Rich People: Why Do They ALL Have to Come After Public Ed?

To start, consider this from Inside Philanthropy (one of my new favorite places to stop by and read awhile:)

Now, with the rise of Big Philanthropy, we’re seeing the logical next act in this age of inequality—the conversion of all those big piles of money into influence that extends into every last corner of U.S. society, not to mention into remote villages in Africa and Asia. Today’s economic inequality may be nothing compared to tomorrow’s civic inequality as more activist mega-donors emerge with big money and big ambitions—at a time, I should add, when government will be spiralling down into fiscal paralysis due to soaring entitlement costs as the boomers retire. If the 20th century was the era of Big Government, the 21st Century is shaping up as the age of Big Philanthropy. This power shift is one of the most important stories of our time.

Which is the lead-in to this: Facebook's Mark Zuckerberg, and his wife, Pricillia, had a baby girl, Max, last week. Mazel to them and she's beautiful.

He and his wife then decided that they would give 99% of their fortune away.    It was oddly done thru a letter to their daughter - quite lengthy and full of big words she won't be reading for quite awhile.  Oh wait, silly me - that letter was just the vehicle for their announcement.

But heck, he's not even setting up a foundation like Gates.

No, they are creating some kind of "limited liability company" where all the purse-strings would be tightly controlled.  It allows them to lobby on bills and invest in companies.  And, they can make political donations.  Any profits from these investments may be put back into the Chan Zuckerberg Initiative (they have said they will but they are not legally obligated to do so.)

For purposes of this blog, here's the key section:

Even better, students around the world will be able to use personalized learning tools over the internet, even if they don't live near good schools. Of course it will take more than technology to give everyone a fair start in life, but personalized learning can be one scalable way to give all children a better education and more equal opportunity.

Kids, you're going to be hearing A LOT about "personalized learning." And, of course we all support a more personal focus for learning but honestly, A LOT of people will be making A LOT of money on this grand experiment including Zuckerberg.


They also said in their letter:

“We must engage directly with the people we serve. We can't empower people if we don't understand the needs and desires of their communities.”

See below about how his $100M to Newark public education went pretty much down the drain.  I rarely trust when wealthy people say they want to listen to the "community."  (Zuckerberg is now $120M into Oakland public ed and so let's see.) 

From the NY Times announcement :

We must build technology to make change. Many institutions invest money in these challenges, but most progress comes from productivity gains through innovation,” they wrote in the letter to their daughter. “We must participate in policy and advocacy to shape debates. Many institutions are unwilling to do this, but progress must be supported by movements to be sustainable.”

Technology is the answer? More on that in a minute.  And what "movements" are they referencing?  It's unclear but here's a hint:

In May, AltSchool, a private school start-up in San Francisco that develops personalized learning technologies, announced that it had raised $100 million from a group of investors, including a donor-advised fund financed by the Zuckerberg family at the Silicon Valley Community Foundation.

In September, Facebook announced that it was working with Summit Public Schools, a charter school network, to develop an online platform to help tailor education to the needs and interests of individual students.

Here's what the NY Times reports today in an article entitled, "How Mark Zuckerberg's Altruism Helps Himself":

An L.L.C. can invest in for-profit companies (perhaps these will be characterized as societally responsible companies, but lots of companies claim the mantle of societal responsibility). An L.L.C. can make political donations. It can lobby for changes in the law. He remains completely free to do as he wishes with his money. That’s what America is all about. But as a society, we don’t generally call these types of activities “charity.”

What’s more, a charitable foundation is subject to rules and oversight. It has to allocate a certain percentage of its assets every year. The new Zuckerberg L.L.C. won’t be subject to those rules and won’t have any transparency requirements.

And how it works out for Zuckerberg personally?

The savvier move, Professor Fleischer explained, would be to have the L.L.C. donate the appreciated shares to charity, which would generate a deduction at fair market value of the stock without triggering any tax.

Mr. Zuckerberg didn’t create these tax laws and cannot be criticized for minimizing his tax bills. If he had created a foundation, he would have accrued similar tax benefits. But what this means is that he amassed one of the greatest fortunes in the world — and is likely never to pay any taxes on it. Any time a superwealthy plutocrat makes a charitable donation, the public ought to be reminded that this is how our tax system works. The superwealthy buy great public relations and adulation for donations that minimize their taxes. 

Let's review Mr. Zuckerberg's efforts on public ed so far. In 2010, to great fanfare (on Oprah, no less), he announced he was giving $100M to improve public schools in Newark.  The crowd went wild.  Now, just five years later, how has that worked out?  Well, it helped the expansion of charter schools but alienated a huge number of parents and community. Zuckerberg said he learned "a lot" from the experience.

The New Yorker had a 2014 article called Schooled about how Chris Christie, Mark Zuckerberg and Cory Booker did with that $100M.

To the bigger picture which is covered by this word, “philanthrocapitalism."  From Jacobin:

Business executives point enthusiastically to the “blurred” line between for-profit and nonprofit activities in order to justify the growing charity they receive.

In 2010, the Gates Foundation offered $1.5 million to ABC News and a little over $1.1 million to NBC in 2011 “to support the national education summit.” The following year, the Gates Foundation gave another million to NBC, this time for the more vague purpose of “inform[ing] and engag[ing] communities.” 


A frequent worry among teachers and parents is that Gates money helps position private firms such as Pearson and Microsoft to benefit from the testing industry that is tightening like a corset around students and teachers.

 The New Yorker has an article today on this very subject - Zuckerberg and philanthrocapitalism:

 By transferring almost all of their fortunes to philanthropic organizations, billionaires like Zuckerberg and Gates are placing some very large chunks of wealth permanently outside the reaches of the Internal Revenue Service. As tax-exempt entities, these charitable enterprises won’t face any liabilities when they eventually sell the stock they receive. That means the country’s tax base shrinks.

Why bring this to your attention?  The New Yorker writer, John Cassidy, says what I have been saying for years:

 It is simply to point out what should be obvious: people like Zuckerberg and Gates, by virtue of their philanthropic efforts, can have a much bigger say in determining policy outcomes than ordinary citizens can.

From Inside Philanthropy:

This couple is still young, remember—he’s 31, she’s 30—and so they should be ridiculously idealistic.

Which brings me to why this pledge is, in the end, darn scary. Whatever the high-minded ideals of Zuckerberg and Chan, we’re still talking about a huge amount of power in the hands of two private individuals, and at a time when wealthy elites already have enormous power.

Philanthropy is not a meritocracy, nor is there a moral litmus test for entering. Anyone with enough money can play. And as more billionaires enter this game—whether we cheer them or fear them—it’s getting harder for the rest of us to be heard in the public square.