If you’ve been on social media or watched the news in the last couple of days, you’ve probably heard about Mark Zuckerberg and his wife Priscilla Chan’s pledge to give away 99 percent of their Facebook shares to the Chan Zuckerberg Initiative. Those shares are currently worth around $45 billion dollars. You’ve probably also seen the backlash.
According to the charity’s Facebook page, the couple set up the initiative with the mission to “advance human potential and promote equality in areas such as health, education, scientific research, and energy.” It sounds pretty great, right? Well after receiving tons of positive publicity after making the announcement, critics started to question Zuckerberg’s motives and where the money would actually go.
People are upset because the organization was formed as an LLC rather than a nonprofit. While nonprofits qualify for tax exemptions LLCs don’t receive, it won’t really matter, because money donated to charities isn’t taxed. There are also limits on spending for nonprofits, but not for LLCs, so technically, the Chan Zuckerberg Initiative could spend non taxable money on things it shouldn’t.
People took to Twitter to express their concern.
“A charitable foundation is subject to rules and oversight. It has to allocate a certain percentage of its assets every year,” Eisinger explained in a piece published in the New York Times. “The new Zuckerberg LLC won’t be subject to those rules and won’t have any transparency requirements.”
“The donation has been characterized a little too simplistically as an outright charitable donation of 99 percent of his wealth,” Robert Willens, a corporate tax expert, told CBS News.
“Certainly it could wind up being that if he directed all of the LLC’s funds to charity,” Willens added. “But the jury is still out regarding what percentage of his wealth will be directed to charity.”
Zuckerberg posted a statement to Facebook addressing the concerns.
“The Chan Zuckerberg Initiative is structured as an LLC rather than a traditional foundation,” he wrote. “This enables us to pursue our mission by funding non-profit 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. Any net profits from investments will also be used to advance this mission. We receive no tax benefit from transferring our shares to the Chan Zuckerberg Initiative. And just like everyone else, we will pay capital gains taxes when our shares are sold by the LLC.”
He made his purpose for starting the initiative to begin with very clear in another Facebook post.
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At this point, all concerns, while valid, seem to be centered around what ifs. Perhaps we should just trust Zuckerberg’s intentions, because good intentions are the beginning of something potentially really great — and that’s exactly what the world needs right now.
(Featured image via Facebook)