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

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

#161

Post by chollida1 »

ClumsyPilot wrote: post #82
chollida1 wrote: post #25

Earlier quoted context omitted.

You're by definitions giving it away. It does nothing to preserve your own wealth even if it goes to a charity you control. It's no longer your wealth and unless you want to do something illegal its not coming back to you and can't benefit you.

> It's no longer your wealth and unless you want to do something illegal its not coming back to you and can't benefit you. This is peak naivity - you are totally wrong. Exanple one - charity can make political donations. Example two - can hire lobbyists. Example three - it can buy voting shares in companies you want to control. Example four - it can hire your family members or friends and pay them salaries.

> Exanple one - charity can make political donations

https://www.fec.gov/help-candidates-and-committees/candidate....

> Incorporated charitable organizations—like other corporations—are prohibited from making contributions in connection with federal elections. Unlike most other corporations, charities face additional restrictions on political activity under provisions of the Internal Revenue Code.

> Example three - it can buy voting shares in companies you want to contro

https://www.infinitegiving.com/blog/nonprofit-investing

> to avoid violating U.S. Securities and Exchange Commission (SEC) regulations, your investments should not benefit your nonprofit’s employees or board members.

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

#162

Post by yunohn »

twodave wrote: post #106
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.

I'm not sure I see the big problem here. Our government has decided that if you want to dedicate your resources to an approved cause that it won't hinder that cause by taxing those contributed resources. We don't place limitations on who is allowed to run a charity, and the range of valid exempt purposes[0] leaves a lot of potential for those resources to be used. Just because someone is a billionaire or not shouldn'…

> Our government has decided

Who exactly is this perfectly unbiased, disconnected, non-influencable group of people you call “our government”?

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

#163

Post by jvanderbot »

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.

OK, this isn't a fair assessment, but does match appearances. Some details are important -- I'm adjacent to major donor fundraising and see this kind of thing happen all the time.

He donated to his foundation, which in turn re-donates and reinvests the money based on merit and priorities set by Musk to other charities. Of course, Elon being Elon, he probably has a huge hand in where it ultimately ends up, but this money is now out of his hands and into a "clearing house" where it can be bid / won by any charitable / non-profit that cares to submit.

This is extremely common with donors of huge wealth -- they pseudo-delegate the decision of what program to fund to a board of intelligent people sitting on their foundation, each member of which cultivates relationships with major programs for the wealthy person so that the money can be ultimately effectively invested without taking all the wealthy person's time.

See Bill & Melinda Gates foundation, or Warren Buffet foundation, etc.

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

#165

Post by hindsightbias »

bane wrote: post #134
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…

Right, I first learned about this when being forced to watch some of the "Housewives of ..." shows by my wife. I couldn't figure out why all these objectively terrible people all had their own personal charities (many of the episodes revolve around the social group of the show going to each other's charity events). It turns out it's a common, but legal, "scam". Take in funds from fundraisers, give away a little, then…

You'll see a lot of giant yachts that are in "research" foundations. They get tax breaks for supporting "research" and have a few jaunts with scientist in popular vacation areas.

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

#166

Post by hbrn »

ClumsyPilot wrote: post #82
chollida1 wrote: post #25

Earlier quoted context omitted.

You're by definitions giving it away. It does nothing to preserve your own wealth even if it goes to a charity you control. It's no longer your wealth and unless you want to do something illegal its not coming back to you and can't benefit you.

> It's no longer your wealth and unless you want to do something illegal its not coming back to you and can't benefit you. This is peak naivity - you are totally wrong. Exanple one - charity can make political donations. Example two - can hire lobbyists. Example three - it can buy voting shares in companies you want to control. Example four - it can hire your family members or friends and pay them salaries.

You're calling somebody naive but your statement is nothing but lies.

> Exanple one - charity can make political donations

Under the Internal Revenue Code, all section 501(c)(3) organizations are absolutely prohibited from directly or indirectly participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for elective public office. Contributions to political campaign funds or public statements of position (verbal or written) made on behalf of the organization in favor of or in opposition to any candidate for public office clearly violate the prohibition against political campaign activity. Violating this prohibition may result in denial or revocation of tax-exempt status and the imposition of certain excise taxes.

> Example two - can hire lobbyists

In general, no organization may qualify for section 501(c)(3) status if a substantial part of its activities is attempting to influence legislation (commonly known as lobbying). A 501(c)(3) organization may engage in some lobbying, but too much lobbying activity risks loss of tax-exempt status.

> Example three - it can buy voting shares in companies you want to control

Which will lead to your tax-exempt status being revoked if it looks like you're doing business.

> Example four - it can hire your family members or friends and pay them salaries.

Which you can already do with your existing companies.

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

#167

Post by dabernathy89 »

Retric wrote: post #158
yellowstuff wrote: post #132

Earlier quoted context omitted.

You have just enough information about foundations to completely misunderstand them. It's true that a major reason for the popularity of foundations is legal tax avoidance: you can donate to a foundation in a year when you have lots of income, get the tax benefit in that year, and not have to make a charitable donation in the same year. The foundations is allowed to sit on most of the money for a long time. However,…

You are mistaken, it is very possible and legal to extract money from a 501(c)(3). “If the organization engages in an excess benefit transaction with a person having substantial influence over the organization, an excise tax may be imposed on the person and any organization managers agreeing to the transaction.” https://www.irs.gov/charities-non-profits/charitable-organiz... One example would be putting staff members…

I don't think it's clear how this contradicts the comment you're replying to.

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

#168

Post by [deleted] »

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.

[deleted]

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

#169

Post by giantrobot »

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…

But there's few restrictions on fundraising and administrations. So if the billionaire wants to throw a party, the charity throws the party. There's all sorts of shady bullshit billionaires do with their charities. So long as they turn in receipts and don't funnel the money directly into their pockets it's typically completely legal.

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

#170

Post by Retric »

dabernathy89 wrote: post #167
Retric wrote: post #158

Earlier quoted context omitted.

You are mistaken, it is very possible and legal to extract money from a 501(c)(3). “If the organization engages in an excess benefit transaction with a person having substantial influence over the organization, an excise tax may be imposed on the person and any organization managers agreeing to the transaction.” https://www.irs.gov/charities-non-profits/charitable-organiz... One example would be putting staff members…

I don't think it's clear how this contradicts the comment you're replying to.

“However, crucially, when the money leaves the foundation it must go to an approved charity.”

They can spend money on expenses and those expenses can benefit you. Having family members work for and be generously paid by such an orientation is a common example. Anytime you control a cash flow you can benefit from that cash flow.

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