The gift, announced with much fanfare Friday on “The Oprah Winfrey Show” (with all the requisite swooning over the 26-year-old Mr. Zuckerberg’s desire to give anonymously), attracted $40 million in matching gifts so far by Monday from the likes of William A. Ackman, the hedge fund manager, and John Doerr, the venture capitalist.
But Mr. Zuckerberg’s donation has some scratching their heads.
How is he going to pay for it? After all, Facebook has yet to go public. In Silicon Valley’s parlance, Mr. Zuckerberg is “paper-rich, cash-poor.”
While Mr. Ackman and Mr. Doerr are probably making their charitable gifts in cold hard cash, Mr. Zuckerberg is doing something different. He’s giving away $100 million worth of Facebook shares to Startup: Education, a new foundation he has started and on whose board he will sit. The foundation, in turn, will sell the shares for cash in what’s known as the “secondary market,” a nebulous world where big-time investors buy into companies before they go public — through the back door.
It turns out that there is a robust market for Facebook shares, even though most people can’t buy them. The going price has been about $76 a share, The Financial Times reported last month, implying a market value of $33 billion. Dozens of employees have sold their shares in the secondary market.
Elevation Partners, the buyout firm that counts Bono of U2 as a partner, paid $120 million for Facebook shares in June at an implied valuation of $23 billion. If the secondary market is accurate, Elevation has already made a pretty penny.
And Yuri Milner, a Russian entrepreneur, has managed to amass a 10 percent stake in Facebook largely through the secondary market. His Digital Sky Technologies paid $200 million for a 2 percent stake, then raised that amount by buying up shares from employees.
The party may soon be ending. Once more than 500 individuals or institutions own shares in Facebook, securities laws mandate that the company go public. Google staged an I.P.O. in part because it hit that same threshold.
But all this share counting raises a new question: Is Mr. Zuckerberg’s $100 million donation really worth just that?
Facebook isn’t saying how Mr. Zuckerberg, or the New Jersey school system, plan to value his shares. (Cynics have suggested that the donation is a publicity stunt to polish Mr. Zuckerberg’s image ahead of Friday when “The Social Network,” a fictionalized story of Facebook’s founding, opens in theaters. Give the guy some credit, he just gave $100 million to a needy school system.)