4 Real Reasons Why Billionaires Give To Charity

The Zuckerbergs

Last week, Mark Zuckerberg wrote a letter to his newborn daughter -Max. In it, he and his wife Priscilla Chan stated that they will be giving away 99% of his Facebook shares (presently worth about $45 billion) to charitable causes. Though some news media reported it as 'Mark Zuckerberg Vows to Give 99% of His Facebook Shares for Charity'. (Some comedians have since named their daughter 'Charity' and asked Zuckerberg to send their share of the money. lol). 

Of course, what he meant is that he believes in using wealth to better humanity, and making the world a better place for all, by investing in causes that will fulfill that dream and desire.

Moreover on this blog, I have advocated giving, but with sense. That however seems to be what Billionaire philanthropists are able to do more than the rest of us. You will be hard-pressed to find a Nigerian, or African billionaire willing to give all his/her wealth to charity (not even our pastors, and many of them are billionaires by the way). Is it the poverty? Is it the fact that we Africans don't really love one another and are not united? Is it a 'black mindset'? I really cannot tell.

However, while researching philanthropy and the real reason why all these self-made billionaires are giving to philanthropic and charitable causes I made some profound discoveries. 

1. In America, one of the ways to protect your wealth from the tax-man is to hide it behind a charitable foundation. 
Tax is a big deal in developed countries. It is the #1 reason why their countries are that developed anyway- 'the taxpayer's money'. You may definitely go to jail if you evade taxes. And the rich are made to pay more in taxes, but they don't like that at all. No one actually likes paying taxes, not even the rich! 

So what do they do...? They incorporate a philanthropic organisation and put all their wealth in it as a form of life insurance or charitable trust. They are deferring to pay taxes that they may never pay at all. It is better and smarter that way than giving it to the government. As a philanthropic organisation/not-for-profit, you are only mandated to give 5% of your earning annually, which may even be spent on 'expenses'. (Though Zuckerberg has stated clearly on his Facebook page that this isn't his reason for founding the Chan Zuckerberg Initiative).

2. Building your 'for-profit company' around a social cause helps profitably establish it firmly and quickly: (#think social entrepreneurship) 
The book that explained this to me is 'Start Something That Matters', by TOMS founder Blake Mycoskie. His shoe company gives one shoe for free, for every one sold, to children without shoes in South America.

Another social entrepreneur I admire and want to emulate in this category is Muhammad Yunus the father of non-profit micro-finance banking, and founder of Grameen Bank. His book, 'Building Social Business' is also very instructive.

The whole idea of social business is to do 'profitable business' that directly helps the community in which your business is located. Or, to give to charitable causes that will eventually bring more profit for your core business. (Now, that is what most businesses do and call Corporate Social Responsibility.) That is the whole idea behind Zuckerberg's CZI.


3. Philanthropy is the future of national, and international support of humanity. 
With the 21st century manner and speed with which mundane tasks and blue-collar jobs are being automated by advancement in science and technology (think Robots/AI, Uber, etc), and with the amount of disruption happening in almost every industry today, a lot of money will be concentrated in a few hands/countries. So philanthropy will be a big thing. In fact, Stanford already teaches its business students philanthropy as a course. 

Billionaires are being encouraged to give back, and more will still give. And I personally believe the majority of humanity will not work anymore, but will eventually be fed and sustained from a central source when all 'common-man' jobs have been automated.

Today, we also see global crowdfunding initiatives helping entrepreneurs to achieve their dreams. Soon, we will see it help ordinary poor people pay the school fees of their children, complete their houses, and even make their first investments. But don't forget that philanthropy isn't only about giving cash.
[By the way, check out Forbes differentiating between philanthropy and charity.]


4. The true meaning of wealth -being truly wealthy- is in creating a legacy that outlives you. 
What differentiates the poor from the rich is not cash- it is what they do with their cash. And the truly rich are those that are able to use their wealth to not just survive, but also help humanity around them. Most African billionaires are poor even though they have cash. How do I know? They use their financial muscle to embezzle, illegally take from others (sometimes aided by corrupt politicians), live for, and hoard cash instead of using money to create legacies. 

When you give back, you are essentially telling yourself and the world that currency is not meant to be stored, but to continually flow...to creating value. Money, i.e currency, is not a store of value, but it can be used to create value, wealth.

So, in a nut shell what does Mark Zuckerberg tell us about giving...? 

Instead of accumulating wealth (to keep) for your children and future generation unborn (like many poor people continue to do), use money to create a (investment) tool that will create opportunities to benefiting not just your physical children, but all of humanity, long after you have lived.

That is the true essence of wealth, and giving back. That is what it means to create a legacy.