The View | Facebook founder Mark Zuckerberg’s tax-dodging philanthropy adds fuel to firestorm of scepticism

It used to be rather simple and maybe it still is in Hong Kong but elsewhere there is something of a backlash against very rich people and their companies making donations designed to give something back to the community but that end up being criticised as ego trips for the donors.

What may be described as a philanthropy firestorm was fuelled last week when Facebook founder Mark Zuckerberg and his wife Priscilla Chan announced they would be giving a breathtaking 99 per cent of their lifetime’s wealth to charity.

The manner of the announcement, made, of course, on Facebook, generated a level of abuse that might not be expected for a charitable act. It came by way of a 2,234-word letter to their newborn daughter, Maxima; an interesting choice of name that she will have to live with. The letter discussed the challenges facing her generation; frankly, its unoriginal thinking would have been largely ignored were it not for the letter’s provenance.

However most of the critical focus was on the manner of the giving. This money will not go to a charity but to a limited liability corporation free to make investments at will and able not to distribute its funds on an annual basis, something charities are obliged to do. Zuckerberg’s defenders argue that this is a shrewd way of giving that not only allows more risky investments for noble ends but may also provide the means to grow its assets more successfully than a typical charity.

What the new company will not do is exactly what Facebook is notorious for not doing, i.e. paying taxes. Facebook has an international reputation for its dexterity in avoiding tax liability. However taxes are the means of funding the public purse and despite widespread criticism of how the proceeds are dispersed the simple fact of the matter is that taxation provides the means to equip the community with its essential services and security.

This is why Warren Buffett, a highly active charity donor, advocates the need for the very rich to pay their fair share of taxes while also giving away a significant proportion of their wealth.

The super rich usually prefer charitable work that involves donating money for buildings bearing their names. This is certainly how things are done in Hong Kong but in the United States there has been a backlash over this kind of thing. This was vividly demonstrated when media mogul David Geffen’s US$100 million gift to New York’s Lincoln Centre turned into farce. The cash was paid for major renovations to the Avery Fisher Hall, named after its original donor, however the deal involved the renaming of the hall as the David Geffen Hall. In compensation for the loss of their name the Fisher family were then paid US$15 million. Unsurprisingly this use of charitable funds invited considerable comment.