Advertisement
News by VICE

Exclusive: Zuckerberg group to spend $45 million on political causes

The Facebook co-founder and wife Priscilla Chan have committed $45 million end mass incarceration and fix the affordable housing crisis in American cities.

by Alex Thompson and Noah Kulwin
Oct 24 2017, 6:00pm

Mark Zuckerberg’s listening tour of the United States, he insists, is not a political campaign. But while “Zuck 2020” may not be happening, the 33-year-old Facebook co-founder is planning to influence American politics for generations to come. And that campaign has already begun.

The world’s fifth-richest man has publicly committed $45 million — most of it in the first 10 months of 2017 — into groups aligned with two political causes: ending the era of mass incarceration and fixing the affordable housing crisis in American cities. The sum, reported here for the first time, represents the first series of investments by the Chan Zuckerberg Initiative (with wife Priscilla Chan), or CZI, which is setting goals to extend far beyond the next election cycle.

“I think that the sort of political scuttlebutt has been kind of silly both in terms of what we’re doing and Mark’s travel,” said former Obama campaign manager David Plouffe, the head of CZI’s political work, in an interview with VICE News. “You can’t manage a fictitious campaign.”

With a $60 billion-plus funding commitment, CZI would be the biggest foundation in the world, almost 30 percent larger than the Bill and Melinda Gates Foundation at $43 billion. And like the Gates Foundation, CZI is putting a significant chunk of its resources into engineering, education, and scientific research, with the goal of “advancing human potential and promoting equal opportunity.”

But CZI isn’t a foundation; rather, it is structured as a limited liability company, meaning it has more flexibility in political advocacy and far fewer legal obligations to disclose how it does so.

Plouffe is one of several political veterans Zuckerberg has brought together over the past year, signaling to Washington and beyond that when CZI takes on a political issue, it plans to win. “We are in the first half of the first inning,” said Ken Mehlman, the former RNC chairman and campaign manager for George W. Bush’s 2004 reelection, who is leading CZI’s public policy advisory board on a volunteer basis. “[Zuckerberg and Chan] are thinking in terms of achieving social change over decades, not in terms of politics or years or election cycles.”

After bringing on Plouffe and Mehlman, Zuckerberg explained to the New York Times that he thought political work was instrumental to accomplishing the organization’s ultimate philanthropic goals. “At the end of the day, the government has far more resources than any individual organization does,” he said.

“A black box”

Because it is structured as an LLC, CZI won’t be the tax shelter for Zuckerberg that other nonprofits have been for some elites. Zuckerberg has already liquidated $1 billion in Facebook shares to fund it, and its disbursements aren’t tax-free. But it also won’t have to publicly disclose individual grants, operating budgets, or total assets, like most foundations must on 990 forms. They also won’t have to argue they’re a “social welfare” organization as many overtly political nonprofits — such as those that employ Karl Rove and other political operatives — must do.

“Clearly, CZI wants the latitude to advocate on political and social issues and they don’t want to have to worry about doing backflips to meet the requirements to reach tax-exempt status,” said Sheila Krumholz, the executive director of the watchdog Center for Responsive Politics. “Now they can be political; they just have to pay taxes on it.”

As an LLC, CZI can invest in for-profit businesses and startups, acquire companies, or develop technologies needed to achieve its goals. It has already hired 100 in-house engineers. It could also buy advertisements (including on Facebook), and expand beyond criminal justice and housing policy to potentially more controversial issues if it’s deemed within CZI’s broad mission of “advancing human potential and promoting equal opportunity.”

CZI could also make money, although it so far appears they’re more interested in spending money than making it.

“Being an LLC allows them to combine policy advocacy and direct, for-profit investment in a way that a traditional foundation does not,” explained Ben Soskis, a research associate at the Center on Nonprofits and Philanthropy at the Urban Institute. “It’s pretty clear that Zuckerberg is OK with getting his hands dirty in politics, and there are certainly some philanthropies that are not.”

While Zuckerberg’s philanthropic arm has so far disclosed the amount they have given to each organization they’ve publicly embraced, they have the ability to conduct business — and affect the country’s politics — largely in secret if they choose. It’s possible the LLC is already funding political advocacy groups and the public would have no way of knowing, akin to the “dark money” activities of the Koch brothers.

Just as Facebook’s algorithm distributes information and ad dollars in unseen ways, CZI will be able to tip the scales of politics with stacks of cash.

“It’s basically a black box,” said Soskis. “CZI seems to be pretty transparent about their grantmaking, but the point is that their transparency is entirely discretionary, and we don’t have the mechanisms to know for sure.

CZI officials have been explicit that their dollars are going to groups with proven records (one fundee described the vetting process as “proctological”) of lobbying for legislation, passing ballot measures, and pressuring city officials to shift priorities on housing and criminal justice reform.

And their pace is quickening. Over the past five weeks, Chan Zuckerberg announced grants to nine groups, including Families Against Mandatory Minimums, Alliance for Safety and Justice, TechEquity Collaborative, and The American Conservative Union Foundation’s Center for Criminal Justice Reform.

A visit to San Quentin

A look at Mark Zuckerberg’s Facebook feed over the past two years shows the origins of his and Chan’s desire to remake the country’s criminal justice system. CZI officials say it came from the couple’s visit to San Quentin State Prison; meeting with Anthony Ray Hinton, a black man who was on death row for 30 years before being exonerated; and reading Michelle Alexander’s influential book arguing that “tough on crime” policies were racist, “The New Jim Crow.”

Plouffe believes CZI has a unique political opportunity right now to fundamentally reform the system that has 2.2 million people — disproportionately people of color — behind bars. Conservatives believe you can save taxpayer dollars by getting people out of jail and liberals want to see a more racially just system put in place.

“On criminal justice, this is an amazing window right now,” Plouffe said. “So while that’s in place, you are passing as many laws as you can, and strengthening as many groups as you can, and working with groups that are doing smart legal work.”

CZI has committed millions of dollars to groups that have already funded successful 2016 ballot initiatives in Oklahoma and California that reformed sentencing laws for nonviolent criminals, helped pass “raise the age” laws in Louisiana and North Carolina that prevent people under the age of 18 from being prosecuted as adults, reformed mandatory minimum laws in Iowa with unanimous support in both houses of the state Legislature, and helped push New York City Mayor Bill de Blasio to announce the closing of the jail complex Riker’s Island.

The underlying thrust behind all of these efforts is trying to make the various levels of American government lock up fewer people. “We can’t jail our way to a just society,” as Zuckerberg put it in 2015.

A problem for Facebook

The couple’s interest in affordable housing, however, didn’t require any treks or expeditions, as the San Francisco Bay Area, where they live, is ground zero for the lack of affordable housing plaguing many American cities. The problem is so stark that Facebook — its Menlo Park headquarters is located in one of the most expensive ZIP codes in the country — announced plans to build employee housing and a small village at its corporate campus this past summer. As with many large tech companies in the Bay Area, its support staff in cafeterias and custodial services also struggle to find affordable housing within commuting distance.

As a result, CZI officials have been consulting dozens of academics, legislators, developers, and other experts in housing to find solutions, and they are still looking and listening. These efforts include a grant to UC Berkeley’s Terner Center for Housing Innovation to generate more ideas and research.

Housing is one of the issues where CZI’s LLC structure has allowed it to invest in market-based solutions, such as a $5 million investment in Y Combinator startup Landed, which helps teachers afford down payments on homes by investing in the home.

“There are not many ways to solve the housing problem: Build more supply, pay people more, or subsidize,” said Landed co-founder Alex Lofton. Any money made from such an investment then goes back into the fund, which, in theory, creates a “market-based solution that will go on in perpetuity,” Lofton said.

But as with criminal justice reform, government advocacy will be a critical part of CZI’s strategy on housing. “I don’t think you can solve this problem without government action, and I don’t think CZI thinks so either,” said professor Carol Galante, the Terner Center’s faculty director.

CZI-funded groups have donated money to successful ballot initiatives in the Bay Area and lobbied for California’s recent housing package — the biggest in a decade with 15 separate bills, which Democratic Gov. Jerry Brown signed at the end of September. The package contained a $4 billion housing bond on the state’s 2018 ballot, new rules for cities that are failing to meet their affordable-housing goals, a streamlining of environmental regulations with the goal of expediting the construction process, and permanent funding for affordable housing units.

Targeting local politics

Like a lot of conservative money from wealthy donors that has flowed every which way over the past decade, CZI sees a big opportunity in local politics.

“[CZI] money is more likely to be a difference-maker on the state level than the federal level,” said Lenore Anderson, a Chan-Zuckerberg grantee. Anderson is the executive director of Californians for Safety and Justice and was a co-author of Proposition 47, a successful California ballot initiative passed in 2014 that allows Californians with felony convictions to wipe their records clean after certain felony crimes were revised down to misdemeanors.

Others say it’s just a matter of time before CZI starts flexing its muscle on national issues. “They’ll find that to really force systemic change, they’ll quickly be focusing on the federal level, because that’s where you get scale,” said Juleanna Glover, a Republican consultant who has represented Silicon Valley companies such as Tesla and Uber.

Earlier high-profile efforts funded by Zuckerberg to pursue both political action and philanthropy have met controversy and mixed results.

Before immigration reform group FWD.us became a major player in the fight to preserve DACA and its recent expansion into criminal justice reform, it had fought hard and failed to pass comprehensive immigration reform in 2013-14, and was considered a political flop. And Zuckerberg’s $100 million donation to Newark, New Jersey, schools in 2010 famously brought significant local backlash — although a new study (funded in part by CZI) suggests that student outcomes have begun improving in the last few years.

But CZI officials say their efforts aren’t about one piece of legislation, or one city, or one election cycle. In fact, they see their role as being engaged on several issues and pieces of legislation continuously over the coming decades.

“What you’ll generally see is you’ll see activities flair up around a moment,” said Plouffe. “But if you’re out there in a sustained way, organizing and making arguments and telling compelling stories, you will often strengthen yourself for that next moment.”

Zuck doesn’t even need to run.