Earlier this week, Mark Zuckerberg made the shocking declaration that he, alongside his wife Priscilla Chan, would be giving 99 percent of their total Facebook shares — worth almost around
$45 billion — for the reason of “advancing human potential” and “promoting equality.” The motion seemed altruistic, however some have criticized the way Zuckerberg is utilizing the money, offering it to a restricted liability organization instead of a charitable establishment. Presently Zuckerberg has reacted to those objections, posting another message that endeavors to clarify why he set up the Chan Zuckerberg Initiative, and what he and his wife going to do with the money.
“The Chan Zuckerberg Initiative is structured as an LLC rather than a traditional foundation,” he writes. “This enables us to pursue our mission by funding non-profit organizations, making private investments and participating in policy debates.” Unlike limited liability companies, charitable foundations are restricted from investing in for-profit businesses and cannot engage in political lobbying, activities that the Facebook founder said the Chan Zuckerberg Initiative was designed to do in order to further the development of humanity.
Others have recommended that the Initiative is a great tax avoidance scheme, determining that by gifting shares instead of cash, Zuckerberg avoids paying much costs in capital gains tax. He addressed this worry as well, expressing that “by using an LLC instead of a traditional foundation, we receive no tax benefit from transferring our shares to the Chan Zuckerberg Initiative, but we gain flexibility to execute our mission more effectively.” Zuckerberg said that if his aim was to avoid tax, he could’ve basically set up a charity. “If we transferred our shares to a traditional foundation,” he wrote, “then we would have received an immediate tax benefit, but by using an LLC we do not. And just like everyone else, we will pay capital gains taxes when our shares are sold by the LLC.”
These four regions are again broad, but Zuckerberg picked out particular examples of where he has spent money recently, listing achievements. “Our education work has been funded through a non-profit organization, Startup:Education, the recently announced Breakthrough Energy Coalition will make private investments in clean energy, and we also fund public government efforts, like the CDC Ebola response and San Francisco General Hospital.” Again legitimizing the choice to use an LLC instead of a charitable foundation, Zuckerberg said “what’s most important to us is the flexibility to give to the organizations that will do the best work — regardless of how they’re structured.”
