Mark Zuckerberg Defends His Philanthropic Pledge
Facebook CEO takes on critics in a new post.
Zuckerberg explained why he chose to structure his philanthropic initiative as a limited liability corporation instead of a traditional nonprofit.
"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," Zuckerberg wrote on his Facebook page yesterday. "Any net profits from investments will also be used to advance this mission."
Zuckerberg and his wife Priscilla Chan said earlier this week they would donate about $45 billion in Facebook stock to their Chan Zuckerberg Initiative, according to a Securities and Exchange Commission filing. Zuckerberg, 31, will also keep his majority voting stake at Facebook, even as he transfers more shares to the initiative.
Zuckerberg noted in his post that he and Chan receive "no tax benefit from transferring our shares to the Chan Zuckerberg Initiative."
"In fact, if we transferred our shares to a traditional foundation, then we would have received an immediate tax benefit, but by using an LLC we do not. And just like everyone else, we will pay capital gains taxes when our shares are sold by the LLC," he wrote.
In an column published by The New York Times, ProPublica’s Jesse Eisinger wrote that Zuckerberg “in essence, moved money from one pocket to the other.”
“What’s more, a charitable foundation is subject to rules and oversight. It has to allocate a certain percentage of its assets every year,” he wrote. “The new Zuckerberg L.L.C. won’t be subject to those rules and won’t have any transparency requirements."
Zuckerberg will sell or gift no more than $1 billion of Facebook stock each year for the next three years and will retain his majority voting position in the company "for the foreseeable future," according to the SEC filing.
The Chan Zuckerberg Initiative's mission will be to "join people across the world to advance human potential and promote equality for all children in the next generation."
"Our initial areas of focus will be personalized learning, curing disease, connecting people and building strong communities," the couple said in a letter announcing the initiative. They said they would provide more details "in the coming months once we settle into our new family rhythm and return from our maternity and paternity leaves."