On Tuesday, Facebook co-founder and CEO Mark Zuckerberg posted a powerful announcement — not only did he reveal the birth of his daughter, Max, but he shared plans to give up 99% of his personal Facebook shares over the course of his lifetime and use them to fund causes through a newly formed entity called Chan Zuckerberg LLC. 
 
 The revelation generated a lot of attention, much of it due to the sheer volume of Zuckerberg’s net worth — $45 billion! While many people, including Bill Gates and Michael Bloomberg, praised him for his generosity, others expressed confusion and even questioned his motives for giving his money away. 
 
 Looking to alleviate some of those concerns, in a post Thursday, Zuckerberg clarified how he and his wife Priscilla Chan, plan to delineate their funds. 
 
 “Our initial focus areas are personalized learning, curing disease, connecting people and building strong communities. We’ve already made many investments over the past five years in these areas — education, science, health, internet access and inclusion — and you can see a summary of our investments on the Chan Zuckerberg Initiative page timeline.” 
 
 Zuckerberg addressed the allegations that forming this organization was a way to avoid taxes — he explained that by structuring the Chan Zuckerberg entity as an LLC, that their shares will still be taxed. 
 
 “By using an LLC instead of a traditional foundation, we receive no tax benefit from transferring our shares to the Chan Zuckerberg Initiative, but we gain flexibility to execute our mission more effectively. In fact, if we transferred our shares to a traditional foundation, then we would have received an immediate tax benefit, but by using an LLC we do not. And just like everyone else, we will pay capital gains taxes when our shares are sold by the LLC.” 
 
 He also says that this “for profit” structure allows them to make investments that will continue to fuel their objectives. 
 
 “This enables us to pursue our mission by funding non-profit organizations, making private investments and participating in policy debates — in each case with the goal of generating a positive impact in areas of great need. Any net profits from investments will also be used to advance this mission….For example, our education work has been funded through a non-profit organization,Startup:Education, the recently announced Breakthrough Energy Coalition will make private investments in clean energy, and we also fund public government efforts, like the CDC Ebola response and San Francisco General Hospital.” 
 
 Some of Zuckerberg’s early attempts at philanthropy were also met with controversy, particularly his $100 million gift to Newark schools, which faced challenges in its execution. But with $45 billion to experiment with, let’s hope that much of this money ends up doing some good. 
 
 Zuckerberg previously signed The Giving Pledge, promising to give away over half his fortune, along with Richard Branson, Warren Buffett and other billionaires. 
 
 By timing the latest announcement with the birth of his baby, it seems that Zuckerberg is trying to send a message that he’s not hoarding his personal fortune for the next 100 generations of Zucks. 
 
 Welcome to the world, baby Max. ||||| Earlier this week, Mark Zuckerberg made the surprise announcement that he, along with his wife Priscilla Chan, would be donating 99 percent of their Facebook shares — worth around $45 billion — to the causes of "advancing human potential" and "promoting equality." The gesture appeared altruistic, but some have criticized the way Zuckerberg is using the money, giving it to a limited liability company rather than a charitable foundation. Now Zuckerberg has responded to those complaints, posting another message that attempts to explain why he set up the Chan Zuckerberg Initiative, and what he and his wife want to do with the money. 
 
 "The Chan Zuckerberg Initiative is structured as an LLC rather than a traditional foundation," he writes. "This enables us to pursue our mission by funding non-profit organizations, making private investments and participating in policy debates." Unlike limited liability companies, charitable foundations are restricted from investing in for-profit businesses and cannot engage in political lobbying, activities that the Facebook founder said the Chan Zuckerberg Initiative was designed to do in order to further the development of humanity. 
 
 Charitable foundations can't lobby politically or invest in for-profit companies 
 
 Others have suggested that the Initiative is a giant tax avoidance scheme, specifying that by gifting shares rather than cash, Zuckerberg avoids paying higher costs in capital gains tax. He addressed this concern too, stating that "by using an LLC instead of a traditional foundation, we receive no tax benefit from transferring our shares to the Chan Zuckerberg Initiative, but we gain flexibility to execute our mission more effectively." Zuckerberg said that if his intentions were to avoid tax, he could've simply set up a charity. "If we transferred our shares to a traditional foundation," he wrote, "then we would have received an immediate tax benefit, but by using an LLC we do not. And just like everyone else, we will pay capital gains taxes when our shares are sold by the LLC." 
 
 Zuckerberg specified where the money would go first 
 
 Tougher to address was criticism that Zuckerberg was being wasteful with the money — specifically, that Facebook's billions would be used to further his own Silicon Valley-shaped worldview rather than donated to a charity that already has operations in place in the developing world. At the moment of its foundation, the Chan Zuckerberg Initiative's intentions were woolly — advancing humanity and promoting equality without a specific roadmap for either goal — but they're already starting to take shape. Zuckerberg used his most recent post to call out initial areas of focus for the Initiative, choosing "personalized learning, curing disease, connecting people, and building strong communities" as places it will first spend its money. 
 
 These four areas are again broad, but Zuckerberg picked out specific examples of where he has spent money before, listing accomplishments. "Our education work has been funded through a non-profit organization, Startup:Education, the recently announced Breakthrough Energy Coalition will make private investments in clean energy, and we also fund public government efforts, like the CDC Ebola response and San Francisco General Hospital." Again justifying the decision to use an LLC rather than a charitable foundation, Zuckerberg said "what's most important to us is the flexibility to give to the organizations that will do the best work — regardless of how they're structured." ||||| Facebook CEO Mark Zuckerberg and his wife Priscilla Chan celebrated the birth of their daughter Max with a promise to give 99 percent of their Facebook shares to a new charity. The couple announced the move in a letter addressed to their baby. (Reuters) 
 
 In 2010, Bill and Melinda Gates announced that they would commit 95 percent of their wealth to charitable work. Together with Warren Buffett, they also created the Giving Pledge, which asks the richest people in the world to devote half or more of their fortunes to philanthropy. 
 
 One of the earliest people to sign the pledge? Facebook’s Mark Zuckerberg and his wife Priscilla Chan. So it was not a complete surprise when Zuckerberg and Chan announced on Tuesday their plan to set aside 99 percent of their Facebook shares — “about $45 billion” — for charity. 
 
 The news is this: Taking a page from the Gates family, they will use the money to pump up their nonprofit, the Chan Zuckerberg Initiative. The private foundation is an especially American style of charitable giving. Nonprofit groups in the United States play a disproportionately large role in public life, in part because American tax laws make it attractive for the rich to donate. Much of their wealth could otherwise be captured by capital gains and estate taxes. 
 
 Private spending on social welfare in the United States is four times the average in advanced economies, according to the Organization for Economic Cooperation and Development. The wealthiest countries, like France and Germany, are far more likely to use government resources to promote social good, and far less likely to use private resources. 
 
 This gap in national philosophies helps explain why the Giving Pledge has been popular with American billionaires, yet not quite as popular abroad. German shipping magnate Peter Krämer is one of the most vocal detractors of the pledge, and the American tradition of government-sponsored charity. Here's an excerpt from a 2010 interview with the German paper Der Spiegel, which asked him for his reaction to the plan. 
 
 Krämer: I find the US initiative highly problematic. You can write donations off in your taxes to a large degree in the USA. So the rich make a choice: Would I rather donate or pay taxes? The donors are taking the place of the state. That's unacceptable. SPIEGEL: But doesn't the money that is donated serve the common good? Krämer: It is all just a bad transfer of power from the state to billionaires. So it's not the state that determines what is good for the people, but rather the rich want to decide. That's a development that I find really bad. What legitimacy do these people have to decide where massive sums of money will flow? SPIEGEL: It is their money at the end of the day. Krämer: In this case, 40 superwealthy people want to decide what their money will be used for. That runs counter to the democratically legitimate state. In the end the billionaires are indulging in hobbies that might be in the common good, but are very personal. 
 
 Compared to the richest nations, the United States ranks near the bottom in terms of public spending on social support, according to the OECD. But that’s because a large chunk of the work is carried out by nonprofit organizations, or otherwise subsidized by the government through tax breaks. 
 
 On average in well-off countries, private social spending accounts for 2.6 percent of the gross domestic product. In the United States, private social spending is 11 percent. 
 
 Americans are some of the most charitable people in the world in part because there is a centuries-old tradition of private nonprofit groups helping people in lieu of the government. 
 
 Even Alexis de Tocqueville observed the trend in the 1830s, writing: “In every case, at the head of any new undertaking where in France you would find the government, or in England some great lord, in the United States you are sure to find an association." 
 
 There’s nothing necessarily wrong with the American system of tax-subsidized charity, of course. As de Tocqueville argued, promoting charity has the benefit of improving social cohesion. He wrote that when the government taxes and gives to the poor, people feel slighted. When people voluntarily give to the poor, they feel better about themselves. 
 
 The critique is that this system affords too much power to the rich, whose decisions may not align with what’s best for society. This is not to say that the government is a paragon of efficacy either, but it risks a lot to depend on a handful of mega-billionaires to be prudent, effective philanthropists. 
 
 The U.S. tax code "ends up subsidizing the gifts of high-income taxpayers the most, lower-income renters the least, and middle-class homeowners in the middle,” Duke University's Charles T. Clotfelter has written. "One of the most significant consequences of this tax treatment of charitable giving is to give to the wealthiest taxpayers a disproportionate role in allocating public resources and influencing the direction that institutions will take." 
 
 In his book "Capital in the Twenty-First Century," economist Thomas Piketty proposed a wealth tax as one way to address rising inequality — and transfer wealth from individuals to the state. In the United States, estate and gift taxes achieve some of that function by prodding people to donate their wealth instead of bequeathing it to their children. (Economists like Piketty tend to regard those measures as too modest.) 
 
 The debate is whether the money is better of in the hands of the government, or in service to private nonprofits. There's no denying the good intentions of the billionaire philanthropists, but it can be hard to know whether the decisions they make about how to use their money ultimately serve society in the best ways. 
 
 Gates has already given away more than $30 billion, and Buffett has parted with $22 billion of Berkshire Hathaway stock. In 2010, before the lion's share of those gifts, the Guardian described the impact of the Bill and Melinda Gates Foundation on public health: 
 
 Precise effects of big charity projects can be hard to measure, especially over a relatively short period. But already two bodies that the foundation funds heavily, the Global Alliance for Vaccines and Immunisation (Gavi) and the Global Fund to Fight HIV/Aids, Tuberculosis and Malaria, have, according to the foundation, delivered vaccines to more than 250 million children in poor countries and prevented more than an estimated five million deaths. "The foundation has brought a new vigour," says Michael Edwards, a veteran charity commentator and usually a critic of billionaire philanthropists. "The charity sector can almost disempower itself; be too gloomy about things . . . Gates offers more of a positive story. He is a role model for other philanthropists, and he is the biggest." 
 
 What genre of philanthropy will Chan and Zuckerberg invest in? Possibly anything. Their letter Tuesday set two missions, both ambitiously vague: “advancing human potential” and “promoting equality." They mention curing diseases, improving clean energy, promoting entrepreneurship, fighting poverty and hunger, empowering women and minorities, and so on. 
 
 The pair do not have a sterling track record when it comes to effective charity. One of their previous efforts, a high-profile $100 million donation to fix the schools in Newark, N.J., has been widely criticized as a failure. 
 
 Chan and Zuckerberg write in their announcement that they have learned from their past experiences with philanthropy. For now, they will start with their own community in San Francisco, focusing on education, health and “connecting people.”
– Mark Zuckerberg announced the birth of his baby daughter and a $45 billion giveaway on the same day this week, and he's had to do a little more explaining about the latter. In a Facebook post on Thursday, Zuckerberg explains that Chan Zuckerberg Initiative LLC, the entity he's donating 99% of his Facebook shares to, is being set up as a limited liability company instead of a traditional foundation so it can engage in actions like "funding non-profit organizations, making private investments, and participating in policy debates," reports TechCrunch, which notes that some critics accused Zuckerberg of having ulterior motives or said the move could be "a big waste." The initiative will focus on "personalized learning, curing disease, connecting people and building strong communities," building on previous investments in "education, science, health, Internet access, and inclusion," Zuckerberg explained. He also addressed concerns that the donation—equivalent to the GDP of Serbia, or around $38 for every Facebook user—could be some kind of tax dodge, explaining that "we receive no tax benefit from transferring our shares to the Chan Zuckerberg Initiative, but we gain flexibility to execute our mission more effectively" and that if he wanted to avoid tax, it would have been far more effective to set up a traditional charity, the Verge reports. (A ProPublica piece calls the initiative a "tax vehicle.")