Mark Zuckerberg Is NOT Giving Away 99% Of His Fortune To Charity
By Guillaume Paumier [CC BY 3.0], via Wikimedia Commons
Mark Zuckerberg, the founder of Facebook and one of the wealthiest men in the world, has said that he will give away 99 percent of his fortune during his lifetime following the birth of his daughter Max.
He made the announcement in an open letter on Facebook, saying that he wanted the world to be a better place for his newborn child. He went on to explain that he would donate his Facebook shares to personalized learning, connecting people, building communities and curing diseases.
Though this seems like an admirable move, the truth is that Zuckerberg and his wife Priscilla Chan have founded the Chan Zuckerberg initiative, which is a limited liability company, not a charity. This means that Zuckerberg is the owner of the initiative and he can spend the money on whatever he sees fit, including investments that would make him even more profit.
Here’s what Facebook’s SEC filing says:
‘’On December 1, 2015, our Founder, Chairman and CEO, Mark Zuckerberg, announced that, during his lifetime, he will gift or otherwise direct substantially all of his shares of Facebook stock, or the net after-tax proceeds from sales of such shares, to further the mission of advancing human potential and promoting equality by means of philanthropic, public advocacy, and other activities for the public good. For this purpose, Mr. Zuckerberg has established a new entity, the Chan Zuckerberg Initiative, LLC, and he will control the voting and disposition of any shares held by such entity. He has informed us that he plans to sell or gift no more than $1 billion of Facebook stock each year for the next three years and that he intends to retain his majority voting position in our stock for the foreseeable future.’’
Basically, donating shares and not cash is a nice way to deduct taxes, seeing as he will get a charitable contribution deduction that is based on the market value of the shares. Since value and basis are two completely different things, Zuckerberg can expect serious tax advantages.
Zuckerberg is no different than Bill Gates, who also promised to give his wealth to his own private foundation, the Bill and Melinda Gates Foundation, and Warren Buffett, who said he would give his fortune to Bill and Melinda’s Foundation as well.