Wednesday, 2 December 2015

Mark Zuckerberg is giving 99 percent of his money to charity. Here's how he should do it.

Facebook founder Mark Zuckerberg and his wife, Priscilla Chan, have officially won 2015's Giving Tuesday.

On December 1, the couple posted an open letter to their newborn daughter, Max Chan Zuckerberg. In the letter, Zuckerberg and Chan explain that they want Max to "grow up in a world better than ours today," and, to that end, commit to giving 99 percent of their Facebook shares — worth about $45 billion right now — to charitable causes.

That's a huge deal: the world's eighth-richest man pledging nearly his entire fortune to charity. He and Chan will still be very, very rich at the end of it — 1 percent of $45.5 billion is about $455 million — but they will have engaged in one of the greatest acts of philanthropy in human history.

So it's very, very important that they get it right. Here are a few recommendations — admittedly, from someone worth a bit less than $45.5 billion — for how Zuckerberg and Chan can donate for maximum impact.

1) Give it away sooner rather than later

In the letter, Zuckerberg and Chan say that they'll give away the $45 billion in Facebook shares "during our lives." Given that Zuckerberg is 31 and Chan is 30, that doesn't give a lot of specifics, timing-wise. An SEC filing from Facebook on Tuesday gave more specifics:

For the next three years, the filing says, Zuckerberg will sell or gift less than $1 billion in shares per year. In the very short term, that might be sensible. Zuckerberg and Chan should take the time to research causes and see where their money could do the most good — or they should research currently existing foundations that they think would be able to allocate the money effectively. And $3 billion in three years isn't a bad start.

But in general, Zuckerberg and Chan should be trying to give their fortune away sooner, rather than later, for a variety of reasons.

For one thing, they begin their letter by noting that the world is improving rapidly: "Health is improving. Poverty is shrinking. Knowledge is growing. People are connecting. Technological progress in every field means your life should be dramatically better than ours today." This is very true! But the first two factors are likely the temporary result of catch-up growth in developing countries. Progress against poverty and toward longer life expectancies/lower child and maternal mortality has been quicker in, say, India than it's been in rich countries.

At the moment, there's a lot of low-hanging fruit in public health and development, where cheap interventions could do a lot of good now but won't in the future. For example: GiveDirectly is a charity currently giving cash straight to poor people in Kenya and Uganda. Its recipients in Kenya live on 65 cents per day, on average. It's very plausible that by 2040, no human being on Earth will have an income that low. That'll definitely happen if the performance of the past couple decades is repeated, and it could still happen even if economic growth in poor countries slows. And giving $1,000 to households living on 65 cents per person per day improves their well-being a lot more than, say, giving $1,000 to a typical American household living on $54,000 or so. As the world gets richer, the amount of good you can do by giving people money shrinks.

That argues for giving away money right now. So does Mark Zuckerberg's public profile. By publicly declaring his intention to give away his money, he can spur other billionaires and even us lowly non-billionaires into increasing giving. He also binds his future self to give. Mark Zuckerberg in 2065 is going to be a very, very different person from Mark Zuckerberg in 2015. Who's to say if he'll want to keep giving? By stating his intention to give publicly, and setting himself up for ridicule if he falls short, Zuckerberg gives his pledge more force.

In the SEC filing, Facebook states that Zuckerberg "intends to retain his majority voting position in our stock for the foreseeable future." That would seem to provide a reason to wait: Zuckerberg wants a long career running Facebook, and losing his controlling stake would limit his power in that capacity. There's even a semi-plausible argument to be made that retaining his controlling stake so he can force Facebook to invest in big, moonshot innovation projects that other companies won't do — the approach that Google's Larry Page is taking — could make him a more effective philanthropist.

But Zuckerberg has cleverly structured Facebook's stock so that it will be very hard for him to lose control even if he sells his shares. Almost all of his shares are Class B, which carry 10 times the voting weight of Class A shares. What's more, when a Class B share is sold, it automatically transforms into a Class A share. So whenever Class B shareholders sell, Zuckerberg's voting share increases. And when he personally sells Class B shares, he dilutes his ownership much, much less than he would if the shares were organized normally. "To make a long story short," my colleague Matt Yglesias once wrote at Slate, "absolutely nothing — up to and including death — is going to dislodge Zuckerberg from control of his firm."

If death can't do it, then some aggressive charitable giving won't, either. Regardless of how long Zuckerberg wants to retain control of Facebook, he should start giving soon.

2) Maybe just give all your money to your college roommate

One of the first questions Zuckerberg and Chan should ask themselves is, "Does the world really need another major foundation?" Because there are a lot of major foundations, each with its own administrative structure, idiosyncratic foci, and bureaucratic dysfunctions.

Many of them do great work, don't get me wrong. But there's only a case for setting up another one if you really don't think the ones currently in existence are making the best, most cost-effective contributions they can. Otherwise, you should just give your money to an existing foundation. Warren Buffett provided a wonderful example of this when he committed $31 billion to the Bill and Melinda Gates Foundation. He saw another foundation doing the kind of work he wanted to support, and so gave his money to them rather than boosting his ego by setting up the Warren Buffett Foundation.

The Gates Foundation is one plausible place for Zuckerberg and Chan's money to go. For one thing, the couple appears to share the Gates Foundation's views on education reform. But there's also a case to be made that Gates is so flush, especially after the Buffett gift, that more money wouldn't do as much good. The Gates Foundation so thoroughly dominates the education sector, for example, that it's not clear what increased funding would offer in that domain.

Luckily for Zuckerberg and Chan, Mark's college roommate and Facebook co-founder Dustin Moskovitz and his wife, Cari Tuna, have a foundation that specializes in identifying areas where a) charitable funding is currently light, and b) there's potential for more funding to do considerable good. It's called Good Ventures, and along with the charity evaluator GiveWell it's formed a group called the Open Philanthropy Project, which researches which interventions will do the most good. It focuses obsessively on evidence, and its interests are wider than most foundations, ranging from antimalarial bed nets to urban land use reform to protecting against genetically modified pathogens. And its findings inform not just Good Ventures' grants but those of Instagram co-founder Mike Krieger and his partner, Kaitlyn Trigger, as well.

Giving away $9.6 billion — Moskovitz's current net worth, most of which he and Tuna plan to donate — is very different from giving away $54.6 billion, of course. But if Zuckerberg and Chan want to give away their money in the most impactful way possible, they could do a lot worse than just handing it over to Mark's college buddy's foundation.

3) Don't give locally

n their letter, Zuckerberg and Chan suggest that they want to start their giving here, in the US. Their education efforts, they say, are "starting in our San Francisco Bay Area community." Their intentions here are no doubt admirable. But their money could probably go to greater use abroad.

It's really hard to adequately express how much richer developed nations like the US are than developing ones like Kenya, Uganda, and other countries targeted by groups like, say, GiveWell's most effective charities (groups that Good Ventures funds extensively). We still have extreme poverty, in the living-on-$2-a-day sense, but it's pretty rare (very rare by some measures) and hard to target effectively. The poorest Americans also have access to health care and education systems that are far superior to those of developing countries. Giving to charities domestically is admirable, of course, but if you want to get the most bang for your buck in terms of saving lives, reducing illness, or improving overall well-being, you're going to want to give abroad.

GiveWell actually looked into a number of US charities, like the Nurse-Family Partnership program for infants, the KIPP chain of charter schools, and the HOPE job-training program. It found that all were highly effective but were far more cost-intensive than the best foreign charities. KIPP and the Nurse-Family Partnership cost more than $10,000 per child served, while deworming programs like the Schistosomiasis Control Initiative or Deworm the World — two groups recommended by GiveWell — generally cost about 50 cents per child treated.

In 2010, Zuckerberg and Chan gave $100 million to Newark, New Jersey's public schools, of which $25 million went to support charter schools. But even KIPP, arguably the best charter chain there is, doesn't pack the same charitable punch as deworming.

Alternatively, Zuckerberg and Chan could consider giving to non-humans. Animal charities, particularly those engaged in corporate pressure campaigns to better the treatment of farm animals, chickens in particular, can be effective in improving animal welfare. The charity evaluations in this area are much younger and probably less robust than evaluations of anti-poverty groups, but Animal Charity Evaluators has named three animal groups that may be effective causes for donations.

4) Give to advocacy

It's hard for small-time donors to give to advocacy efforts. It's impossible to say precisely how a gift to a given group will increase the likelihood of a given policy being enacted. But the stakes are high enough that it makes sense for people like Zuckerberg and Chan to give advocacy a try. They have the money not just to fund ongoing efforts but to sprout entirely new ones. The Gates Foundation and the Broad Foundation have had a massive effect on US education policy. Zuckerberg and Chan could do the same elsewhere.

One area to look at is monetary policy. The Open Philanthropy Project estimates that the most recent financial crisis cost the US economy around $10 trillion dollars in lost output, not to mention the permanent harm it did to the economy's ability to grow by reducing investment and forcing people out of the workforce. Even if you assume that a crash like that will happen only twice in a century, that means preventing huge recessions could have an annual impact in the hundreds of billions. And many economists think that better monetary policy is the key to preventing worse recessions. If a Zuckerberg/Chan investment in lobbying the Federal Reserve to adopt better policies — or in funding a new generation of like-minded economists who might be appointed to or influence the Fed — changes policy, the effects could be truly massive.

To give a more concrete example, Open Philanthropy funds the Pew Charitable Trusts' Public Safety Performance Project, which works with states to develop policies that "reduce incarceration and correctional spending while maintaining or improving public safety and concentrating prison beds on high level offenders." Pew claims incarceration will fall 11 percent in the states they're working with, compared with rates if they hadn't intervened; that suggests the project has led Americans to spend 858,000 fewer person-years in prison, at a cost of $29 per person-year. That's not a precise estimate, by any means. But it's indicative of the kind of leverage that policy advocacy can have, when done right. A few dollars upfront can initiate changes that affect thousands if not millions of people.

One area where Zuckerberg and Chan's money could also potentially go far is immigration, where Zuckerberg has already tried to have an impact through the group FWD.us. But so far he's focused on mainstream path-to-citizenship advocacy, a space that's pretty crowded. He'd do better to focus on open borders policy, or at least a dramatic expansion of low-skilled immigration. Those policies have the potential to generate trillions in economic growth and vastly reduce global poverty. They're long shots, but if they're to succeed they need the backing of pro-immigrant philanthropists like Zuckerberg and Chan, who help build support among elites and make open borders mainstream.

If Zuckerberg and Chan don't take my advice and do want to work in the San Francisco area, they could also fund advocacy on land use policy. One of the easiest ways to increase wages and economic growth in the US would be to repeal regressive laws limiting the supply of housing by, for example, restricting buildings to an arbitrary height or barring multifamily dwellings. Repealing those laws and letting enough buildings be constructed to meet demand would make rent much cheaper in America's most productive cities, like New York, DC, and San Francisco. That means more people could live in those cities, and the cities and the country would benefit from the considerable network effects of having more talented individuals clustered in the same place. That means faster growth and more innovation, which could benefit people far outside the US eventually.

5) Think about future generations

The vast majority of people who will ever exist haven't been born yet. That's a pretty good reason to dedicate oneself to ensuring that humans don't go extinct and render those people's existence impossible. That's why a lot of effective altruists — people focused on using research to improve philanthropy and other do-goodery pursuits — focus on reducing existential risks, or risks that have the potential to end mankind entirely. Zuckerberg and Chan might want to give to causes in this area, as well.

The obvious one is climate change. That's an area with a lot of donor interest already, but there are still areas that look relatively underfunded. Geoengineering, for example — the altering of the world's climate through artificial means meant to counteract global warming — has gotten relatively little attention from funders. That's partially because many geoengineering proposals, like shooting sulfur particles into the atmosphere to reflect the sun away, are likely quite dangerous and could very well backfire, making climate advocates understandably wary of their use. But it's very possible that rogue individuals or governments could do limited geoengineering all on their own if global warming continues apace, and there's little funding going to efforts to manage and control the field to ensure that doesn't happen. Whether you think it's a promising option or a recipe for disaster, work on controlling it could be worthwhile.

Also worth focusing on are pandemics, in particular synthetic ones. The dawn of synthetic biology and gene-editing technology like CRISPR makes it possible that amateur biologists could, rather cheaply, design viruses and bacteria that are more lethal and more infectious than anything that currently exists. This could happen on purpose — as a means of biological warfare, for example — or by accident in a lab. One nice thing about "biosecurity" as a funding area is that many of the ways one could tackle it, such as improving our response to disease outbreaks in poor countries and increasing hospital sanitation, have benefits beyond just reducing the risk of a mass pandemic that kills us all (or a lot of us, anyway). Those changes would also improve life in developing countries in non-pandemic situations.

Perhaps the most famous existential risk is artificial intelligence. This has become something of a trendy funding area since Elon Musk took up the cause, and it probably won't lack for Silicon Valley funding going forward. But enough serious AI researchers, like Berkeley's Stuart Russell, are concerned about it to justify some degree of funding for efforts to reduce the risk that the technology will backfire.

6) Give to research

We don't know nearly everything we need to know about reducing poverty in the developing world. We also need to know more about how to do effective advocacy, about what interventions are effective at reducing existential risk, and so forth. That's a good argument for Zuckerberg and Chan to fund more research into how to make charity more effective.

That could mean funding labs like Innovations for Poverty Action, the anti-poverty research group led by Yale economist Dean Karlan, or the Abdul Latif Jameel Poverty Action Lab (J-PAL) at MIT, both of which do research intended to improve aid to developing countries. It could mean funding for social scientists researching effective persuasion and advocacy. It could mean funding randomized control trials in any number of policy areas. Zuckerberg and Chan can only fund effective interventions if they know which interventions are effective. Funding research is a great way to increase the knowledge base around that.

7) Seriously, just give your money to your roommate

Really, Good Ventures is doing all the stuff I recommend above in a careful, rigorous way. Don't reinvent the wheel. Just give Good Ventures your money. For more, see my profile of Good Ventures and Open Philanthropy from this past March.

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