December 11, 2015

4 Steps Priscilla Chan and Mark Zuckerberg Should Take to Make a Difference

Mark Zuckerberg and Priscilla Chan’s extraordinary pledge of $45 billion of their wealth over their lifetimes is exciting and generous — but it raises tough questions about the role modern philanthropists should play in our democracy.

Of particular concern is the limited-liability corporation they created to shelter their stock shares while they distribute their wealth. Although this arrangement may suit the wishes of the donors, it does not provide the public with any accountability or transparency. There is no indication that the LLC will have a board of directors, that Dr. Chan and Mr. Zuckerberg will consult anybody as they give, or that there will be any oversight of the LLC’s activities. They are creating an instrument of oligarchy, not democracy. The very size of the eventual gift makes the structure of their donation potentially more alarming.

Had they followed the example of Mr. Zuckerberg’s mentor, Bill Gates, the donors would still have had plenty of leeway to guide public policy, fund organizations that do advocacy work and some lobbying, and support some for-profit organizations. After all, the Gates foundation has been a major player in helping to determine policy in American public education and global health matters, as well as in providing important investments in the developing world’s health and agricultural effort.

But that’s not the only lesson they can learn from examining what has worked and not worked in billionaire philanthropy. Here’s my advice on how Dr. Chan and Mr. Zuckerberg can truly make a difference in the world:

Insure transparency and public accountability.

The couple should establish an LLC board with a diverse group of people, not just business colleagues. And they should issue periodic reports of their philanthropic grants, corporate investments, and political activities, including lobbying.

Under the structure they announced, they could easily establish a foundation parallel to the LLC that could distribute part of the money so that their grant making would more publicly accountable. If they put money into a foundation, it would be required to distribute at least 5 percent of its assets every year and file reports on its work available for all to see. The foundation would also be prohibited from excessive spending on salaries, overhead, and cozy insider deals.

Consult a wide variety of people.

Too many wealthy donors are not in touch with the communities and nonprofits they are supposed to assist. Such donors tend to call only on their friends and close colleagues for advice. What’s more, they often ignore local grass-roots constituencies and local or regional leaders, preferring instead to rely on feedback from well-known national figures or celebrity personalities. Dr. Chan and Mr. Zuckerberg should find out what’s most needed through a process that is broad and diverse enough to give them an accurate picture of what is going on, both locally and nationally.

Place a priority on poverty and inequality issues.

The overwhelming majority of superwealthy donors who have signed the giving pledge do not give much, if any, of their money to fight poverty or help marginalized citizens, the neediest nonprofits, or advocacy organizations. Despite what they often claim, tech billionaires are not giving money that disrupts the status quo. They are not challenging America’s health, financial, political, infrastructure, transportation, or higher-education systems. They are pushing entrepreneurship, research, and technology, but they do not seem to be the agents of social or institutional change.

Reinforce grass-roots democracy and civic engagement.

Much, if not, most of the fight against inequality and poverty is being carried on at the local level by community and grass-roots organizations. Local groups are the source of a great deal of innovation in crafting programs that provide better services, promoting citizen involvement, and pushing for changes in government and social institutions that don’t work. They urgently need assistance.

But this is not the kind of activity that superwealthy donors and large foundations support. They prefer to support national organizations and large projects. They therefore fail to penetrate America’s heartland and are often out of touch with people’s needs and requirements. Dr. Chan and Mr. Zuckerberg could infuse these organizations with desperately needed money and send a signal to other wealthy people that they need to give differently.

Although their choice of a distribution mechanism raises many serious questions about direction and control, only time will tell how well and responsibly the $45 billion pledge will be spent. That’s why watchdog groups and journalists will need to be vigilant in monitoring how the money is distributed.

Mark Zuckerberg and Priscilla Chan have a wonderful opportunity to demonstrate how a major philanthropic enterprise should be run. Let’s hope they don’t blow it.

Pablo Eisenberg, a regular Chronicle contributor, is a senior fellow at the Center for Public and Nonprofit Leadership at the McCourt School of Public Policy at Georgetown University. His email address is pseisenberg@verizon.net.