I am not dodging tax: Mark Zuckerberg

Without a doubt, the revelation of two new Zuckerberg’s (you heard right, Zuckerberg’s new daughter Max and the new LLC Chan Zuckerberg) have raised a lot of media attention over the last few days.

In the same post, Zuckerberg said he and Chan will, over time, commit 99 percent of their Facebook stockholdings to such causes as fighting disease, improving education and “building strong communities”.

“In fact, if we transferred our shares to a traditional foundation, then we would have received an immediate tax benefit, but by using an LLC we do not and just like everyone else, we will pay capital gains taxes when our shares are sold by the LLC”, wrote Zuckerberg, according to The Guardian. The changes excite many in the charity world but also raise questions about effectiveness, ethics and the impact on older charities that may not share in any windfall.

“They acknowledged that it takes time to become good at something as hard as effective philanthropy”, said Phil Buchanan, president of the Centre for Effective Philanthropy.

By comparison, the Bill and Melinda Gates Foundation has an endowment of just over $41 billion, which includes wealth donated by the Microsoft founder and his friend, the businessman Warren Buffett.

Of course, despite the extremely generous move, the couple will still be worth hundreds of millions of dollars, and Zuckerberg said he would continue as the CEO of Facebook for “many many years to come”.

Amir Pasic, dean of Indiana University’s Lilly Family School of Philanthropy, drew parallels between these modern-day philanthropists and those from the earlier Gilded Age, roughly a century ago, when the Carnegie, Ford and Rockefeller families pioneered a new type of charitable foundation.

Limited liability companies have been used by some other wealthy philanthropists to give themselves more control over how their money is used. He led other prominent Silicon Valley figures in forming a group, FWD.us, that lobbied and gave donations to congressional candidates in an unsuccessful effort to promote immigration reforms.

Zuckerberg and Chan, in announcing their pledge, said potential donors “should not wait to give back”. “The greatest challenges require very long time horizons and can not be solved by short term thinking”. Zuckerberg is more than guaranteeing that his money won’t be saved for future Zuckerbergs at all.