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If I got this right, he is not donating actual $$ but his shares are transferred to this new entity "Start Small" which is not even a non-profit but an LLC.
by csomar 7y ago
If I got this right, he is not donating actual $$ but his shares are transferred to this new entity "Start Small" which is not even a non-profit but an LLC.
- diggan 7y agoYeah, that seems strange. If your motive is really to provide relief for people and not focus on getting profits, why would you do that with an entity that is used for profit motives? I'm not from or in the US, so might misunderstand what a LLC is, but could someone provide some reasoning why you would want to do this with a LLC instead of non-profit? Edit: thanks y'all for your answers, I didn't think to check the rest of his Twitter timeline to see if he already answered that question.
- wallflower 7y agoGetting 501c(3) status can take months if not years. Most small non-profits start off incubated in a larger non-profit that acts as their fiscal sponsor. Even if they had an existing non-profit, this might go against the mission/budget/aims of the existing organization.
- hkmurakami 7y agoAllows more flexibility, less disclosure, no forced distributions annually, etc. Basically more control. Emerson Collective (Laureen Jobs) is probably the most prominent example.
- hobofan 7y agoFrom his Twitter: > Why is #startsmall a LLC? This segments and dedicates my shares to these causes, and provides flexibility. Grants will be made from Start Small Foundation or the LLC directly based on the beneficiary org. All transfers, sales, and grants will be made public in tracking sheet. Private + non-profit combinations are not uncommon. I'm not sure about the specifics in the US, but getting the status as a non-profit acknowledged is also a PITA in some jurisdictions, especially if he dedicates part of it to non-traditional causes like UBI.
- mrslave 7y agoA little bit unusual, but in the absence of more information let's give him the benefit of the doubt? I find the division between those who are donating or pledging, vs those lining up for a handout, far more interesting. https://www.sfgate.com/news/article/Behind-the-scenes-private-equity-angles-for-a-15182768.php https://www.sfgate.com/news/article/Behind-the-scenes-privat...
- gnicholas 7y agoZuck used an LLC also, apparently for more control. [1] One big reason is that he can time the actual donations, for tax purposes. That allows him to make big donations in years where he has large amounts of taxable gains to offset. If he donated $1B this year, he'd likely hit a deductibility cap (especially if he donated to a private foundation, as opposed to a generic 501(c)(3)). https://www.nytimes.com/2015/12/03/technology/zuckerbergs-philanthropy-uses-llc-for-more-control.html https://www.nytimes.com/2015/12/03/technology/zuckerbergs-ph...
- thundergolfer 7y agoSo the practical outcome of that is it keeps more tax money out of the hands of the American public?
- chrischen 7y agoWell he could also not donate it and still keep it out of the hands of the American public?
- thundergolfer 7y agoI think if he doesn't donate it can get taxed as capital gains.
- gnicholas 7y agoOnly if/when he sells.
- gnicholas 7y agoFrom a tax perspective, yes there would be more tax revenue if he gave $1B all this year. But probably the amount was chosen partly because he is doing it in a tax-efficient way. That is, if he gave it all this year, he probably would have given much less. This is a dynamic system, so changing one parameter would cause other parameters to be changed as well.
- 7y ago
- qeternity 7y agoIANAL but I’m unaware of a legal entity that ensures non profit. Usually that’s just a tax assessment of 501c3 status. But charities themselves are corporations typically.