5 ms·

Is it just me, or is this deal somewhat shady? It just seems like acquiring the startup of one of your board members is one of those things you shouldn't do, f

Is it just me, or is this deal somewhat shady? It just seems like acquiring the startup of one of your board members is one of those things you shouldn't do, for the sake of appearances if nothing else. When Ralph Yarro was using pumped-up SCOX shares to acquire his side businesses, people were rightly suspicious, and lawsuits followed. Of course SCOX != GOOG in any way, but the activity seems analogous.

ape4 11y ago
Except for the charity donation
- kareemm 11y ago
  Two things wrt the donation. First, she gets a massive tax receipt to use against other income. I don't know how it works in the US, but in Canada you can use charitable tax receipts to lower taxable income in future years if you don't want to use the whole thing in the year in which you made the donation. Second, she donated to a donor advised fund, or DAF. A DAF is a charitable entity that is sort of like a bank account: you put your money in, get the tax receipt, your money manager invests the capital, and you can allocate some portion of the money (the amount depends on the financial institution's policies) to actual 501c3's (I.e charities doing charitable work). DAFs are just another instrument offered by the Fildelities of the world to increase assets under management. The most common reason people give to DAFs is so they can get a tax receipt for the current year and defer the decision about which charities to support until later. Plus giving stock to charity is the most tax-efficient way to give. She gets the tax receipt for $148m regardless if the stock goes down after the donation. And if it goes up, she has more to give to charities. I've Had a long term contract to build an online donor advised fund, so my head has been in this space for 8y or so.
  - jahnu 11y ago
    > I don't know how it works in the US, but in Canada you can use charitable tax receipts to lower taxable income in future years if you don't want to use the whole thing in the year in which you made the donation. I don't know how this can be a tax-dodge of any significance. Surely you can only offset your tax by the amount you donated anyway so it makes no difference to you in the end.
    - tombrossman 11y ago
      This is a good overview of how the money might be used to influence, and not be a purely altruistic gesture: http://newint.org/features/2012/04/01/bill-gates-charitable-giving-ethics/ http://newint.org/features/2012/04/01/bill-gates-charitable-...
    - gohrt 11y ago
      You can donate to a "charity" that employs your friends and family, not society at large. I can create a Betterness Foundation, and donate all my income to it, and you can do, and the Foundation can spend its resources bettering the neighborhood where you and I happen to live, but no one else lives there. This is a scam loophole to avoid Federal taxes that are intended to benefit society at large.
      - rlucas 11y ago
        It's not quite that simple. The IRS didn't just fall off the turnip truck. Yes, there's a large chance that if Mr. X sets up a DAF, you might see people with the last name X doing various work for the DAF etc. Same if Mr. X ran a for-profit business. But there are rules and regs and you can't just blatantly self-deal and loot your foundation; see https://www.irs.gov/irm/part7/irm_07-027-020.html https://www.irs.gov/irm/part7/irm_07-027-020.html The truly naive shenanigans don't work and there actually is scrutiny of foundations. Plus, foundations have to distribute 5% of their assets annually, which has actually been sort of a problem lately with low fixed-income returns. If you want to know the "scam," others above have described quite adequately the two main lines: the tax write-off and the ability to influence what charities benefit. The scam is not that you can set up a "Mr. X's landscaping and Champagne pouring foundation" to privatize all the benefits. (I mention this not to chastise parent, but because left without any additional color, parent comment could make a reader not versed in how nonprofit stuff works overly cynical.)
        thrownaway2424 11y ago
        I think you understate the extent to which one can use a tax-deductible non-profit organization to benefit oneself. For example selective private schools are all (at least in my area) not-for-profit organizations to which contributions are tax-deductible. So you "give" to these organizations and essentially pay for private school from pre-tax income. There are even country clubs that are non-profits. I think the only thing that really prevents these organizations from being formed are if they have documented written policies of racial discrimination, in which case the IRS will go after them eventually.
  - ChuckMcM 11y ago
    This is exactly right. Funding a DAF is great and all, but it is also a tool of influence. The headline is "gives it all to charity" which sounds great but remember that there are many groups that are 503(c) organizations which you might not consider actual charities. And they often have other "influencers" on their boards. So you want to deal with X you find some charity in common with X and you offer to have your DAF provide a generous donation. Externally a donation to a charity is recorded, internally someone has a new "friend." And the weird thing is that the person you are influencing feels good about the fact that they feel they helped get more support for some charitable cause they champion.
    - Rapzid 11y ago
      Very interesting.. Can you create a 503(c) down the road that you work for and pays you a fat salary, then fund it from your own DAF?
      - ChuckMcM 11y ago
        Well if you're going that road you create an LLC that contracts with the 503(c) that provides a service. But once you start creating shell companies to hide the source and destination of funds it starts to smell like money laundering and that generates more interest than its worth.
  - drumdance 11y ago
    I'm pretty sure you can't carry forward donations.
  - nogbit 11y ago
    There is no profit like non profit!
- s73v3r 11y ago
  What she's doing with the proceeds is really irrelevant.
- ProAm 11y ago
  Give a large chunk to your employees?
tyingq 11y ago
The more interesting conflict (since she donated her windfall to charity) to me is that she's on the Board of Directors for Intuit, makers of Quickbase. From what little information I can glean, Bebop would be a direct competitor to that product.
- e28eta 11y ago
  Well, Intuit is planning to sell Quickbase, so that conflict will disappear. Although if true, it's interesting that it was there in the first place. http://fortune.com/2015/08/20/intuit-quicken-sale-turbotax/ http://fortune.com/2015/08/20/intuit-quicken-sale-turbotax/

ape4 11y ago

Except for the charity donation

kareemm 11y ago
Two things wrt the donation. First, she gets a massive tax receipt to use against other income. I don't know how it works in the US, but in Canada you can use charitable tax receipts to lower taxable income in future years if you don't want to use the whole thing in the year in which you made the donation. Second, she donated to a donor advised fund, or DAF. A DAF is a charitable entity that is sort of like a bank account: you put your money in, get the tax receipt, your money manager invests the capital, and you can allocate some portion of the money (the amount depends on the financial institution's policies) to actual 501c3's (I.e charities doing charitable work). DAFs are just another instrument offered by the Fildelities of the world to increase assets under management. The most common reason people give to DAFs is so they can get a tax receipt for the current year and defer the decision about which charities to support until later. Plus giving stock to charity is the most tax-efficient way to give. She gets the tax receipt for $148m regardless if the stock goes down after the donation. And if it goes up, she has more to give to charities. I've Had a long term contract to build an online donor advised fund, so my head has been in this space for 8y or so.
- jahnu 11y ago
  > I don't know how it works in the US, but in Canada you can use charitable tax receipts to lower taxable income in future years if you don't want to use the whole thing in the year in which you made the donation. I don't know how this can be a tax-dodge of any significance. Surely you can only offset your tax by the amount you donated anyway so it makes no difference to you in the end.
  - tombrossman 11y ago
    This is a good overview of how the money might be used to influence, and not be a purely altruistic gesture: http://newint.org/features/2012/04/01/bill-gates-charitable-giving-ethics/ http://newint.org/features/2012/04/01/bill-gates-charitable-...
  - gohrt 11y ago
    You can donate to a "charity" that employs your friends and family, not society at large. I can create a Betterness Foundation, and donate all my income to it, and you can do, and the Foundation can spend its resources bettering the neighborhood where you and I happen to live, but no one else lives there. This is a scam loophole to avoid Federal taxes that are intended to benefit society at large.
    - rlucas 11y ago
      It's not quite that simple. The IRS didn't just fall off the turnip truck. Yes, there's a large chance that if Mr. X sets up a DAF, you might see people with the last name X doing various work for the DAF etc. Same if Mr. X ran a for-profit business. But there are rules and regs and you can't just blatantly self-deal and loot your foundation; see https://www.irs.gov/irm/part7/irm_07-027-020.html https://www.irs.gov/irm/part7/irm_07-027-020.html The truly naive shenanigans don't work and there actually is scrutiny of foundations. Plus, foundations have to distribute 5% of their assets annually, which has actually been sort of a problem lately with low fixed-income returns. If you want to know the "scam," others above have described quite adequately the two main lines: the tax write-off and the ability to influence what charities benefit. The scam is not that you can set up a "Mr. X's landscaping and Champagne pouring foundation" to privatize all the benefits. (I mention this not to chastise parent, but because left without any additional color, parent comment could make a reader not versed in how nonprofit stuff works overly cynical.)
      - thrownaway2424 11y ago
        I think you understate the extent to which one can use a tax-deductible non-profit organization to benefit oneself. For example selective private schools are all (at least in my area) not-for-profit organizations to which contributions are tax-deductible. So you "give" to these organizations and essentially pay for private school from pre-tax income. There are even country clubs that are non-profits. I think the only thing that really prevents these organizations from being formed are if they have documented written policies of racial discrimination, in which case the IRS will go after them eventually.
- ChuckMcM 11y ago
  This is exactly right. Funding a DAF is great and all, but it is also a tool of influence. The headline is "gives it all to charity" which sounds great but remember that there are many groups that are 503(c) organizations which you might not consider actual charities. And they often have other "influencers" on their boards. So you want to deal with X you find some charity in common with X and you offer to have your DAF provide a generous donation. Externally a donation to a charity is recorded, internally someone has a new "friend." And the weird thing is that the person you are influencing feels good about the fact that they feel they helped get more support for some charitable cause they champion.
  - Rapzid 11y ago
    Very interesting.. Can you create a 503(c) down the road that you work for and pays you a fat salary, then fund it from your own DAF?
    - ChuckMcM 11y ago
      Well if you're going that road you create an LLC that contracts with the 503(c) that provides a service. But once you start creating shell companies to hide the source and destination of funds it starts to smell like money laundering and that generates more interest than its worth.
- drumdance 11y ago
  I'm pretty sure you can't carry forward donations.
- nogbit 11y ago
  There is no profit like non profit!
s73v3r 11y ago
What she's doing with the proceeds is really irrelevant.
ProAm 11y ago
Give a large chunk to your employees?

tyingq 11y ago

The more interesting conflict (since she donated her windfall to charity) to me is that she's on the Board of Directors for Intuit, makers of Quickbase. From what little information I can glean, Bebop would be a direct competitor to that product.

e28eta 11y ago
Well, Intuit is planning to sell Quickbase, so that conflict will disappear. Although if true, it's interesting that it was there in the first place. http://fortune.com/2015/08/20/intuit-quicken-sale-turbotax/ http://fortune.com/2015/08/20/intuit-quicken-sale-turbotax/