Facebook: Andrew Carnegie said a man who dies rich dies disgraced. Facebook’s 26-year-old co-founder, Mark Zuckerberg, is taking note early, giving $100 million to city schools in Newark, a troubled US city. It’s a generous move - and a burnished reputation will probably help the social networking magnate’s business, too.
It’s impressive that Zuckerberg is giving away such a chunk of his fortune at Internet speed. Sure, he has plenty - he is worth an estimated $6.9 billion, according to Forbes’ new rich list, more than Apple’s Steve Jobs and up sharply from $2 billion last year. And it won’t be difficult for him to cash out a little of his stock - investors such as Russia’s Digital Sky Technologies and Elevation Partners have been eager to buy more of the company.
But Facebook turned free cash flow positive only last year, and the firm is not yet public, so he’ll have to sell his stock on the private gray market that exists. And Zuckerberg is young to be making grand philanthropic gestures. The impact of his gift is also uncertain, because Newark’s problems are convoluted, with endemic corruption and troubled families just the start.
The move is, however, likely to have a more easily defined favorable effect on Zuckerberg’s reputation. Whether by coincidence or not, his gift is well-timed in this regard. “The Social Network,” an unflattering semi-fictional film on the creation and rise of Facebook, makes its debut on Friday. Appearing on Oprah Winfrey’s TV show the same day with New Jersey’s governor and Newark’s mayor to announce his donation - as is expected - isn’t a bad riposte. The timing of the gift also happens to counter the impact of the Forbes list.
Of course, for the children of Newark it doesn’t really matter whether Zuckerberg was driven by pure altruism or partly by self-interest. But Facebook’s value over the long term depends upon the trust of its users. If they think its figurehead is generous and community-minded, customers are more likely to continue to flock to the site and feel comfortable disclosing information about themselves. The company can then turn this into advertising revenue and profit.
Carnegie’s generation may have had their legacies in mind. With Zuckerberg’s future business success depending more heavily on a benign reputation than theirs did, getting on the philanthropy trail early may mean he has more to give away over the long run.