Mark Zuckerberg’s daughter was born this week and the couple announced that they will give away 99 per cent of their Facebook stock to charity.
But is that what’s really happening here?
Vox reports that Mark Zuckerberg’s huge new donation is going to a limited liability corporation (LLC) rather than a charitable foundation or a traditional non-profit structure. That’s confirmed by the paperwork filed by Facebook.
What’s an LLC?
A limited liability company (LLC) is the United States-specific form of a private limited company. It is a business structure that combines the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation. An LLC is not a corporation; it is a legal form of a company that provides limited liability to its owners in many jurisdictions.
An LLC can spend money on advertisements or act as an angel investor to a start-up. A non-profit organisation cannot. The idea of an LLC is more beneficial than a non-profit organisation, as an NGO working for charity is exempted from tax, so they cannot engage in advertising or investment because they will earn profits if their investment pays off.
What’s in it for Mark?
An LLC structure is a safe bet. Zuckerberg and many Silicon Valley bigwigs say the Chan Zuckerberg Initiative will simply reinvest any profits the LLC earns back into the larger enterprise.
It’s a more valuable model to have than a Charitable Trust. Only time will tell whether Mark Zuckerberg will stick to his word, because if he doesn’t, he has just given away 99 per cent of his Facebook shares (and that’s a lot of money) to an angel investing fund.
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