Days after Facebook chief executive Mark Zuckerberg announced the birth of his daughter and that he and his wife, Dr. Priscilla Chan, were going all-in on their new child equality program, he’s back in the press to defend it. Amid the scrutiny the press is giving the Chan Zuckerberg Initiative, Zuckerberg sought to clear the air and explain his thinking.
In response to questions about why Zuckerberg opted to structure the initiative as a Limited Liability Company (LLC), he wrote in a Facebook post that it will enable Chan Zuckerberg to “pursue our mission by funding non-profit organizations, making private investments, and participating in policy debates — in each case with the goal of generating a positive impact in areas of great need.” He explained that any net profits that resulted from these investments would go back into supporting this mission.
The LLC will provide no tax benefits to Zuckerberg or Dr. Chan when they begin transferring 99 percent of their shares to the Initiative, but Zuckerberg said it’ll help them “gain flexibility to execute our mission more effectively.” He elaborated further:
“If we transferred our shares to a traditional foundation, then we would have received an immediate tax benefit, but by using an LLC we do not. And just like everyone else, we will pay capital gains taxes when our shares are sold by the LLC.”
If you think that Zuckerberg smoothed things over, guess again, because he was attacked repeatedly in the comments of this Facebook post. He took the time to address some of the misconceptions, such as that they are donating the money to themselves — Zuckerberg said that moving their money to the Chan Zuckerberg Initiative isn’t a donation itself, but will rather be a mechanism by which donations will be made to other programs and initiatives.
In response to claims that he won’t be paying taxes and that the Initiative was a scheme to dodge this financial responsibility. Zuckerberg wrote: “This is incorrect. We will pay tax just like everyone else when the Chan Zuckerberg Initiative sells our Facebook shares…”