How Private-Sector Innovation Can Help Those Most In Need

from the profit-can-be-good dept

Facebook Co-Founder and CEO Mark Zuckerberg’s decision to dedicate 99 percent of his Facebook stock towards improving the world was met with strong praise this holiday season. The resources will be used to promote programs related to “personalized learning, curing disease, connecting people and building strong communities.”

Everyone’s talking about “why” this donation is important: namely, helping future generations live in a better world than we live in now. But fewer people are focusing on “how.” The Facebook proceeds will be channeled through the Chan Zuckerberg Initiative, LLC ? a for-profit company with philanthropic ambitions.

As a business rather than a non-profit, the Initiative will have more freedom to put the power of private sector innovation to work in the non-profit world, such as making private investments, and promoting public policy issues. This is not the first time social good was driven by private sector innovation. Digital platforms like Facebook, Twitter and Instagram are changing how we interact, driving fundraising and donations for large charitable projects, and enabling us to coordinate efforts and produce social change. We saw these macro effects throughout the Arab Spring, in places as distant as Tunisia and Egypt.

The innovation cycle is also impacting forward progress on the micro level, whether it’s a solar-powered well that’s being installed in a small, rural, mountainous community in Chile, a mobile phone in Africa that helps rural farmers know what prices they should expect for their goods at market or the anytime/anywhere connectivity that can keep a fisherman safe from storms he wouldn’t have been aware of otherwise. What’s born in a lab in Silicon Valley can have a life-altering impact on people half the world away in the Jordan Valley.

That could help explain why multibillionaire Google co-founder Larry Page has said he wants to leave his fortune to Elon Musk, the forward-thinking innovator and CEO of Tesla Motors and SpaceX. Leaving his billions to Musk would presumably ensure that research into “moonshot” projects akin to those of Google’s new parent company Alphabet ? robots, nanoparticles, self-driving cars, wind-energy-capturing kites, balloon-based WiFi and more ? would continue after he’s gone.

Musk is redefining the parameters of innovation. With Tesla, he’s changing the whole structure of the car, which allows us to do other things in the car besides focus on the road. And by redesigning the car’s power supply, he’s changing the physical layout of the car, too ? where we sit, where we store luggage. Musk refuses to allow the status quo to dictate the trajectory of tomorrow’s innovation.

Yes, Musk is making $100,000 cars that may seem worlds away from the extreme poverty that pocket the earth, but innovation doesn’t exist in a silo. Innovation permeates every facet of our life. In chaos theory, Edward Lorenz’s “butterfly effect” describes how a small change in one state of a deterministic nonlinear system can produce very different outcomes in later states of that system. Musk and countless other private-sector innovators, are today introducing massive change into our world which in turn are powering and empowering massive change in the world that lays before us and before the billions of underserved among us.

The tangible examples of innovation’s near-universal influence are numerous. Mobile payments aren’t just for paying rent in Washington, D.C., or splitting lunch in San Francisco. They grow economic development in remote parts of the world by accelerating transactions, and improve safety by reducing the need to travel with large sums of money in dangerous locals. Booz Allen Hamilton estimates digitization of emerging markets could drive respective economic growth by $4.1 trillion dollars among the most underserved 3.9 billion consumers. The UN recently endorsed goals to eradicate extreme poverty over the next 15 years. Connecting the last billion people to the Internet will help end marginalization through banking, identification and the broad dissemination of information.

Our reliance on technological innovation for social change may be more important now than ever. Philanthropic giving has yet to rebound to pre-Great Recession levels, even as community needs expand, according to a report from the National Council of Nonprofits. This makes it hard for non-profits to keep up with demand, or upgrade and invest in their own technology and capabilities.

While there’s certainly a continued need and role for charity, innovations and technologies are lifting one person at a time, and in the aggregate, they’re lifting entire nations to a higher plane. Innovation isn’t helping just the most desolate among us; it’s improving the quality of life for all of us.

What may look on the surface like another business transaction ? just another company out for profit ? has the potential to do tremendous good. The great promise of innovation encompasses not only the predetermined outcomes or reasons for investment, but also all of the opportunity that is unleashed as a result of those investments and decisions.

Shawn DuBravac is chief economist of the Consumer Electronics Association and the author of “Digital Destiny: How the New Age of Data Will Transform the Way We Live, Work, and Communicate.” Follow him on Twitter @shawndubravac.

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Comments on “How Private-Sector Innovation Can Help Those Most In Need”

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Anonymous Coward says:

This is all very interesting, but why are we even bothering to give Facebook the benefit of the doubt on this one? Didn’t TD just run an article about how Facebook is trying to exploit the poor people of the world under the guise of philanthropy with their walled-garden Internet programs? Under no circumstances does Mark Zuckerberg deserve to be spoken of alongside Larry Page and Elon Musk.

Raging Alcoholic (user link) says:

Corporate innovation

It might be a good way to go. The ACLU, scourge of Conservative America, is not a non-profit and that allows them much greater latitude in what civil liberties they protect.
For instance, the ACLU is not too big on guns but they do strongly advocate for privacy rights.

If it were public money I would not like it. If someone wants to give their money away no one should stop them

Is his plan to party on until he is old and on his death bed or does he want to start doing good deeds right away.

Mike Masnick (profile) says:

Re: Re:

Hold on a sec … I recall several articles in which it was pointed out that it this is not a charitable donation yet. The assets are being held by a business construct which is capable of making donations and is controlled by Zuckerberg for its tax dodging capabilities.

1. The whole point of the article is that, yes, it’s going to a for profit entity, and why that’s not a bad thing.

2. It’s not a tax dodge. It’s the opposite of a tax dodge. Putting money in a charitable foundation gets you out of paying taxes. In an LLC does not.

Anonymous Coward says:

Re: Re: Re:

2. It’s not a tax dodge. It’s the opposite of a tax dodge. Putting money in a charitable foundation gets you out of paying taxes. In an LLC does not.

This is Zuckerberg playing a public relations game by moving money from one of his pockets to another and calling it “charity”. There are plenty of legitimate charitable organizations he could give it to if he wanted to, other than himself.

Mike Masnick (profile) says:

Re: Re: Re: Re:

This is Zuckerberg playing a public relations game by moving money from one of his pockets to another and calling it “charity”. There are plenty of legitimate charitable organizations he could give it to if he wanted to, other than himself.

Yes, yes, I read the Eisinger piece too. Felix Salmon has a good response to that.

The idea that you can only do good through non-profit organizations shows a massive misunderstanding of BOTH the for profit AND non-profit world.

We covered this on our podcast as well:

Anonymous Coward says:

Re: Re: Re:2 Re:

Yes, yes, I read the Eisinger piece too. Felix Salmon has a good response to that.

By that article practically every company in the world is a charitable organization. Hell, even the RIAA, MPAA, AT&T and Comcast qualify. Still, I just don’t feel like I’m making a charitable contribution when I pay my cable or phone bill. No, I think you and I have different ideas of what makes for a “charitable organization”.

GEMont (profile) says:

If it walks like a duck and quacks...

Sounds all cherry and rose petals….

Still, a corporation has but a single mandate – to make more money next year than it did this year, ad infinitum.

Those funky zig-zag profit charts are the whole “brain” of a corporation, whether they be leasing plastic sky-cranes or manufacturing organic rain widgets.

Regardless of how “benign” or “humane” their public face appears, the only true purpose of a corporation, and the only thing that makes a corporation successful, is continuously escalating profits.

In all of these “altruistic” business ventures, I see naught but the most tempting of facades behind which greed may play good-guy while stealing old lady’s pension money.

Every organization that operates in secrecy in any way will inevitably attract criminals and become corrupt – the only useful measuring stick for the speed of corruption is the amount of money the organization handles and the “goodness” of its public facade.

Corporations always operate in secrecy and always deal in larger and larger amounts of money. Their eventual corruption is guaranteed to be either swift, or immediate.

While creating a for profit altruistic entity may not be a bad thing in and of itself, it is absolutely guaranteed to eventually become a bad thing, unless its mandate contains an absolute and irrevocable termination clause due ten years after creation, whether it fulfills its “intended” purpose or not.

In my humble opinion only, of course.

Mike Masnick (profile) says:

Re: If it walks like a duck and quacks...

Still, a corporation has but a single mandate – to make more money next year than it did this year, ad infinitum.

Regardless of how “benign” or “humane” their public face appears, the only true purpose of a corporation, and the only thing that makes a corporation successful, is continuously escalating profits.

That’s a load of hogwash. There are some companies for which that’s true, but plenty of corporations do not follow such a path. And, indeed, it is entirely possible to set up corporations with social missions as well (we are one such company).

Furthermore, the idea that every company only seeks to steal people’s money is ridiculous. Companies make profits by creating an exchange that benefits both parties in the exchange. Fucking over people out of greed does not lead to repeat business.

And, of course, this ignores all the advancement in the world today thanks to private companies.

GEMont (profile) says:

Re: Re: If it walks like a duck and quacks...

That’s a load of hogwash.

Your hog appeared to be in need of cleaning.
Consider it a gift.

but plenty of corporations do not follow such a path.

How exactly, does a corporation not follow the “more money next year than this year” formulae and remain competitive with similar corporations that value profit over all else?

Are you saying that there is a corporate structure that actually considers flat line profits, or even waning profits, as a success, or as a intentional goal?

Can you post an example of such a corporate structure?

This is something I’ve never encountered, and consider highly improbable if not outright impossible, but I’d be very interested in discovering such an entity and seeing how it functions.

this ignores all the advancement in the world today thanks to private companies.

I did not ignore it. It simply had nothing to do with my point, and in and of itself does not exonerate the process.

War and Crime have also fostered an enormous amount of “advancement”, but I do not consider that fact to be cause for praising War or Crime.

GEMont (profile) says:

Re: Re: Re: If it walks like a duck and quacks...

Dear Mike,

After a short perusal of your company creations, I see where you’re coming from with this Good Guy corporation thing.

To try and clarify, I did not state at any time that a corporation must be “set up” as an “Evil Entity”, or that all corporations are corrupt, right out of the gate.

In fact I stated on numerous occasions that any corporation or organization that deals in money will “eventually” become the property of men and women who will attempt to use it for their own nefarious purposes and that it will thereafter become more and more corrupt regardless of how benign or humane the corporation’s original intent might have been.

Church and government are great examples.

To put this in a perhaps more obvious light, techdirt and its associated companies, while it does not actually “deal” in money, nonetheless may someday, if not already, make money, and once it becomes big enough to a.) make a lot of money, or b.) cause wealthy people to lose lots of money – through awesome reporting and its public-opinion-setting articles – it will become a target for take over by those who either want to use it to make money for themselves, or those who want it to stop interfering with their ability to make money.

Consider for a moment, that if you were to die, or be otherwise removed from your position of control, other people would become the leadership of the ship you built, and that their destination may be different from that which you set as your bearing, even if you have already chosen your replacement.

Thus, while you may have created a company that has a 100% benign and beneficial mandate, there is nothing preventing it from becoming corrupt, either through intervention by others more powerful than yourself, or through the loss of your guidance and control, or both.

Any benign organization that is effective, will make enemies.

The more effective, the greater the number of enemies.

If it also makes money, then it will also attract the attention of those who wish to use its good name as a facade behind which they can profitably operate nefariously.

These people will also have the willing assistance and eager support of it enemies – those who the organization was effective against.

You might also consider that the vast majority of corporate entities are NOT set up for benign purposes, and ARE set up specifically to make more money next year than this year.

All such institutions, organizations and corporations will become corrupt over time, if they did not indeed begin life as pure monetary siphons.

As an example, try Green Peace, or for that matter, any of the myriad Pro-Earth organizations – Institutions that were obviously set up for an extremely benign purpose – saving the earth.

Utterly benign on the surface – Save the Whales, Save the World – yet they are ALL fully aware that 75% of the damage to the eco-sphere – land and water and air – each year is due to the cattle industry.

These institutions do absolutely nothing to try and prevent the cattle industry from polluting the seas and air, and destroying the land, because to do so would hurt their ability to “raise funds” – because they know that the public will NOT give up their barbeque beef and going against the beef industry would lose the popular support from which their funding is derived.

They are just men and women who treasure their own incomes and the continued existence of the source of that income – their institution – over that of the earth, like the humans that compose the membership of any other such institution, eventually.

Self survival first.

Because they have chosen to ignore the problem that is actually causing all the damage, for fear of losing money, they have also chosen a path that will lead these institutions towards greater and greater corruption and eventually, they will likely end up creating fake crisis in order to “fight” those crisis, like government and church does.

The only way to prevent this natural corruption is to limit the length of time any institution can remain intact, to 15, or 20 years, after which it is automatically and irrevocably dissolved.

This will never be allowed of course.

You yourself – at age 63 – would not want the future TD Inc., to face automatic dissolution when it was making 130 million a year after taxes, even if it was nothing more than a propaganda tool of whatever repressive regime runs America at that time.

Mike Masnick (profile) says:

Re: Re: Re: Re:

No, because you regularly fellate lord Goog, and now it appears you’ve acquired a taste for Zuckerberg as well.

Ah, I see. You’re not even remotely serious.

We also regularly criticize both companies. It’s called being honest, not being religious. If they do something that we think is bad, we say so. If they do something we think is good, we say so.

This is a guest post, and the topic was interesting. Do you have any legitimate criticism of the actual content, along with evidence for why, or do you just have a blind, religious hatred for no good reason?

Anonymous Coward says:

Except the Arab Spring has been an abject failure:

Zuck is a typically self-interested Silicon Valley autistic sociopath whose previous PR-laden attempt at pouring money into a noble cause made him a laughingstock at best and public enemy #1 in Newark’s public school system at worst.

Why should we regard this initiative as any different from two-faced politicians having photo ops at soup kitchens and then voting to slash the very things that keep people out of poverty in the first place?

Moreover, why should this dubious “good deed” on his part absolve him of all the other no-goodnik things he’s done with Facebook with regards to everything from complete and willful ignorance of privacy issues so that he can line his stupid hooded sweatshirt pockets with money from Big Data, to the unethical use of that data in psychological experiments on users’ sense of well-being without their explicit consent?

You mean to tell me he’s not going to do it again, but this time with the full cooperation of repressive regimes like China and Saudi Arabia who have no qualms whatsoever about surreptitiously making their denizens into guinea pigs and execute members of the press who report on it? There is no APA to provide oversight in that part of the world.

Then again, I could speak similarly ill of the U.S. where psychologists were implicated in aiding the CIA to design torture methods on Iraq war prisoners, but at least those rogue shrinks were subsequently disbarred. No one has any idea what Zuck and his Huawei heiress wife plan to do with this “foundation” of theirs. If you really think the mere existence of a charitable organization set up in a couple’s name is proof of ethical character, go look up the Clinton Foundation and their ties to that bastion of human rights and democracy known as Saudi Arabia. I rest my case.

This has blood and black-ops written all over it. Next time please tell your readers you’re shilling for Facebook or a Zuckpuppet by any other name.

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