Earlier this week, Mark Zuckerberg made a surprise announcement by announcing with his wife Priscilla Chan that they would donate 99% of their Facebook shares, worth $45 billion, to projects focusing on human resources and equality.
His gesture seems altruistic, but some have criticized him for the way he uses the money, giving it to a limited liability company rather than a charitable foundation. The Facebook responded to these complaints by posting another message in which he attempts to explain why he created the Chan Zuckerberg Initiative and what he and his wife plan to do with the money.
“The Chan Zuckerberg Initiative is structured more like a limited liability company than a traditional foundation,” he writes. “This allows us to further our mission by funding nonprofits, making private investments, and engaging in policy debates. Unlike limited liability companies, philanthropic foundations are limited to investing in nonprofits and cannot engage in political lobbying, which is what our initiative aims to do for the betterment of humanity.”
Some have also said the initiative was a tax dodge, arguing that by giving away shares rather than cash, the Facebook founder is avoiding paying more in capital gains tax. He responds by saying that if he had intended to avoid taxes, he would have set up a charity. “If we transferred our shares to a traditional charity, we would have had a direct tax benefit, whereas now we don’t, and just like everyone else, we will pay capital gains taxes when the shares are sold.
The businessman tried to respond to his critics by citing examples of how he had spent his money in the past. “The work we have done in education has been funded through a non-profit organization, the Breakthrough Energy Coalition that will make private investments in renewable energy, and we also fund public government efforts like the Embola Campaign and San Francisco General Hospital.”
