Facebook’s CEO ‘Friends’ Schools—With a $100-Million Gift

Mark Zuckerberg, the 26-year-old chief executive of Facebook, wasn’t content to finish his degree at Harvard, famously dropping out to expand the social-networking Web site he founded. Now, it seems, Mr. Zuckerberg isn’t content to wait to give away the money he’s been making, either.

Mr. Zuckerberg’s $100-million pledge to improve Newark, N.J.’s public schools, which he announced last month on The Oprah Winfrey Show, instantly made him one of the country’s biggest donors and the first member of his generation to make a huge gift. The money, which will come from Mr. Zuckerberg’s Facebook stock holdings, will go to a foundation he is creating, Startup: Education, to support the effort.

Whether Mr. Zuckerberg, whose net worth Forbes pegs at $6.9-billion, is representative of his generation is debatable, but his decision to support school-improvement efforts does provide further evidence that the young and wealthy are giving earlier than their affluent predecessors, and to social problems rather than institutions.

“It’s significant that with his first big gift, he’s giving to change, not charity,” says Jason Franklin, the 30-year-old director of Bolder Giving, a New York group that promotes philanthropy.

Mr. Franklin says the gift reflects the greater emphasis that people in their 20s are placing on social change. “There is the increasing expectation among those in Generation Y that part of their success will be that they give back actively,” he says.

Betting on the Mayor

The gift did not come through any personal connection to Newark. Mr. Zuckerberg, who grew up in affluent Westchester County, N.Y., says his girlfriend’s experiences as a teacher recruited by the nonprofit organization Teach for America got him thinking seriously about the education system. He spent about a year studying education issues and in July, met Cory Booker, the mayor of Newark, at a conference.

A conversation over dinner about how Mr. Booker cut crime in Newark and wanted to turn his attention to education sold Mr. Zuckerberg on the 41-year-old mayor. “This is the guy I want to invest in,” Mr. Zuckerberg recalls thinking. “This is a real person who can create this change.”

Mr. Zuckerberg said he planned to make the donation anonymously, in part to avoid the suggestion that the gift was an attempt to shore up his reputation ahead of the release of a movie, The Social Network, which portrays him in an unflattering light. But Mr. Booker and Chris Christie, New Jersey’s governor, said they encouraged the Facebook executive to go public.

But the faith Mr. Zuckerberg is putting in Mr. Booker is among several reasons the gift is already attracting controversy. The donation precipitated a shift in who has control over Newark schools, which came under state authority in 1995. In accepting Mr. Zuckerberg’s gift, Governor Christie will give some control to Mr. Booker, allowing the mayor a prominent voice in choosing a new school superintendent and redeveloping the school system. The plan also leaves room for the governor to regain control if the system fails.

Paul Tractenberg, co-director of Rutgers University’s Institute on Education Law and Policy, says there are legal questions about whether the governor has the authority to grant the mayor control. He fears the move could further sideline the local school board and suppress parents’ and teachers’ voices.

“I’m afraid this program will turn out to be a distraction,” he says. “You will see arguments and lawsuits.”

Spending the Money

How exactly Mr. Booker and Mr. Christie will spend Mr. Zuckerberg’s $100-million, which is being donated over five years, is not yet clear. Mr. Booker says he will ask people in Newark to help come up with goals and hold the project accountable to those objectives. But the mayor has supported charter schools and merit-based pay for teachers in the past, and people who challenge the effectiveness of those approaches are raising questions about the wisdom of Mr. Zuckerberg’s gift.

“He is working in lockstep with his fellow billionaires to undermine public education,” Diane Ravitch, author of The Death and Life of the Great American School System: How Testing and Choice Are Undermining Education, which criticized the role of Bill Gates, Eli Broad, and other donors in education, says in an e-mail message.

Others say Mr. Zuckerberg isn’t doing enough to ensure the money produces results. Frederick M. Hess, director of education policy studies at the American Enterprise Institute, says Mr. Zuckerberg is missing an opportunity to negotiate changes, like new contracts with the teachers union, that could really make a difference to students.

“The biggest impact that a major gift has is in the conditions that are attached to giving,” he says. “I don’t think this gift is optimally configured to help change the dynamics.”

Suzanne Muchin, founder of ROI Ventures, a Chicago consulting company that works with donors, agrees that Mr. Zuckerberg’s gift seems haphazard. “It feels like a very old-world approach, which is ironic given who it’s coming from,” she says.

But Mr. Zuckerberg, who has no intention of stepping away from Facebook, says he does not plan to be a hands-on donor. Startup: Education will be managed by a professional staff, he says, but it will be small and designed to draw on the expertise of grantees.

The foundation will be led by Jennifer Holleran, a former director of New Leaders for New Schools, a nonprofit that seeks to improve the education system by training school principals. While the fund will remain focused on Newark for now, the hope is that any successes would also be attempted in other cities.

“We really want to make this a symbol of educational excellence for the country,” says Mr. Zuckerberg. “Hopefully from there we’ll learn more and do more as years go on.”

Particularly given that Mr. Zuckerberg won’t be terribly involved, the executives he chooses to work at the foundation will be key to its success, says Ellen Remmer, president of the Philanthropic Initiative, a Boston group that works with donors.

Recruiting Supporters

Part of the reason Mr. Booker’s plan for improving schools remains vague, meanwhile, may be that he has to attract other supporters to his vision. Mr. Zuckerberg made the donation as a challenge gift, asking the mayor to raise an additional $100-million.

Mr. Booker is already having some luck. As of last week, he had secured $40-million. The Pershing Square Foundation, the philanthropic arm of the New York hedge fund Pershing Square Capital Management, committed $25-million; smaller amounts were pledged by the philanthropist John Doerr, the Bill & Melinda Gates Foundation, and Beth and Ravenel Curry, founders of Eagle Capital Management, a New York investment firm.

A Web site that uses mobile credit-card donation technology created by another social-networking entrepreneur, Jack Dorsey, the chairman of Twitter, is raising money from the public. In five days, it had collected just shy of $10,000.

In an interview, Ms. Curry said she was influenced to give both by Mr. Booker, with whom she is acquainted, and because of the involvement of Mr. Zuckerberg, whom she met last week before announcing the gift.

William Ackman, chief executive of Pershing Square Capital Management, said his company’s grant (four times larger than any other it has made to date) was a result of his faith in Mr. Booker. But he says Mr. Zuckerberg’s financial commitment greatly increases the chances the effort will succeed.

Mr. Gates—who, like Mr. Zuckerberg, is a Harvard dropout-turned-technology entrepreneur who is using his fortune to try to improve public schools—congratulated the 26-year-old on the gift. “Your involvement in the years ahead—your thinking, your energy—will be even more important than your resources,” he said in a statement. “I’m excited to be on this journey together.”