Zuckerberg bequeathed his Facebook shares to his own LLC, the Chan Zuckerberg Initiative, rather than a traditional charity or foundation.
Because it’s an LLC, a limited liability corporation, it can do things like invest in private companies and earn money — which Zuckerberg now clarifies will be strictly reinvested back to the initiative’s causes.
On Thursday, the Facebook CEO posted an explainer on why he and his wife, Priscilla Chan, chose to go a different route and not just split up the money amongst already-known charities.
- On why it’s an LLC and not a foundation: “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 organisations, 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.”
- On whether or not he’s using it to avoid taxes and gain all the benefits: “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.”
- On the areas where they are going to be making investments: “Our initial focus areas are personalised learning, curing disease, connecting people and building strong communities. We’ve alre ady 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.”
As for when they will start working on the organisation, Zuckerberg says that will be a task for after he gets back from parental leave.
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