Following Mark Zuckerberg’s announcement that he and his wife Priscilla Chan will dedicate 99 percent of their wealth to the new Chan Zuckerberg Initiative, many are asking how their estimated $45 billion would be best spent.
The couples’ stated intention to “advance human potential and promote equality in areas such as health, education, scientific research and energy” is ambitious, but must be carefully directed to achieve the same success for human development that Facebook has achieved as a business and the world’s largest social network — with 1.55 billion monthly active users in 2015’s third quarter (more than the population of China).
Some say the best ways for Zuckerberg to execute his ideas for philanthropy would be to apply the same methods that steered the exponential growth of his business. Take Adam Davidson, an economics writer for the New York Times: “Whatever you think of Silicon Valley, the venture-capital philosophy of investing can be an extremely useful model for philanthropy.”
So, can we test this hypothesis, and can this new philanthropic initiative transform sustainable development?
Lean is not mean: A culture of innovation can transform human development
When comparing different models of philanthropy, there is a danger of creating a false dichotomy between traditional nonprofits (often disparaged as “risk averse, slow, with large-scale change processes, command and control operations, and multiyear, top-down planning”) with the “lean startup” model developed in Silicon Valley over the past decade to help entrepreneurs launch new products and services with speed and efficiency.
As Mark Zuckerberg and Priscilla Chan welcomed their daughter to the world, they also announced the birth of an initiative committing 99 percent of their Facebook shares to "advancing human potential and promoting equality." Devex spoke with philanthropy experts about what the Chan Zuckerberg Initiative could mean for global giving.
In truth, in their methods and operational culture, numerous nonprofits and foundations have absorbed many of the practices that define the lean startup methodology. As noted by a Public Interest Network report, these organizations are: “embracing risk, rapid experimentation, creating a swift feedback loop that responds to what your constituents truly need and want, and scaling up the implementation of an idea that works, while continuing to run experiments for ever greater efficiency and additional value.”
Beyond contests that encourage innovation in the nonprofit sector, the performance-based aid delivery model of the U.S. government’s Millennium Challenge Corp. is an excellent example of an initiative that has furthered sustainable development interests, while providing value for money.
As I explained in a Carnegie Endowment white paper, funding for MCC grants is subject to strict performance criteria with meaningful consequences for doing a poor job, just like the scrutiny with which venture capitalists analyze prospective investees. This rigorous process can exert the pressure required to effect meaningful economic and political reform, which itself aids sustainable development.
For example, in Lesotho the prospect of MCC funding led the government to adopt historic legislation granting women the right to own property and enter into binding contracts.
The World Bank reported that the MCC eligibility process created a strong incentive for El Salvador to reduce dramatically the time it takes to start a business, from 115 days to 26 days.
So acknowledging the culture of experimentation, innovation, learning and performance assessment present in the most forward-thinking nonprofits should broaden our perspective on newcomers to the development field. The culture that created the lean startup is closer than we often think to the culture of effective philanthropy.
Structured for success
In addition to experimentation and risk-taking, the Chan Zuckerberg Initiative will need the right structure for success. Zuckerberg’s unusual choice of a limited liability company, instead of a traditional nonprofit or foundation as a vehicle for his philanthropy, while questioned by skeptics, has great potential humanitarian benefits.
An LLC structure will give the Zuckerbergs more flexibility in their investments, and the freedom to experiment — one of the hallmarks of venture capital or Silicon Valley investing.
Crucially, an LLC structure allows for the execution of long-term visions, a prerequisite for addressing systemic or global challenges: “[We] are willing to embrace risk and invest in things that may take 10, 20, 50 years to show really concrete results,” said Caitlyn Fox, the Chan Zuckerberg Initiative’s chief of staff.
This is encouraging, as the United Nations’ Sustainable Development Goals, such as eliminating extreme poverty, ending hunger, achieving gender equality, ensuring inclusive and quality education for all, have targets to be achieved over the next 15 years. Take the challenge of extreme poverty as an example. The following projection of global poverty rates over the next 15 years is a reminder of the sustained application and long-term thinking required to achieve a best-case scenario.
The freedom to form vital partnerships
To reach those best case scenarios for poverty and the other major development goals at which the Zuckerbergs have taken aim, the structure of their initiative can also help in another way — the ability to form impactful partnerships.
To make a meaningful impact in the humanitarian sphere, new initiatives entering the field must tap into the expertise, operational experience and reach of more established nonprofits; and multilateral, international partnerships across sectors are vital.
Polio cases have been reduced by 99.9 percent worldwide and more than 2.5 billion children in 122 countries have been immunized since the initiative started in 1988. Today, Pakistan and Afghanistan are the last remaining polio-endemic countries, and polio is close to becoming only the second human disease after smallpox to be banished to our past. The success of the GPEI is based on well-defined roles for each partner and its ability to maximize impact through political engagement, advocacy, and a clear strategy, with regular reviews of progress and independent oversight.
Zuckerberg’s announcement indicates that he already recognizes the value of effective, multilateral partnerships in order to pursue his ambitious goals: “We must back the strongest and most independent leaders in each field. Partnering with experts is more effective for the mission than trying to lead efforts ourselves.”
And as an LLC, his initiative has none of the restrictions on partnering with the private sector that can beset traditional charities.
So rather than fearing the Chan Zuckerberg Initiative as a for-profit interloper in the development field, we should be excited by its potential to extend our reach in the quest for sustainable human development.
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John Hewko is the general secretary of Rotary International and The Rotary Foundation. Before joining Rotary in 2011, he was vice president of operations and compact development at the Millennium Challenge Corporation (MCC), a U.S. government agency established to deliver foreign assistance in a new and innovative manner.
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