Mark Zuckerberg announced on Tuesday that he is going to give away 99% of his wealth over his lifetime.
Almost immediately his decision was met with criticism from many people who learned that his own LLC, the Chan Zuckerberg Initiative, would be used in place of a traditional charity or foundation.
As an LLC, the group is able to do certain things that a charity doesn’t do. For example, earning money and reinvesting it on a large scale.
On Thursday, the Facebook CEO posted an explainer on why he and his wife, Priscilla Chan, chose to go a different route than other billionaires and their charities.
- Why An LLC: “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.”
- Doing this just to avoid taxes: “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. 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.”
- Explaining the areas where they will make investments: “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.”
Zuckerberg says the couple will decide on when to start making donations to the initiative after he returns to Facebook after a recently started two-month paternity leave.
You can read Zuckerberg’s full post here.