Home https://server7.kproxy.com/servlet/redirect.srv/sruj/smyrwpoii/p2/ Science https://server7.kproxy.com/servlet/redirect.srv/sruj/smyrwpoii/p2/ Elon Musk’s charitable donations use philanthropy as a tax haven – Quartz

Elon Musk’s charitable donations use philanthropy as a tax haven – Quartz

Elon Musk is known for spending billions of dollars building better electric cars and bigger rockets. Since 2008, Tesla’s CEO has spent more than $ 80 billion on the commissioning of the electric carmaker’s first three models alone, according to public financial documents.

But when it comes to handing out money, the billionaire and head of the Musk Foundation is a little less quick.

Founded in 2002 by Musk and his younger brother Kimball, the Musk Foundation is a private non-profit organization 501 (c) (3). Kimball Musk served as secretary, treasurer and board director, while the older Musk served as president and sole financier after starting the organization with $ 2.5 million in 2002.

Each year, non-profit organizations such as the Musk Foundation disclose their assets and donations to the IRS as paper or digital documents. Quartz spent nearly two decades with the IRS to analyze the foundation̵

7;s finances. The picture shows a foundation that in its early years distributed dozens of small pet donations to Elon Musk before changing its strategy, as its assets grew to more than a quarter of a billion dollars.

Between 2002 and 2015, the foundation allocated an average of $ 493,801 a year, with assets falling to $ 57,000 in 2015. But the balance sheet increased dramatically the following year with Musk’s contribution of 1.2 million shares of Tesla shares, such as began a series of significant donations – most of them to financial institutions that began to manage his philanthropy.

So far, Musk has donated at least $ 257 million to the foundation, most of Tesla’s stock. And its grants have increased in turn: Between 2016 and 2018, the Musk Foundation distributed $ 65 million, slightly more than the minimum (5% of assets) that the foundation must pay annually to avoid IRS sanctions. The foundation’s latest documents (tax year 2017) show that most of the contributions went to about 200 non-profit organizations focused on education, healthcare, community service, the environment and space.

Most of the beneficiaries of the foundation have received small contributions. The average amount is $ 10,000 and approximately 20% of the funds went to research, technology and public services, according to the Musk Foundation’s mission, as stated in its summary summary on its website (Yahoo! -Hosted).

Over time, IRS data show that Musk’s giving has moved to the intersection of his business interests and his home base in Los Angeles. In 2012, he gave $ 8,750 to neurosurgery researchers at the University of California, Los Angeles (Musk’s company Neuralink seeks to build a direct interface between computer and brain), $ 10,000 to the Los Angeles Police Foundation and $ 25,000 to the Rose Foundation for Angeles vs. Gridlock (traffic is one of his bugs).

Overall, the foundation’s causes have dropped out of the center’s left, including a $ 2,500 donation to the Transgender Legal Center and $ 19,200 to the William J. Foundation. Clinton in 2011. But it was also given to right-wing organizations such as the Cato Institute, a $ 5,000 donation in 2007 to “promote public policy based on individual freedom.” [and] limited government ”and the conservative National Taxpayers Union Foundation in 2005. You can search for each of them in the table below.

But all of these amounts have been reduced by donations from just three organizations: a $ 10 million donation to YC.org, a research group set up by the Y Silicon Valley Y Combinator (led by Musk’s OpenAI associate Sam Altman) to “Grant grants for other 501 (c) (3) initiatives and activities that seek to address global issues, ”as well as two donor-advised funds ($ 50 million) managed by Vanguard and Fidelity. Together, they represent 86% of the reported donations so far. The group that manages the Musk Foundation’s finances, Catalyst’s family office in Menlo Park, California, did not respond to press inquiries.

Musk has been following a strategy that the tech-rich (and elsewhere) have been pursuing for years: create a donor-recommended fund to donate. It’s like checking accounts for rich donors, where funds can grow tax-free and grants can be channeled anonymously over time. Fidelity Charitable, now the richest non-profit organization in the United States, calls it “the easiest and most tax-friendly way” for charity. They have become so large that they are now a new source of profit on Wall Street.

Nothing unusual about this is for the founders of Silicon Valley. Like New York Times Billionaires who have donor-recommended funds with the Silicon Valley Community Foundation (with $ 13.5 billion in assets) include Mark Zuckerberg of Facebook, Reed Hastings of Netflix, Jack Dorsey of Twitter, and Sergey Brin from Google, Paul Allen from Microsoft and Ian Kum and Brian Acton from WhatsApp.

These financial instruments are essentially black boxes, with no requirements for transparency or annual provision. Critics argue Donor-recommended funds violate the purpose of the tax code, which provides donors with generous tax relief immediately, while remaining uncertain how and when these funds will be used.

The benefit to billionaires is clear: Money donated to such funds provides immediate tax relief by reducing taxable income and assets, especially in years with large windfall profits or major life events (such as an IPO or divorce). But unlike family foundations, which have to allocate a portion of their assets each year, there are no time requirements for donor-advised funds. Their money can be held for 100 years (or more). Funds that donate money to non-profit organizations, even party political ones (501 (c) (4) under the Tax Code), can be anonymous gifts without being related to the donor himself.

Of course, society must make it easier to distribute money. However, the lack of transparency and rules has led politicians in Washington and California to bring the regulation of donor funds in line with those of other foundations. For now, these accounts remain unknown.

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