Mark Zuckerberg explains why he is donating his weath to an LLC, not a foundation
Mumbai: After Facebook CEO Mark Zuckerberg announced that he is donating 99 per cent of his social networking business’ shares to the Chan Zuckerberg Initiative, several media reports emerged pointing out that the ‘Initiative’ is a limited liability company (LLC) and not a charitable foundation.
For those of you who don’t know, an LLC can also be referred to a private limited company, where a proprietor can make personally-beneficial investments for earning additional revenue. Putting it simply, by investing in an LLC; Zuckerberg can escape the burden of taxation.
A New York Times article perfectly illustrates how Mark Zuckerberg’s altruism will assist him. However, Zuckerberg has now given a drawn-out explanation of why he decided to invest in an LLC instead of a foundation.
In his Facebook post, Zuckerberg said: “The Chan Zuckerberg Initiative is structured as an LLC rather than a traditional foundation. 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.”
Regarding the issue of tax evasion, he said: “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 further pointed out that even if he transferred his shares to a tradition foundation, he would have received immediate tax benefit; but still he decided to contribute in an LLC. “And just like everyone else, we will pay capital gains taxes when our shares are sold by the LLC,” he added.
Moreover, he discussed some of the initial goals of the Chan Zuckerberg Initiative. He said: “Our initial focus areas are personalized learning, curing disease, connecting people, and building strong communities. We've already made many investments over the past five years in these areas—education, science, health, internet access and inclusion—and you can see a summary of our investments on the Chan Zuckerberg Initiative page timeline."
“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,” he added.
Although the sudden decision has left a certain air of scepticism in the mind of several individuals, it is too early to question the Chan Zuckerberg initiative, which has made a significant contribution to the field of education, health, and clean energy technology.
