A petition on RootsAction is demanding that Mark Zuckerberg stops the ‘charity’ façade. The petition, which was looking for 10000 signatures has already received 11,251 at the time of writing this article.
But why? Didn’t Mark Zuckerberg ‘donate’ 99 per cent, or $45 billion, of his wealth to charity? Didn’t he receive accolades from all over the world for the magnanimous gesture? We, too, mentioned it though we focussed on the happy announcement of the birth of the couple’s daughter, Max.
Mark’s initiative would help in further reducing poverty, malnutrition, and hunger besides making clean drinking water, homes and other basic facilities accessible to millions around the world.
No one is raising doubts on that, but Mark has been criticized for calling the Chan-Zuckerberg Initiative a charitable foundation.
Financial Times chief US commentator and columnist Edward Luce pointed out that the 31-year-old tech czar is transferring that humongous wealth into a limited liability company (LLC), which would not be considered a charity by the US Inland Revenue.
Luce highlights two things:
- The LLC will allow Zuckerberg to invest the money in profitmaking ventures, and
- Zuckerberg will be freed from the need to spend 5 per cent of its capital every year.
In a defence posted on his Facebook account Zuckerberg claimed that “just like everyone else, we will pay capital gains taxes when our shares are sold by the LLC”.
But Luce also mentioned that Zuckerberg’s move ensures that there is a minimisation of his capital gains tax liabilities. Being presented as a charitable entity, the LLC will attract a very low tax bill.
Luce mentions that Facebook paid just around £4,327 in UK corporate taxes in 2014. It is known for taking steps to either reduce its tax liability or evade it altogether – like it did in 2012 by writing off employee stock options as an expense.
Kyran Fitzgerald of the Irish Examiner says that Zuckerberg’s decision shows his low-level of confidence in various government agencies and, therefore, he devised a way to bypass the Government itself even if for a noble cause.
Though not critical, Susanna Poon, a former lawyer, told Forbes’ Kerry A. Dolan that Zuckerberg’s LLC should not be seen as a charitable firm because of the following reasons:
- Charitable foundations can’t do lobbying, LLCs can.
- Charitable foundations can’t make political donations; LLCs can.
- Charitable foundations must disclose what it pays to top executives; LLCs need not.
- Charitable foundations cannot own more than 10% of a company’s stock; Zuckerberg’s LLC can.
Yet Zuckerberg is pushing the initiative as a charity. Perhaps this is why a petition on roots action is demanding that the billionaire stop calling it so.