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Musk’s $5.7B Mystery Gift Went to His Own Charity

bloomberg.com

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Re: Musk’s $5.7B Mystery Gift Went to His Own Charity

#121

Post by throwawaylinux »

brookst wrote: post #64
c22 wrote: post #40

Earlier quoted context omitted.

I think he's probably optimizing for both. Don't hate the player, hate the game.

I don’t see how a charity can be simultaneously optimized for benefiting its founder and also benefiting people other than its founder. Different goals, different choices. Unless you’re suggesting that Musk is such an egomaniac that he thinks the best thing a charity can do is help him personally?

The term charitable is used in its generally accepted legal sense and includes relief of the poor, the distressed, or the underprivileged; advancement of religion; advancement of education or science; erection or maintenance of public buildings, monuments, or works; lessening the burdens of government; lessening neighborhood tensions; eliminating prejudice and discrimination; defending human and civil rights secured by law; and combating community deterioration and juvenile delinquency.

Easy to see how a charity could line up with what Musk is interested in and/or his companies are doing.

Advancement of space travel, advancing rocket science, reducing rocket launch cost for government, communications connectivity for people, electric vehicles and batteries, self-driving cars, reducing government costs for tunnels and transport infrastructure, relief for conservatives who were distressed about being banned from Twitter, advancing the Gospel of Musk, etc.

EDIT: http://www.muskfoundation.org/ yep, looks about right.

Re: Musk’s $5.7B Mystery Gift Went to His Own Charity

#123

Post by brookst »

ensignavenger wrote: post #93
brookst wrote: post #32

Earlier quoted context omitted.

All true and a perfectly valid model. But also try: If I were incredibly wealthy and obsessed with running the score up, I’d see any taxes or other loss of wealth as a threat to my ego. If my tax accountants came to me and said I could have a greater net worth by founding a charity optimized for my personal benefit, I’d happily shuffle money there rather than paying taxes. I think that’s also a valid model. I don’t h…

And you would be violating the law.

Not necessarily. Plenty of rich peoples’ charities are incredibly inefficient at their stated purpose, good for their owners, and legal.

Consider an imaginary tobacco tycoon’s charity that promotes cigarette use. It would be 100% legal.

Re: Musk’s $5.7B Mystery Gift Went to His Own Charity

#125

Post by notjulianjaynes »

SamBam wrote: post #80
Someone1234 wrote: post #50

Earlier quoted context omitted.

Billionaire's 501(c)(3)s aren't charities in the typical sense. They're tax-exempt piles of money that are controlled exclusively by billionaire and their families (in this case Musk and his brother). The Musk Foundation in particular has donated less than 1% of the "charities" assets (most donations less than $500K, most years less than $1M) and these "charities" can pay out to their owners from tax-exempt gains on…

> and these "charities" can pay out to their owners from tax-exempt gains on the back-end. I pretty certain that legally these charities can only give to causes that furthers their exempt purpose. [1] E.g. a charity claiming to be devoted to saving children's lives in Africa can only spend money on exactly that, governance costs and fundraising. The charity may be paying the owners as employees, and/or the owners may…

What's your take on these newer "economic development" 501c3's? Example: https://archgrants.org/

I've talked with the founder of Arch Grants, and I don't doubt their intentions are pure (there's others I'm more skeptical of), but either way it's difficult for me to wrap my head around the concept of a non profit that is by most metrics operating as a startup accelerator giving seed funding to for-profit businesses.

*Edit:grammur

Re: Musk’s $5.7B Mystery Gift Went to His Own Charity

#126

Post by abledon »

beckingz wrote: post #7

The classic billionaire tax move. Donate money to your own foundation to work on things you want while getting a big tax break.

did you watch Chappelle's segment on how trump walks out of the house, says what hes doing, then walks right back in?

Re: Musk’s $5.7B Mystery Gift Went to His Own Charity

#127

Post by tlogan »

c22 wrote: post #8

If I had money to donate I'd donate it to the charity I thought would be most effective at helping the cause I cared most about. If I had enough money to create my own charity it would be focused on the cause I cared most about. My giant ego and hubris would make it hard for me to come to the conclusion that a charity I created wasn't the most effective at its goals, even if that didn't happen to be the case.

This is a tax move to stash the cash so it does not got hit by big tax bill immediatelly. That money can be then invested in twitter (thru charity), buy twitter bonds, or whatever. Or give payouts in smaller amounts to friends and family which will work for the charity. My bet is that they will buy twitter bonds thru the charity.

There is nothing wrong here and it is not illegal.

Re: Musk’s $5.7B Mystery Gift Went to His Own Charity

#128

Post by snowwrestler »

brookst wrote: post #107
s1artibartfast wrote: post #75

Earlier quoted context omitted.

The important distinction is that you cant spend those non-profit funds the same way you could cash in your pocket. It is under your control, but you can't use it to buy a Hawaiian island vacation home.

Well, sort of. I can use it to buy a Hawaiian compound and retreat that my nonprofit will use, and it might have living space and my taste in art on the walls, and the people invited for conferences might be my friends. At that point it comes down to regulators’ appetite and ability to enforce, and of course the worst cast is some fines. As long as the EV of fines for inappropriate spending that is caught is less tha…

The worst case is actually that the IRS takes away the charity’s tax-exempt status, thereby negating the whole strategy.

Re: Musk’s $5.7B Mystery Gift Went to His Own Charity

#129

Post by dmix »

brookst wrote: post #107
s1artibartfast wrote: post #75

Earlier quoted context omitted.

The important distinction is that you cant spend those non-profit funds the same way you could cash in your pocket. It is under your control, but you can't use it to buy a Hawaiian island vacation home.

Well, sort of. I can use it to buy a Hawaiian compound and retreat that my nonprofit will use, and it might have living space and my taste in art on the walls, and the people invited for conferences might be my friends. At that point it comes down to regulators’ appetite and ability to enforce, and of course the worst cast is some fines. As long as the EV of fines for inappropriate spending that is caught is less tha…

So a [wealthy person] can live/work out of a Hawaiian compound bought for the purpose of a charity using a charities money?

Or are we talking about the charity workers themselves living it up... like we've seen in those famous recent fancy houses purchases in Canada and UK.

Re: Musk’s $5.7B Mystery Gift Went to His Own Charity

#130

Post by boringg »

TuringNYC wrote: post #104
Someone1234 wrote: post #50

Earlier quoted context omitted.

Billionaire's 501(c)(3)s aren't charities in the typical sense. They're tax-exempt piles of money that are controlled exclusively by billionaire and their families (in this case Musk and his brother). The Musk Foundation in particular has donated less than 1% of the "charities" assets (most donations less than $500K, most years less than $1M) and these "charities" can pay out to their owners from tax-exempt gains on…

>> The Musk Foundation in particular has donated less than 1% of the "charities" assets That is how almost all endowments work -- they give away their interest income or other income, not the principal, this way they can theoretically last forever. In the past, this was easier since you could earn 5% or 7% interest on a 1-yr Certificate of Deposit. Now, rates have been 0% so charities have to either dig into principa…

Oh but most people think how it works is you give away all your money and if you don't do that you aren't very charitable.

However the smart way to donate is keep principal alive and any money that money makes it goes to the charity therefore ensuring money in perpetuity. You bring up the challenge in the current environment.

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