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 charity donations use philanthropy as a tax haven – Quartz

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

Elon Musk is known for spending billions of dollars to build better electric cars and larger rockets. Since 2008, the Tesla CEO has spent more than $ 80 billion on launching just the first three models of the electric carmaker, according to the financial submission to the public.

But when it comes to giving money, the billionaire and head of the Musk Foundation is in a bit of a hurry.

Founded in 2002 by Musk and his younger brother Kimbal, the Musk Foundation is a private 501 (c) (3) nonprofit. Kimbal Musk serves as secretary, treasurer, and board director, while senior Musk serves as president and sole pilot, which began with the $ 2.5 million organization in 2002.

Each year, nonprofits such as the Musk Foundation disclose their assets and donations to the IRS as paper or digital filing. Quartz has amassed nearly two decades of IRS filings to analyze the foundation’s finances. The photo shows a foundation giving dozens of small donations in its early years to Elon Musk’s pet care causes, before changing its strategy as its assets rose to more than a quarter of a billion dollars.

Between 2002 and 201

5, the foundation averaged $ 493,801 per year, with assets dropping to $ 57,000 in 2015. But the balance rose sharply next year with Musk’s contribution of 1.2 million shares of Tesla stock, initiating a string of large donations – most of them to financial institutions that began managing its philanthropy.

So far, Musk has donated at least $ 257 million to the foundation, most of it Tesla stock. And grants have risen steadily: Between 2016 and 2018, the Musk Foundation distributed $ 65 million, slightly more than the minimum (5% of assets) the foundation had to drop annually to avoid penalties to the IRS. The latest foundation filing (tax year 2017) shows most of the contributions went to nearly 200 nonprofits dedicated to education, health care, community service, environment, and space.

Most foundation grants received small contributions. The median amount was $ 10,000 and approximately 20% of the funds went to research, technology, and community services, in accordance with the mission of the Musk Foundation stated in its lump sum (Yahoo! – Hosted) website.

Over time, IRS records show that Musk’s donation has moved toward the intersection of his business interests and his home base in Los Angeles. In 2012, he donated $ 8,750 to neurosurgery researchers at the University of California, Los Angeles (Musk company Neuralink seeks to develop a direct computer-brain interface), $ 10,000 to the Los Angeles Police Foundation, and $ 25,000 to The Rose Foundation for Angelenos against Gridlock (traffic is one of his bugbear).

Overall, the causes of the foundation fell to the left of the center, with a $ 2,500 donation to the Transgender Law Center and $ 19,200 for the William J. Clinton Foundation in 2011. But he was also given to right-wing organizations like Cato Institute, a $ 5,000 donation in 2007 to “promote public policy based on self-reliance [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 are dwarfed by donations to only three organizations: a $ 10 million donation to YC.org, a research team founded by Silicon Valley accelerator Y Combinator (run by Musk’s partner at OpenAI, Sam Altman) with the aim of “Making grants to other 501 (c) (3) initiatives and activities trying to solve problems in the world,” and two donor-funded funds ($ 50 million) managed by Vanguard and Fidelity. Together, this accounts for 86% of reported donations to date. The Musk Foundation’s financial management group, the Catalyst Family Office in Menlo Park, CA, did not respond to questions from the press.

Musk follows a strategy that the ultra-rich in tech (and elsewhere) have pursued for years: create a fund advised by the donor to make your donation. It is like checking accounts for wealthy donors where funds can grow without taxes and grants can be directed anonymously over time. The Fidelity Char charity, now the richest nonprofit in the US, has called it the “easiest and most tax advantage” way to give to charity. They grew so big now that they are a new source of income on Wall Street.

Nothing about it is out of the ordinary for the founders of Silicon Valley. As The New York Times reported, billionaire holding fund advised by donor with Silicon Valley Community Foundation (with $ 13.5 billion assets) with Mark Zuckerberg, Reed Hastings of Netflix, Twitter of Jack Dorsey, Sergey Brin of Google, Microsoft’s Allen Allen, and Jan Koum and Brian Acton of WhatsApp.

These financial vehicles are essentially black boxes, with no transparency or annual supply requirements. Critics have argued Donor-advised funds distort the purpose of the tax code, giving donors immediate tax exemptions while leaving how and when to use funds that are uncertain.

The benefit to billionaires is clear: The money given to such funds delivers immediate tax deductions by reducing taxable income and assets, especially in years with large windfall revenues or major life events (such as an IPO or divorce). But unlike family foundations, which must be distributed a certain 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-profits, even political parties (501 (c) (4) s under the tax code), can be anonymous gifts without the affiliate donor itself .

Of course, society should make it easy to give money. But the lack of transparency and policies prompted the movements of politicians in Washington and California to bring in regulation of donor-advised funds in accordance with governing other foundations. Today, those bills remain in limbo.

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