanthropy has an important role to play in society, would do well to heed these criticisms. Although it is probably not possible to assuage hard-line Marxists (for whom philanthropy will always be anathema), or those who remain cynical or suspicious about the power afforded to those who are able to use their wealth to influence social progress, by trying to understand and counter their arguments, we can learn a great deal about how philanthropy can best be done.

In particular, there is a growing realisation that in order for philanthropy to be a true force for progress when it comes to dealing with inequality, it cannot simply be about transfers of money – it must involve a transfer of power as well. Zuckerberg and Chan seem to have realised this to some extent, with their acknowledgment of the importance of learning from experts and engaging communities and individuals in finding the solutions to their own problems.

However, it will not be easy: when you have put so much effort into gaining both wealth and power, the temptation is to hold on to them. And whilst philanthropy has long provided a template for disposing of wealth, that has not always been accompanied by a disposal of power. The danger is that philanthropy then becomes merely a means for wealthy individuals to advance their own views and pet projects, rather than a way of seeking real solutions to the big challenges facing society, which will reinforce the views of those who already question the effectiveness and legitimacy of philanthropy.

One thing is for sure: with $45bn at their disposal, Mark Zuckerberg and Priscilla Chan have a real opportunity to test the idea of philanthropy as a force for changing society for the better. Let’s hope they can turn their promising words into reality.