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Facebook CEO Mark Zuckerberg unveils the company's new location services feature called "Places" during a news conference with staff at the Facebook headquarters in Palo Alto, Calif., , in August 2010.
Updated 6:50 p.m. ET: Facebook filed papers Wednesday to raise $5 billion in its initial public offering of stock. Facebook said it will apply to have its shares listed with the symbol "FB," suggesting it will be listed on the New York Stock Exchange. The IPO could be the biggest ever for an Internet company.
Original story:
What will a new generation of Facebook millionaires do with their wealth?
It’s a good bet that many will splurge on a fancy new car, purchase a new home or perhaps even plan a trip to space. But it's also likely that they’ll be giving some of it away to charity.
Experts expect charitable causes and nonprofits to be among the side beneficiaries of the minting of 1,000 or more new millionaires from Facebook’s impending initial stock offering.
“When wealth is created like that and folks are holding highly appreciating assets, it’s a great opportunity to start a philanthropic legacy,” says Rob Mitchell, CEO of Atlas of Giving, a company that tracks and forecasts charitable donations across America.
Facebook, founded in 2004, has reportedly supplemented employee salaries with stock incentives over the years. The Silicon Valley-based social media company now has more than 3,000 employees, and many of them will be able to cash in on their stock after Facebook goes public -- typically after a lockup period expires.
"With an IPO you create a liquidity event. These people in theory are just as wealthy today as they were before filing the IPO. But liquidity helps in terms of philanthropy," noted Patrick Rooney, executive director of The Center on Philanthropy at Indiana University.
He said studies have shown that entrepreneurs are about twice as generous as people who inherit their wealth, and people who are millionaires tend to give a higher share of their income and assets than those who are not.
“Will all the new thousand millionaires give? Absolutely not. But one of things we saw in 2011 was the fact that wealthy people were again interested in donating appreciated assets and specifically stock,” Mitchell said. “One of best ways to give is to give appreciated assets because you can avoid capital gains tax.”
A cue from Zuckerberg
People who track such things can’t recall ever seeing such an immediate influx of wealth in Silicon Valley -- or beyond. The closest similar scenario was when Google went public in August 2004; by some estimates more than 900 employees became instant millionaires, at least on paper.
To lessen their tax burdens, the new Facebook millionaires could contribute some of their stock to a donor-advised fund, a type of public charity that serves as an umbrella giving vehicle. They could also set up a "charitable remainder trust," whereby a chunk of money goes to a charity after a specified time – like upon death – but the donor receives income or interest off the donated assets. In both cases, the donor can avoid capital gains tax and might also be eligible for an income tax deduction.
Employees could take a cue from Facebook’s 27-year-old founder, Mark Zuckerberg, whose net worth pre-IPO has been estimated at more than $17 billion. Zuckerberg, one of the youngest billionaires in the world, has signed on to The Giving Pledge, a campaign launched by Bill Gates and Warren Buffett to get America’s superwealthy to pledge to give at least half their fortune to charity. Zuckerberg also donated $100 million to Newark, N.J., schools in 2010.
"People wait until late in their career to give back. But why wait when there is so much to be done?" Zuckerberg said at the time. "With a generation of younger folks who have thrived on the success of their companies, there is a big opportunity for many of us to give back earlier in our lifetime and see the impact of our philanthropic efforts."
Zuckerberg isn’t the only wealthy person who believes the rich should give more to charity.
PNC Wealth Management recently surveyed 555 millionaires and found 70 percent believe they bear a special responsibility in society to help the less fortunate. Sixty-four percent believe they should give substantial sums to charities to improve society.
Facebook didn’t reply to an email request for comment on this story.
Too young to give?
But Robert Frank, who writes about culture and the economy of the wealthy in his The Wealth Report blogin The Wall Street Journal, doesn’t think charities will see an immediate significant impact on charitable giving by Facebook employees.
“Many are still very young so they are still in an accumulation phase of life as opposed to a distribution/legacy phase,” Frank says. ”These are people who, for now, want to change the world through their company rather than through philanthropy.”
Frank says it’s likely that some of the accumulated stock wealth will be funneled into foundations for tax purposes. But that money won’t trickle out to actual groups or grants for many years – or even generations.
“The money will be going to mansions before you see it going to funding for villages in Africa,” he says.
But for charities that do benefit, Rooney says the trend of fewer people attending Mass or other religious services means that the newest generation of millionaires is more likely to give to secular causes than to churches and other religious organizations.
Mitchell and Frank agree that any charities that do reap Facebook dollars are likely to be more niche-focused and mission-oriented. Frank cites education and scientific research in areas such as space, alternative energy and food supply as among the causes technology-driven wealthy people are drawn to.
Indeed, one former employee told Reuters he’s is looking into booking a trip to space once he’s able to cash in on his Facebook shares.
Which is why Frank thinks there will be a “long delay” in Facebook philanthropy.
“People typically don’t start thinking about this stuff (philanthropy) until they’re in ‘50s or ‘60s,” Frank says.
Facebook employees “are going buy a lot of stuff and they’re not going to give away a lot of stuff for a long time. Part of that is where they are in the wealth spectrum and timeline of life.”
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Anyone who reads this article and gets an urge to prove the predictions wrong, check out CASA of Menominee County on FaceBook or www.menomineecasa.com for a worthy cause. We are a small group of volunteers on the MI/WI border working with abused and neglected children in Menominee County. I have seen kids' lives change by having a volunteer assigned to them throughout the entirety of their case; someone who cares for them, works for their best interests and gives them a voice in court. If you don't have the money to donate, check your local area for a CASA program and volunteer your time...we can change futures! :)
"What will a new generation of Facebook millionaires do with their wealth?" It's not your money, so it's none of your business.
Yup, I could care less what they spend it on. Just as long as they pay their taxes like I normal people do.
yep agreeded pay your taxes ... but most likely they will find loopholes lol
But just wait, you'll have the typical crowd here soon b-tching and moaning because they won't be the ones getting that money. It happens anytime MSN posts an article about someone else's money. People have to come here and complain because someone used THEIR money to buy a house, or a horse etc etc. According to them, it doesn't matter how much the person gave away to charity, they'll simply whine about the money he still has.
@Bela Ghostly
Go away troll. Your infantile name calling simply shows you have nothing intelligent to offer the discussion. If and when you ever do, feel free to return. Till then, bye bye.
No doubt - it doesn't take more than a day for organizations & 4th cousins to come out of the woodwork with their hands out. I bet vested employees of Facebook now wish employment was anonymous.
We could all use this kind of problem.
This kind of story really annoys me...these do gooders on both sides that think anytime someone strikes it rich that they need to share it with charity, their fellow citizens or churches...it's not their money and society should not be browbeating sucess, it should be browbeating the miserable failures that aren't contributing anything...
Don't forget to mention that spending their money creates demand and, therefore, jobs...giving to charity gives very little returns. Now, I'm not saying this to be cold-hearted or that charities are bad. But I am saying that a blind idea that charities are a better way to spend your money is not necessarily correct. They may effectively help way more people by not giving to charity.
I agree!!!
What a difference between current thinking and the attitude at the start of our country.Back then you gave your kids a house,a good education and maybe a start in the company - but the rest of it you left to benefit the community,the country,etc.The next generation were expected to earn their money. Now the next generation expects to be given it all.
But thank God my parents decided to leave all of their money to us kids! :~)
What a difference between current thinking and the attitude at the start of our country.Back then you gave your kids a house,a good education and maybe a start in the company - but the rest of it you left to benefit the community,the country,etc.The next generation were expected to earn their money. Now the kids have their hand out first -front and center.
Katheryn Brandy
" Now the kids have their hand out first -front and center."
So does half of the country, rich, poor and those in between. Give to the charity of your choice. The government isn't a charity.
True words Bob
Save by Faith Children Foundation, Inc. is a human services agency providing
opportunities, recreational activities, social service, and character building
for low income children and families at risk in the inner city of Chicago, IL.
We will provide guidance; resume writing, job application assistance, balancing
awareness, and teenage prevention from gangs, drugs, and violence. Our focus is
to help kids aged 13 to 18. We want to provide programs for kids to help get
them off the streets.
Can you tell me a charity or non profit organization where nobody gets paid a salary? If its a charity, why do people get thousands if not millions to run it. Why is not their time operating it donated? I would donate more to charities and personally know lots of others willing to donate if all the money went to charity and not pay ridiculous salaries to people that are suppose to be running these charities. I know all have operating expenses and that's to be expected. But if you're asking people to donate thousands or millions of dollars and people operating the charity are taking home 6 figure incomes a year, well, I just don't get it !
DUH
entrepreneurs...New money; learning to dodge taxes
inherit their wealth....Old money; knows how to doge taxes
people who are millionaires tend to give a higher share of their income and assets than those who are not.....who'd thunk it?
Cynical but mostly true...
charities are too pushy nowadays.they call me all the time and send me letters begging for money.once you donate,they hound you for more.
So the Truly Selfish have taken over the boards? I'm not surprised, but wish I was. Some incredibly horrible comments here. What has happened to people?
I was raised to believe that if you're lucky enough (not merely industrious enough) to make it in this world, you reach behind you and help the next person up, not put your foot in their face and push down. Whatever happened to values? I'm not some devout person who gives till it hurts, but to hear the folks here, I must be a frickin' saint!
I must wonder how many of those who posted that the wealth is no one's business but their own, consider themselves Christians? Laughably, I'd bet most of them. I must wonder, therefore, how many of them would cajole me into re-reading my Bible to find where Jesus commanded, "Thou shall pull thyselves up by thy bootstraps"?
I would argue that pumping money through the economy by spending could be a better use of their money and may have the ability to help way more people. A charity is often just a giving mechanism, but not a problem solving mechanism. The best way for people to overcome their problems is to be able to fix the problems themselves...which comes with the economic means to solve them.
Just look at the Red Cross in countries around the world. They aren't really solving any problems. They're just keeping people alive in their problems. What those people really need is the ability to solve the problems themselves (i.e. a working economy to participate in). This liberation comes from demand for products and services, which comes not from charities but from somebody willing to pay for that product or service.
An blind belief that give to charities is always good is misguided.
Over half of Americans have either tried Facebook and quit to perserve their privacy or like me never started forking over my personal panty drawer to start with. YES YES I heard they have privacy protections but given the idiots we have these days most don't understand how they're giving away their right to privacy via an IP address. The privacy options are just an illusion.
Bela - but here you are -posting on a liberal board of a liberal network. You can't just say you are going to boycott -you actually have to or they won't care
that is one thing i agree with. Although it takes moxy, guts, know how and the willingness to sacrifice to make it big . It also takes an immeasurable amount of luck to make it. Most people who become rich like the arrogant premise of I made it all on my own screw the world. Ahem When you were born how did you feed yourself, How did you make it through school, How did you get to survive for many years all by yourself. How about the talents you recieved did you do it all by yourself.
How about the guy who has two or three jobs and works 80 plus hours a week but is not smart, is he a less deserving human being because he wasnt born as smart. How about you doing it all by yourself but at any moment you could be stricken with cancer or die in an accident. It happens all the time with some of the most wonderful sometimes more deserving people.
My wife and i are fortunate enough and are becoming wealthy at a young age and i am starting to hate it already. As you move up in circles the people you meet are more and more fickle low lives. Bless those who stay true and full of philanthropy though
I hope the lucky ones enjoy their stock. Many don't, this is one of those "lucky guys" stories. They will splurge on items but at the same time, that splurge of wealth will be distributed to people who would like to see them spending. Home construction, stores, services, etc....
I know if I was lucky enough, I'd be shopping, traveling, seeing lifes pleasures while I could. Sure, I'd earmark some money for a church, charity, etc. that I found of interest but I know I could make a lot of my family and friends happy.
No, It doesn't work like that. They are "paper" millionaires only. No cash. They can borrow and take on debt against it.....maybe....
They cannot sell their stock for months if not years and can only hope that the company and price does not tank in the meantime.
Jello heads!
Remember how some Mafia leaders helped take care of their home neighborhood? Same thing with Facebook. The best criminals always present some facet that makes them look moral.
What?!? They're not going to instantly begin "creating jobs", since they're now, "job creators"???
Hello folks, while the media presstitutes have the readers opining on the who's who of "reality" news they are failing to cover the biggest business story in perhaps our history.
The ISDA (International Swaps and Derivative Association) is expected to make a decision as early as this week on whether five major US banks will go insolvent. The ISDA organization is more powerful than governments, they determine how world financial events are categorized. These are the people who are going to determine if Greece is a credit event that constitutes a default. If so, the 5 largest banks in America who hold 97% of the over the counter derivatives will have to pay up and will collapse because they don’t have the resources to pay off the credit default swaps they are liable for. The derivative market liability is estimated to be 1.4 quadrillion dollars.
The saving grace for the banks is that they heavily influence the ISDA and can even be called the ISDA. I know that sounds like double speak but we are coming to the end of the road when the banks are going to have a coming to meet Jesus meeting regarding their actual liquidity.
In other words the markets call taking a loss and in this case on Greek bonds a haircut (loss on expected return of bond investment). They have already taken a 50% loss on Greek bonds but the ISDA didn’t call that credit event a default. If you or I invested our life savings on Greek bonds and we were told we would have to take a 50% loss on our expected return, I think we would call that a default.
Now, the European Union is telling the Greek bond holders that they will have to take a 70% haircut. The predicament that is clearly becoming evident is at what point does the ISDA consider bond losses a default. You see where this is headed? Even if the ISDA doesn’t declare a 70% loss as a default, which they probably won’t since the banks have a big say in the default declaration, it is getting dangerously close to the 100% loss. At the 100% loss how can they not call that a default and then the USA’s 5 largest banks are forced to pay and can’t which would cause them to collapse. Greek bondholders who thought they had principal insurance are now screwed and left holding the bag. Greek bondholders (big euro banks, big Euro governments, big hedge funds) will now be insolvent.
Greece is bankrupt and the bulk of the austerity measures haven’t even been implemented yet which will seriously impede their productivity.
In order to stave off the inevitable later rather than sooner, being that it is an election year and all, the powers that be will try not to allow this to happen. We will see global QE3 (printing and devaluing currency) on steroids until Greece succumbs to their ordained default status. The Federal Reserve Currency Swaps going on right now in my estimation were the beginning of QE3.
Don’t expect the media presstitutes to cover the climax of this obscene financial abortion called the derivatives market. Once this starts to occur in earnest, listen for the beating of the one world currency drums.
To see for yourself how much power the ISDA wields, Google the International Swaps and Derivative Association.
Too long...didn't read....
SloppyJoe Good thing. Doomsday stuff about credit default faults and Greece paralleling how the media is hiding the truth of this possible financial horror from the public in favor of feel good stories. Scared the living crap out of me and is what nightmares are made of.
And MSNBC background people - I don't want your system pushing me to post to Facebook. I don't care about anything on Facebook when I am on MSNBC, NYT, or a daily.
I have always thought FB to be intrusive and getting more and more so which means I put only minimal info and rely on email or a telephone call for security issues. I usually play a little 7card poker on the zynga site, read nonsense from friends or their friends that FB pushes and get off. I resent companies like the local news paper or MSNBC trying to force me to use FB to sign on to read or make a comment so don't. I also don't read the adds or participate with them and wonder if the companies that advertise and provide that revenue stream to FB ctually see a sales increase or just do it because they get sold that if they don't they will lose business. Amazing that FB walks with 50% profit on revenue. A New generation that just can't wait until all their freedoms are taken away.
You guys are chuckleheads! You act like they are actually getting money that they can spend.
It doesn't work like that. They are "paper" millionaires only. Value of stock in an account. That's it. No cash. They can borrow and take on debt against it.....maybe....
They cannot sell their stock for months if not years and can only hope that the company and price does not tank in the meantime.
Jello heads!
This offering is so typical, without more than mentioning what the product actually produces to entertain the consumer.
This offering follows the well-practiced venture capital scheme where the equity stock holders begin to extract their investment amplified by extracting dollars from would be common stock holders. After equity formation capital is fully extracted for exorbitant capital gains. The common stock will played on the sucker stock market, sold to mutual funds, pawned on to retirement portfolios.
This is the only way to make money; produce a buzz for a product of no value added, enticed bored and bothered to subscribe to it, IPO it to death.
Bundles of money sure enough and new world headquarters sure enough and endless mergers and acquisitions to soak up idle cash sure enough.
The shrewd traders will play the information game and make money.
In the end after a few years company will not be recognizable and to product or purpose really.
It will be entertaining to follow (on Facebook) the flow of capital from this offering and guess who might benefit.
Then sit to watch millions and millions of venture capitalists succeed as never before, lifting a nation to live effortless on capital gains.
If on the other hand you have company based on generating equity capital shares for millions and millions and millions more we dump the common-stock pronto.
Oh and lock your doors the starving poor are growth business these days
Good for them
Zuckerberg is a big Obama fan and should be. Stingy and greedy Republicans would say no.
I agree with Rick 546746 and Matt1145746: It's nobody's business who gives their $ or how much! Our country needs to create jobs and get people back to wrok NOT soak successful people with taxes. If Mark Zuckerberg gives $ to NJ School systems great BUT here's my question... what improvements have been made with those school systems? More liberal programs? When has throwing $ into public school systems been the answer? NO, I am NOT against giving away $. I give lots away...but it's nobody's business to tell me what to do with my $! period!
what charities DONT want you to read. please visit, happycow.net (search) 4mula1, WHY charities must stop funding animal research. NO LIE can live forever!.. also, reform march of dimes.org