US Politics

Financial Wizardry: The Curious Case of the Chan Zuckerberg Initiative

The recent outcry over Cambridge Analytica has brought to light a number of different aspects of the Facebook CEO's personal ambitions. Tanner Kenney takes a closer look at the Chan Zuckerberg Initiative, a philanthropic organization on its face, but one that speaks volumes of Mark Zuckerberg's political ambitions.

BY: TANNER KENNEY

In recent months, Facebook founder, CEO, and Chairman Mark Zuckerberg has been publicly scrutinized by legislators, watchdogs, public officials and citizens for a litany of privacy violations and security concerns related to the social media outlet as well as the financial structure of the charitable institution he created alongside his wife, Priscilla Chan, the Chan Zuckerberg Initiative (CZI). This public outcry has been compounded by Special Counsel Robert Mueller’s investigation into Russian meddling in the 2016 elections coupled with the Cambridge Analytica scandal that broke in March of 2018.

All of this comes at a time when Zuckerberg is exploring a potential career in politics after carefully grooming his public image, but many mistakes have been made along the way. Both Zuckerberg and Chan should be lauded for their large contributions through CZI to the logical progression of science, society, and the planet. The organization, however, is a limited liability corporation, not a trust or foundation, which are considered to be more transparent financial vehicles.

A non-operating foundation would generally limit CZI’s exposure to taxes maximizing the amount it spends on charitable contributions, while an LLC has the added benefit of the philanthropist retaining a higher degree of control. On this point, a foundation would essentially require Zuckerberg to relinquish control of his social media empire since the donor of any stock must relinquish rights and controls over his donations to an independent special representative. It certainly does make sense in this case that CZI retained its LLC structure as opposed to a foundation, given Mr. Zuckerberg’s affinity to oversight.

Of course, the conflicts of interest still remain very apparent as the media mogul continues to fund CZI through his stock options. It is important to note that Zuckerberg’s sale of over $500,000,000.00 Facebook stocks prior to the public revelations of the Cambridge Analytica scandal indicate some risky behavior. Some may see it as a move to prevent major personal financial losses in order to maintain effective control over Facebook through his management of the charitable foundation.

Therefore it is possible that, should he be elected to public office, Zuckerberg could be involved in making decisions wherein conflicts of interest may be more difficult to reveal via public inquiry than in other scenarios. Like many billionaires, who are activists in their own right, both Mark and Priscilla participate in political fundraising and have commented on numerous issues in the press; the LLC structure of CZI allows for this to continue.

This murky financial arrangement mirrors a multitude of aspects of President Donald Trump’s inauguration committee and, ultimately, the rationale behind CZI’s founding as an LLC becomes more clearly understandable when considering that LLC’s as a rule “may engage in lobbying, policy advocacy and political contributions to approach social.” In other words, once Zuckerberg’s finances are shuffled amongst his investments and ultimately deposited into CZI’s coffers, there are fewer oversight responsibilities, allowing for conflicts of interest to go unnoticed.

These precautions taken by Zuckerberg and Chan have created a financial juggernaut to advance philanthropic endeavors such as “human potential and promote equality in areas such as health, education, scientific research and energy.” However, their personal involvement in both Facebook and CZI stands as a major detractor from their philanthropic and political endeavors as the former attempts to cover-up the alarming number of privacy violations related to the Cambridge Analytica scandal.

Zuckerberg and Chan tend to portray a public image of progressivism – democrats, but not quite liberal – as reflected in the CZI’s above-referenced mission statement- an examination of their political donations tells a different story. More importantly, the board of CZI boasts big political names, including David Plouffe, chief adviser to President Barack Obama’s 2008 race and Kenneth Mehlman, who managed President George W. Bush’s 2004 re-election campaign. Their political expenditures – coupled with Facebook’s assembly of a pseudo-campaign team – show that they are laying the groundwork for future endeavors. However, Zuckerberg and Chan often cross party-lines in order to contribute to candidates, committees, and causes that share at least some modicum of like-mindedness, thereby engendering predictability in their motivations.

In establishing such a presence on the American political landscape, the couple have positioned themselves well for a future in government that could take either a Democratic or Republican direction, and at any given time – but is that ambition too grandiose? Their cozying-up to the political establishment could also be a negative, moving forward, as the American people have begun to recognize that the type of lobbying that takes place currently is no longer acceptable.

Zuckerberg, who has come to expect a certain amount of freedom of movement within Facebook, will be stripped away of those when he meets with members of the House Energy & Commerce Committee before appearing before the Senate Commerce and Judiciary Committees to discuss the corporation’s alleged misdeeds. To prepare him for his stint before Congress, he hired experts and coaches to help guide him through the hearing event with a more affable and genial tone. But this may not even be necessary as Zuckerberg and Facebook have donated a significant amount of money to a large number of committee members. The House Energy and Commerce Committee have received nearly $381,000 in contributions tied to Facebook since 2007, while the Senate Commerce, Science and Transportation Committee and Judiciary Committee received $369,000 and $235,000, respectively. Simultaneously, Republicans on the House Committee received twice as much more than their Democratic counterparts.

Lastly, the couple’s desire to maintain a greater level of privacy than the vast majority of Facebook users not only undermines their public-facing comments regarding societal progress and prosperity, it begs the question as to their power to censor criticism even in private as “Mark Zuckerberg has the power to reach into every single Facebook inbox and delete messages that he’s sent. Zuck and other executives at Facebook have reportedly used that power multiple times.” Facebook insists that this policy was in response to the hacking of Sony Pictures’ servers in 2014 and that the measures “included limiting the retention period for Mark’s messages in Messenger. We did so in full compliance with our legal obligations to preserve messages.”

In concert, the above-referenced missteps, scandals, privacy concerns, and more have combined to cloud-up the couple’s burgeoning political future. As the Cambridge Analytica scandal unravels further, Zuckerberg’s political ambitions may be stymied. But for how long, only time will tell.


Tanner Kenney is an energy and media professional with a background in journalism and received his M.S. in Global Affairs, Environment & Energy Policy from NYU’s Center for Global Affairs. Recently, Tanner has focused on the advocacy of sustainable development through renewable energy technologies, transportation efficiency, and inclusive public policy.

Please note that opinions expressed in this article are solely those of our contributors, not of Political Insights, which takes no institutional positions.

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