Sunday, December 23, 2012

The Real Significance of Zuckerberg's $500 Million Donation

By now, it has been widely reported that Facebook founder and CEO Mark Zuckerberg has donated approx. $500 million of Facebook stock to charity.  In particular, his donation was made to the Silicon Valley Community Foundation to aid education and health efforts, and represents the first of several such gifts to come.  While the gift is substantial and noteworthy in itself, it also represents something more significant.  In the not too distant past, the ultra-wealthy conducted philanthropy in a different and very predictable way: late in life, they would start a private foundation in their own name and bequeath funds to that private foundation, the investment returns from which would later be used to fund charitable activities.  Zuckerberg's gift represents two key shifts from this formula: (i) the gift was made early in life; and (ii) the gift was not given to his own private foundation but instead a community foundation.  Both portend philanthropic efforts with more immediate impact.  The trend in (i) follows the lead of Bill Gates, while (ii) follows Warren Buffett's lead.  Though the donations to the Silicon Valley Community Foundation likely come with substantial restrictions (those details have not been released), they are still much more likely to be put in use quickly than funds placed in a private foundation.  It looks like Gates, Buffett, and now Zuckerberg have started a new wave of wealthy philanthropists with hopes of making notable impact during their lives.  Winkelvoss twins, your move...

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