Mark Zuckerberg explains why he didn’t give his Facebook billions to charity

4 Dec 2015 | Author: | No comments yet »

Facebook’s Zuckerberg: No tax benefit from philanthropic initiative.

Facebook Chief Executive Mark Zuckerberg said on Thursday he and his wife would receive no tax benefit from setting up their new philanthropic endeavour as a limited liability company and hinted at the types of efforts it would support. After new parents Mark Zuckerberg and Priscilla Chan revealed their plans this week to give away 99 percent of their Facebook shares, a firestorm of controversy erupted.

Two days after announcing plans to donate $45 billion over time to his family foundation, Facebook CEO Mark Zuckerberg responded to criticism about his philanthropic ambitions.Glenn CHAPMAN – Mark Zuckerberg has grown from a Harvard dropout who changed what it means to be social into a billionaire philanthropist bent on shaping a better world for his daughter. The 31-year-old magnate announced on Tuesday following the birth of the couple’s daughter that he would donate 99% of his Facebook shares, currently worth about $45 billion (over Rs 297,000 crore). Their recent donations include $20 million to EducationSuperHighway, which helps connect classrooms to the Internet, and a new acute care and trauma center at San Francisco General Hospital, where Chan works as a paediatrician.

Others have suggested that the Initiative is a giant tax avoidance scheme, specifying that by gifting shares rather than cash, Zuckerberg avoids paying higher costs in capital gains tax. I hope the tycoons and celebrities in China can pay more attention to the environment, healthcare and education, buy fewer luxury race cars,” another Weibo user wrote.

Priscilla Chan, were channeling their wealth through an L.L.C. instead of a more traditional foundation to give themselves maximum flexibility “to pursue our mission by funding nonprofit organizations, making private investments and participating in policy debates — in each case with the goal of generating a positive impact in areas of great need.” “In fact, if we transferred our shares to a traditional foundation, then we would have received an immediate tax benefit, but by using an L.L.C. we do not. And just like everyone else, we will pay capital gains taxes when our shares are sold by the LLC.” Tougher to address was criticism that Zuckerberg was being wasteful with the money — specifically, that Facebook’s billions would be used to further his own Silicon Valley-shaped worldview rather than donated to a charity that already has operations in place in the developing world. Others mentioned the reluctance of many of China’s wealthy to attend a dinner hosted by Warren Buffett during a 2010 trip to China to promote philanthropy.

Responding to a comment he would pay “ZERO tax” for the initiative’s investments that was made in reply to his Facebook post on Thursday, Zuckerberg denied that was the case. At the moment of its foundation, The Chan Zuckerberg Initiative’s intentions were woolly — advancing humanity and promoting equality without a specific roadmap for either goal — but they’re already starting to take shape. Zuckerberg used his most recent post to call out initial areas of focus for the Initiative, choosing “personalized learning, curing disease, connecting people, and building strong communities” as places it will first spend its money.

Facebook has assured investors that Zuckerberg won’t give more than $1 billion annually for at least the next three years, so he’ll control the social network for the forseeable future. The $16 billion IPO was structured to keep control of Facebook in the hands of Zuckerberg, who has been Time’s “Person of the Year” and cracked the Forbes list of 20 richest people in the world. Because they are tax-exempt, traditional nonprofit organizations and foundations face restrictions on for-profit endeavors and political activity — two areas in which Mr. The hoodie-wearing 31-year-old, depicted in the Hollywood drama “The Social Network” as a socially challenged computer geek, has evolved into a confident chief executive presiding over an online community boasting more than 1.5 billion users monthly as of September.

As Gawker noted, an LLC — unlike a charitable trust — can “spend its money on whatever it wants, including private, profit-generating investment.” Some people also took issue with the vagueness of the couple’s plan. Despite his massive wealth, Zuckerberg still favors t-shirts, jeans and sneakers, topped off by his trademark hooded sweatshirt and a mop of brown, curly hair. Quipped Esquire’s Stephen Marche: “These goals coincide with literally every political ideology from libertarianism to Communism.” In an apparent effort to mitigate some of these concerns, Zuckerberg took to Facebook on Thursday to elaborate upon his original announcement. Zuckerberg is known for setting annual goals, which have included wearing ties every day; only eating meat of animals he kills himself; and learning to speak Chinese to be able to chat with members of his wife’s family who speak that language. As the New Yorker’s John Cassidy noted on Wednesday, Zuckerberg’s decision to spend his money in this way will still have ramifications on the average taxpayer, despite the structuring of his organization as an LLC.

He began writing computer programs at the age of 11, including one said to resemble Pandora’s musical taste program which reportedly drew the interest of AOL and Microsoft. Zuckerberg’s past charitable efforts didn’t always pan out as planned, notably a $100 million donation to the Newark public school system in 2010. The stated goal: “Making the world more open and connected.” In 2008, a $65 million settlement was reached with three Harvard classmates – twins Tyler and Cameron Winklevoss, and Divya Narendra – over their charges that Zuckerberg had stolen the idea for Facebook from them. Moreover, even Facebook’s own seemingly philanthropic initiative, Internet.org, which aims to bring Internet connectivity to more people worldwide through programs like a mobile app that comes with free Internet use, has been viewed with skepticism because of potential conflicts of interest. Zuckerberg left Harvard in May 2004 for Silicon Valley, where he received his first major funding – $500,000 – from PayPal co-founder Peter Thiel followed by nearly $13 million the next year from Accel Partners.

As Fortune previously noted, an others who have used the same structure include the Emerson Collective, founded by Laurene Powell Jobs, the widow of Apple co-founder Steve Jobs. Similarities between the men have been said to include not being afraid to risk falling down while chasing big dreams, and passionately pursuing visions despite obstacles or detractors.–AFP

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