Corporate Charity Is Corporate Power

Facebook CEO Mark Zuckerberg at a press conference in Deauville, France on May 26, 2011. Zuckerberg did not donate $45 billion to charity. Rather, all the Facebook founder and his spouse did was stash their money in a limited liability corporation that they promised would use the money for good, not bad. (Photo: Frederic Legrand – COMEO / Shutterstock.com)

A friend and I were discussing all the horrible ramifications of the decision of Mark Zuckerberg and his wife to “give away” 99% of their Facebook stock. The money is not even going into a charity, I told him. It’s going into a Limited Liability Corporation (LLC) where it can be used to generate more profit.

“However bad it is,” my friend said, “look for it to be worse.”

So true. How “worse” is it? Allow me to enumerate:

1. Tax Breaks Upon Tax Breaks

Corporations and wealthy people pay significantly less in taxes than they used to. What do they do with all this extra money that they used to pay into the public coffers? Well, for the most part, it just makes them richer, as is evident in the rising income inequality in the United States. In addition, they have more cash on hand to set up foundations, which provide a handy tax shelter for said cash, which again reduces the amount they pay into the public coffers. Mark Zuckerberg, for example, is one of the 10 richest people on the planet, yet by transferring his stock to an LLC and then instructing the LLC to give it away, he avoids paying taxes on his earnings. And the charitable organization he donates it to can keep it or sell it, in neither case paying taxes on any gains, so it is possible for this massive fortune to generate zero taxes.

2. The Oligarchy Makes Itself Stronger

Foundations are not just passive, tax-free places for rich people to park their wealth. People like Zuckerberg have decision-making power over what happens to that wealth. Previously, when the wealthy paid a fairer share into public coffers, the public played a role in deciding how it should be spent. This was obviously far from perfect, as we have a low-functioning democracy where the wealthy have a grossly disproportionate role in public decisions, but it was something. The unemployment marches of the 1930s, the civil rights movement of the 1960s, and the welfare rights movement of the 1970s were examples of the public putting pressure on the government to allocate resources in response to the needs of the public.

Now there is an ever-shrinking pie for us to mobilize over. Even the corporate media is concerned about what this says about our democracy. “Instead of lavishing praise on Mr. Zuckerberg for having issued a news release with a promise,” wrote Jesse Eisinger in the New York Times, “this should be an occasion to mull what kind of society we want to live in. Who should fund our general societal needs and how?”

3. Democracy Takes a Hit

The government has always used the social safety net to regulate the lives of poor people, people of color, and women. In our current welfare program, for example, Temporary Assistance for Needy Families (TANF), “the provision of actual income assistance has been overshadowed by the imposition of rules and services to regulate poor mothers’ lives,” according to Felicia Kornbluh and Gwendolyn Mink. Government assistance, it turns out, can be a thinly disguised way to force poor people to accept low-wage work, forego education, and get married or stay married. As controlling as this may be, there is at least a sense that these decisions are a matter of public policy and can be (and have been) contested in that arena by social movements, with varying degrees of success depending on the strength of the movement. Transfer this decision-making power to the super-wealthy oligarchs, and we find ourselves gushing about their “generosity” – their funding of a hospital wing, their gift to a law school, their decision to eradicate malaria – rather than noticing that these are things we should all be deciding via thorough and open debate and a transparent and accessible decision-making process.

4. A Public Relations Bonanza for Capitalism

As extreme wealth inequality grows, now we have extreme philanthropy. The Economist calls it the “upside of a worryingly unequal distribution of wealth.” As if rich people deciding how to dole out resources makes up for the fact that they control so many resources. And control resources, they do. The wealthiest 3 percent of families in the US own more than twice as much as the bottom 90 percent combined. Even more shocking: the US is home to one tenth of the world’s poorest people, according to the recently released Global Wealth Databoook 2015. “That seems impossible,” says Paul Buchheit on Inequality.org. “It requires a second look at the data, and then a third look. But it’s true. In the world’s poorest decile (bottom 10 percent), 1 out of 10 are Americans… Incredibly, then, nearly 50 million of America’s 243 million adults are part of the world’s poorest 10 percent.”

Guess what? At a certain point, it’s possible to be so rich that you can’t even buy anymore private jets or yachts or tropical islands. If the rich person who hits this point starts to give some of it away, this isn’t exactly deserving of praise. This is the moment where we ask: how have we let it get this bad? What is happening in our society that one person even has $45 billion to “give away,” and meanwhile 50 million Americans have nothing to get them through the day? Zuckerberg’s decision to dole out his money to projects that he deems worthy and use it to fund political ads and advocate for policies that help maintain the status quo so that he can keep on being wealthy, doesn’t make Zuckerberg the warm and fuzzy face of capitalism (although plenty of the corporate media would like to pitch it this way).

Quite the contrary. Both his extreme wealth and his extreme philanthropy exemplify the ways that capitalism can continually transfer wealth to the already wealthy, along with an ever-increasing supply of decision-making power – masked as altruism.