Zuckerberg charity is no charity at all

Zuckerberg Charity is just another investment vehicle

Mark Zuckerberg and Priscilla Chan recently announced the birth of their daughter Max Zuckerberg. At the occasion they also declared that they will be donating 99% of their net worth to charity. 

But the truth is a far cry from any charity at all.

Mr. Zuckerberg and Ms. Chan did not set up a charitable foundation, which has nonprofit status. He created a limited liability company, one that has already reaped enormous benefits as public relations coup for himself. His P.R. return-on-investment dwarfs that of his Facebook stock. Mr. Zuckerberg was depicted in breathless, glowing terms for having, in essence, moved money from one pocket to the other reports the New York Times.

An L.L.C. can make political donations. It can lobby for changes in the law. He remains completely free to do as he wishes with his money. That’s what America is all about. But as a society, we don’t generally call these types of activities “charity.” The article further reports.

Zuckerbergs on donating Facebook Shares

A charitable foundation is subject to rules and oversight. It has to allocate a certain percentage of its assets every year. The new Zuckerberg L.L.C. won’t be subject to those rules and won’t have any transparency requirements. - The New York Times

If the L.L.C. donated to a charity, he would get a deduction just like anyone else. That’s a nice little bonus. But the L.L.C. probably won’t do that because it can do better. The savvier move, would be to have the L.L.C. donate the appreciated shares to charity, which would generate a deduction at fair market value of the stock without triggering any tax. Explains Prof. Victor Fleischer, a law professor and tax specialist at the University of San Diego School of Law

Mr. Zuckerberg didn’t create these tax laws and cannot be criticized for minimizing his tax bills. If he had created a foundation, he would have accrued similar tax benefits. But what this means is that he amassed one of the greatest fortunes in the world — and is likely never to pay any taxes on it.

Read the full article here.

Instead of lavishing praise on Mr. Zuckerberg for having issued a news release with a promise, this should be an occasion to mull what kind of society we want to live in.

Original Article: Jesse Eisenger NY Times