The Chan Zuckerberg Initiative, the name of the couple’s new organization, will focus on “personalized learning, curing disease, connecting people and building strong communities”, the pair wrote on Facebook.
Advertisement
In a post on Facebook, Zuckerberg said that the decision to register as a company gave the Chan Zuckerberg Initiative more flexibility. While it’s true that many will not pay much in taxes due to the charitable deduction, that just means we should eliminate that deduction, not encourage more money into foundations. In other words, Zuckerberg is not attached to any form of control that could define how he could use the money put into the company. An LLC is somewhere between a corporation and a business partnership.
Facebook founder Mark Zuckerberg has defended the unusual company structure chosen for the eye-catching philanthropic venture launched to celebrate the birth of his daughter. Because they are tax-exempt, traditional nonprofit organizations and foundations face restrictions on for-profit endeavours and political activity -two areas in which Zuckerberg and Chan have pledged to be active.
And, if the intentions would have been to avoid tax, then he could have easily set up a charity.
Moreover, if the L.L.C.is sued, the partners’ personal assets are exempt.
“Our education work has been funded through a non-profit organisation, Startup:Education, the recently announced Breakthrough Energy Coalition will make private investments in clean energy, and we also fund public government efforts, like the CDC Ebola response and San Francisco General Hospital”, he said.
The Facebook CEO responded to the criticism on Friday, writing that by “using an LLC instead of a traditional foundation, we receive no tax benefit” but instead “gain flexibility to execute our mission more effectively”.
The Chan Zuckerberg Initiative is structured as an LLC rather than a traditional foundation.
The couple will pay capital gains taxes if the initiative sells their donated shares, he said.
Advertisement
An LLC brings certain tax exemptions but also allows investment for profit.
