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Jesse Eisinger writes in the NYT that if you heard that Mark Zuckerberg donated $45 billion to charity, you are wrong. Here's what really happened: Zuckerberg did not set up a charitable foundation, which has nonprofit status. Instead Zuckerberg created an investment vehicle called a limited liability company (LLC) that can invest in for-profit companies, make political donations, and lobby for changes in the law. What's more an LLC can donate appreciated shares to charity, which will generate a deduction at fair market value of the stock without triggering any tax. "He remains completely free to do as he wishes with his money," writes Eisinger. "That's what America is all about. But as a society, we don't generally call these types of activities "charity.""
A charitable foundation is subject to rules and oversight. It has to allocate a certain percentage of its assets every year. The new Zuckerberg LLC won't be subject to those rules and won't have any transparency requirements. According to Eisinger what this means is that Zuckerberg has amassed one of the greatest fortunes in the world — and is likely never to pay any taxes on it. "Instead of lavishing praise on Mr. Zuckerberg for having issued a news release with a promise, this should be an occasion to mull what kind of society we want to live in," concludes Eisinger. "The point is that we are turning into a society of oligarchs. And I am not as excited as some to welcome the new Silicon Valley overlords."
Previously: Mark Zuckerberg to Donate $45 Billion Facebook Fortune to Charity
(Score: 1) by PocketSizeSUn on Saturday December 05 2015, @01:46AM
I agree to a point. I do think that starting a "charitable" LLC and widely publicizing it does shelter the worst of the effects of dumping stock (presumably a chunk roughly equivalent to the tax burden on each transfer will be dumped to the open market on of each transfer to the LLC, where as direct sales by the LLC will be understood and raising capital for the LLC (and would not generally shake shareholder confidence).
Of course there are still limits to the amount of stock he actually can divest before he looses control of FB, which is a separate issue entirely.
All in all this should allow Zuck to divest into the LLC at a fairly rapid pace (on the order of multiple millions per month). Also recall that he cashed out ~$1 billion on the IPO so large stock divestitures w/o the LLC intermediary explanation would certainly shake investor confidence and sharply driven the stock price lower.
Just my 2 cents.