Earlier this week, Mark Zuckerberg, Facebook CEO and co-founder, and his wife Dr. Priscilla Chan, announced that Zuckerberg was going to donate 99% of his personal Facebook shares (US$45-billion) over the course of his lifetime to a newly formed entity called Chan Zuckerberg Initiative.
The donation, he said, was to “advance human potential and promote equality for all children in the next generation”. The reception to the news was — contrary to what the two might have hoped for — less than flattering.
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Two days after making this announcement, the Facebook CEO was forced to clarify the many confused and accusatory claims against the gesture.
Among the complaints of the initiative were that perhaps Zuckerberg was trying to avoid taxes on his US$45-billion worth — that by channeling it into a non-profit, he might be able to avoid paying taxes. Addressing this particular view, the Facebook founder and CEO said by structuring Chan Zuckerberg entity as an limited liability company (LLC), that the shares will still be taxed.
Read more: Mark Zuckerberg to donate 99% of his Facebook shares to ‘advance human potential’
In a post he wrote on Facebook, Zuckerberg clarified why he and Chan were giving his entire worth of his Facebook shares to charity.
“Our initial focus areas are personalised 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,” he wrote.
“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.” Zuckerberg wrote.
