Facebook is one of the largest and most profitable technology companies in the world. In 2021, Facebook reported over $117 billion in revenue and over $39 billion in net income. With such immense profits, many people wonder – how much does Facebook give back through charitable donations?
Facebook’s Philanthropic Efforts
Facebook does engage in some philanthropic efforts. In 2015, Facebook founder Mark Zuckerberg and his wife Priscilla Chan pledged to give away 99% of their Facebook shares, then valued at $45 billion, through a new organization called the Chan Zuckerberg Initiative. However, this organization is structured as a limited liability company rather than a non-profit charity. This allows the organization to invest in for-profit companies and advocate for policy changes, not just make charitable grants. So how much of this commitment will actually go towards charitable causes remains to be seen.
Facebook also directly makes some donations through its Facebook Foundation. This foundation donated $20 million in 2020 towards efforts related to the COVID-19 pandemic. Facebook also matched $7 million in donations from employees to nonprofits in 2020. While sizable, these donations represent only a tiny fraction of Facebook’s earnings. $27 million in donations represents only 0.02% of Facebook’s $117 billion revenue in 2021.
Tax Deductible Expenses
Facebook does benefit from some tax deductible expenses that could be considered philanthropic. In 2021, Facebook claimed $13.6 billion in tax deductible stock-based compensation expenses. This refers to the stock options and restricted stock units granted to Facebook employees. However, this type of expense mainly serves to attract and retain talented workers rather than directly serve charitable causes. The billions of dollars Facebook saves through stock-based compensation deductions dwarf its direct grants to nonprofits.
The Fremont Data Center
As an example of how stock-based compensation deductions can benefit Facebook more than charities, consider the Fremont data center. When this data center was built in 2015, Facebook structured it so the construction was done by a subsidiary in exchange for stock options. This allowed Facebook to claim over $1 billion in tax deductions related to the data center’s construction through stock-based compensation expenses. The data center therefore generated a large tax benefit for Facebook while providing no direct charitable services.
Political Donations
Facebook does not directly donate money to political candidates. However, its employees, especially executives, do make considerable political donations personally. In the 2020 election cycle, Facebook employees donated over $8.8 million to federal candidates, with 98.7% of that going to Democrats. Facebook also maintains a political action committee (PAC) funded by employee contributions. This PAC donated $944,000 in the 2020 cycle, with 52% going to Democrats and 48% to Republicans.
Lobbying Efforts
While not directly a form of philanthropy, Facebook spends heavily on lobbying efforts. In 2021, Facebook spent over $20 million on federal lobbying. It lobbies on issues like corporate taxes, data privacy, and technology regulation that impact its bottom line. Some could view this political influence as undermining charitable ideals.
User Donations
Facebook provides tools for users to donate or fundraise for charities through its platforms. This includes Facebook Fundraisers, Facebook Giving tools for nonprofits, and donate buttons on Instagram. However, donations from users obviously provide no charitable benefit to Facebook itself. The company simply incurs some costs to facilitate user giving.
Fees on User Donations
When users make donations through Facebook’s tools, the company actually takes a processing fee of 5% of the donation value. For example, if a user donates $100 to charity through Facebook, the charity only receives $95. Facebook collects $5 as a fee. So donations made on Facebook’s platforms may actually divert funds away from charitable causes rather than contribute Facebook’s own money.
Partnerships with Nonprofits
Facebook partners with some nonprofits to provide free advertising credits or tools for managing communications and donors. For example, Facebook offers ad credits to nonprofits through its Social For Good program and free Instagram business profiles to nonprofit organizations. However, these services either improve Facebook’s public image or help grow usage of its platforms.
Education Partnerships
Facebook has partnered with Code.org and other nonprofits to expand access to computer science education. But these partnerships also help Facebook build a talent pipeline of future engineers and users of its products. So the benefit to Facebook likely outweighs the charitable component.
Total Estimated Charitable Giving
Considering Facebook’s direct grants from its foundation, employee donation matching, and other small programs, its total estimated charitable giving likely falls in the range of $50 – $100 million per year. With over $117 billion in annual revenue, that equates to about 0.05% – 0.1% of revenue directed to philanthropy. This analysis suggests only a tiny fraction of Facebook’s profits actually go towards charitable causes.
Comparison to Other Tech Companies
How does Facebook’s charitable giving compare to other large technology companies? Here is a table comparing estimated annual charitable contributions as a percentage of revenue:
| Company | Estimated Charitable Giving | Annual Revenue | Giving as % of Revenue |
|---|---|---|---|
| $50 – $100 million | $117 billion | 0.05% – 0.1% | |
| Apple | $300 million | $365 billion | 0.08% |
| $200 million | $257 billion | 0.08% | |
| Microsoft | $500 million | $168 billion | 0.3% |
This table shows Facebook’s estimated charitable giving as a percentage of revenue is lower than Apple, Google, and Microsoft. However, all of the technology giants devote less than 1% of profits to philanthropy.
Reasons for Facebook’s Low Charitable Giving
Why doesn’t Facebook donate more of its billions in profits to charitable causes? Here are some potential reasons:
- Prioritizes growth – Facebook focuses investments on growing its platforms rather than charitable works.
- Stockpiles cash reserves – Facebook amasses cash reserves rather than giving it away, with over $48 billion cash on hand.
- Spends on non-charitable goals – Much of Facebook’s spending advances business and political interests rather than pure philanthropy.
- Tax avoidance – Facebook utilizes strategies like stock-based compensation to minimize tax liability rather than make direct donations.
- Lacks philanthropic culture – Facebook has not prioritized philanthropy historically in its business culture.
Pressure to Increase Giving
Given Facebook’s minimal charitable giving, some philanthropic groups and nonprofit experts have advocated for Facebook to dramatically increase its giving levels. For example, critics argue Facebook should donate $10 billion or more annually to address major global issues like education, climate change, or poverty reduction. However, Facebook has so far resisted calls to meaningfully expand its philanthropy. Unless public pressure on the company grows, Facebook’s philanthropic efforts are likely to remain a tiny fraction of its overall profits.
Conclusion
In conclusion, Facebook contributes a very small portion of its profits to charitable causes. By most estimates, Facebook’s direct charitable giving amounts to less than 0.1% of its annual revenue. While Facebook does engage in philanthropy through its foundation, employee gifts, and user fundraising tools, these efforts are dwarfed by the tens of billions generated in profits each year. Compared to other technology giants like Apple, Google, and Microsoft, Facebook donates the lowest percentage of profits to charity. Unless Facebook dramatically changes its priorities, the world’s largest social media platform will likely continue being viewed as minimizing its charitable giving.