Why Zuckerberg's Giving Pledge Is Bad News for Charity

Last Updated Dec 9, 2010 3:31 PM EST

Mark Zuckerberg could use a little good press right now. But getting some love from the worldwide media may be the only real benefit of the news that the fledgling billionaire is the latest super-rich entrepreneur to sign the Giving Pledge, calling for him to give at least half his wealth to charity.

Truth is, the Giving Pledge is probably bad news for most of the world's causes, and for the people and projects that depend on them for support. Here are three reasons why:

1) Rich people support things they like. Wealthy benefactors tend to give to certain causes, especially their alma maters and fine arts organizations. While these are worthy causes, they don't do much for vulnerable people. They're more like donations to help the wealthy's favorite hobbies.

2) Charitable donations come right out of tax revenues. Gifts to charities are deductible from income on tax returns. That means every time some billionaire gives to a non-profit, he or she pays less in taxes. That means government has less to do what it needs to do -- unless, of course, taxes on the rest of us, who can't afford to give huge sums to charity, go up.

3) Taxes are probably a better way to redistribute wealth. The rich -- the self-made rich, at least -- got that way because they could get people to pay more for a product or service than it cost to produce, not because they were skilled at determining the needs of poor people, sick people, oppressed people or other vulnerable populations. The best people at determining how to help those in need are usually in government, where they are responsible to the people they serve. For that reason, taxes are probably the most effective way to really help everybody who needs it, as opposed to, say, the polo team at the Ivy League college some heiress attended.

So if you're an entrepreneur whose success doesn't quite justify an invite to join the Giving Pledge bunch, take heart. Your taxes and, if you want, your personal donation decisions are probably doing as much or more than the high-sounding promises of all these people possessed of wealth beyond the dreams of avarice. Give, sure, but don't just give to look good.

Mark Henricks has reported on business, technology and other topics for The New York Times, The Wall Street Journal, Entrepreneur, and other leading publications. Follow him on Twitter @bizmyths.
Image courtesy of Flickr user mauricesvay, CC2.0

  • Mark Henricks

    Mark Henricks' reporting on business and other topics has appeared in The Wall Street Journal, The New York Times, The Washington Post, Inc., Entrepreneur, and many other leading publications. He lives in Austin, Texas, where myth looms as large as it does anywhere.