technology billionaires are so generous, why?

The world is very conflicted on how they feel about Mark Zuckerberg’s recent, startling announcement. The 32-year-old Facebook boss, who became a parent for the first time with the birth of daughter Max, wrote a 2200-word Facebook letter to his newborn on Tuesday, welcoming her into the world.

“Like all parents, we want you to grow up in a world better than ours today,” the post reads.

To show his commitment to his daughter’s generation, Zuckerberg announced the creation of a new company – not a charitable trust, but one which would explicitly invest in socially impactful issues – where he will spend 99pc of his Facebook shares - the equivalent of $45bn over a lifetime.

Many philanthropic tech founders are investing in issues close to their hearts. A personal connection always makes people more committed.

The media response has spanned the gamut of reactions from slightly patronising to useful advice on how Zuckerberg should spend the money for maximum impact, all the way to cynical and reasoned debates on whether the money is truly charitable, and/or just a smart way for the Zuckerberg-Chan family to avail of various tax benefits by donating its sizeable wealth to its own Foundation.
Either way this is a lot of money. If managed properly, it could change the world. Zuckerberg can clearly afford it: he is now the richest man under 40, and the world’s 7th richest.
Even after his donation, his wife Priscilla and he will be worth at least $455 million. They join an elite rank of billionaires, roughly 137, who have pledged to give away more than half of their total wealth.

Technology founders are the new industrialists of our times. While the world’s richest men (they were all men) in the 20th century all made their money in the gritty, cutthroat worlds of oil and steel, the billionaires of today have built their industry on the bedrock of the internet.
On the recent Forbes 400 list of richest Americans, six of the top 20 made their money in tech – Microsoft, Oracle, Amazon, Facebook and Google. More billionaires come from tech than any other industry on the list.

It’s clear tech founders, in particular those in Silicon Valley, are self-made – they have amassed large fortunes mostly from inventing everything from search engines, to social networks and strap-on cameras. The rising wealth has led to the inevitable growth of a bubble subculture in the Valley, with backlash against arrogant, clichéd startup-types, who are mockingly referred to as “Glassholes” in reference to the now-defunct Google Glass.
But while some technology entrepreneurs may be getting rich inventing lazier ways of doing your laundry or apps that objectify women, those who have garnered the most success seemingly want to invest in a better future.
Founders of Google, Facebook, Apple, and Microsoft have invested in energy, medicine, online learning and artificial intelligence, to name a few.
And it’s not just for-profit projects – the numbers show that technology founders are some of the most generous philanthropists too.
According to the Chronicle of Philanthropy’s Philanthropy 50 list, which compiles data on America’s biggest donors each year, 10 of the top 20 biggest donors of 2014 are from the technology world.
The obvious ones are Bill and Melinda Gates, who got the top spot overall having donated nearly $2bn to charitable causes ranging from education in the United States to healthcare in the developing world, through their eponymous foundation.
But there were several new, unexpected entrants too – Whatsapp founder Jan Koum, 39, gave 555 million dollars to the Silicon Valley Community Foundation, ranking him number 4 on the list.
Sean Parker, the founding president of Facebook, along with GoPro chief executive Nick Goodman and his wife Jill followed Koum at numbers 5 and 6 respectively. Both donated more than half a billion dollars.
Google’s Sergey Brin who comes in at number 9, donated his $382m partly to Ashoka, a nonprofit that brings together social entrepreneurs to work on education, the environment, and women’s issues.
The reason that tech founders are giving generously could be a reflection of the current financial environment – it’s never been easier to raise investment, valuations are peaking, unicorns and even decacorns – companies valued at ten billion dollars – abound.
According to CB Insights, there are now a record 143 unicorns, with a combined valuation of $508bn. They could be giving it away because they are confident they will be making more.

But many philanthropic founders are investing in issues close to their hearts – reflected in the establishment of family or community foundations such as the Chan Zuckerberg Initiative or to the Silicon Valley Community Foundation, where they can be closely involved with the social causes they give to.
A personal connection always makes people more committed.
WhatsApp founders Brian Acton, left, and Jan Koum (right). Mr Koum said he wished to "set the record straight" on the nature of the partnership with Facebook  Photo: Eyevine
Sean Parker, for instance, has set up an allergy research centre at Stanford University with part of his endowment. The reason, he says, is partly because he suffers from anaphylactic allergies himself and wants to find a cure so his children won’t suffer the same crippling, life-threatening symptoms.
Google’s Sergey Brin, 41, has donated $150 million to the study of ageing and Parkinson’s disease cures, because he was found to have a mutation of the LRRK2 gene linked to a higher risk of Parkinson’s disease.
These newly-minted billionaires are also remarkably young, compared to their peers. According to a recent report by UBS and PwC, 23pc of today’s billionaires launched their first venture before they turned 30.

How the money is put to use is as important as the giving of the money itself.

For the first time ever, Forbes compiled a rich list of under-40s this year. Of the 21 billionaires on this list, 19 made their money in technology companies. In fact, as Forbes points out, eight of the richest entrepreneurs made their money from Facebook, including the three richest, and the youngest, Oculus Rift inventor Palmer Luckey.
Having made money quickly and unexpectedly might actually lead to greater generosity. In the 90’s, Whatsapp founder Jan Koum was an Ukranian immigrant who used to collect food stamps from a local welfare office and lived off his mother’s disability allowance until he was 18. Only two decades later, the memories have clearly not faded: just last year, he signed off the $19 billion sale of his company to Facebook at the very same welfare office.
We can continue to debate the motivation behind generosity like Zuckerberg and Chan’s, and yes, how the money is put to use is as important as the giving of the money itself. Zuckerberg’s previous donation of $100m to public schools in New Jersey is proof of what happens when money is mismanaged – it can do more harm than good.
But ultimately, tech philanthropists are earmarking their money for our generation’s most gnarly social problems – healthcare, poverty, education, access to internet for all. Let’s encourage the effort, and hold them to their word.