Facebook’s Mark Zuckerberg Defends Giving Money to LLC

He said that, for the couple, the main appeal of the LLC organization was the flexibility it gives them to fund a variety of projects and initiatives. An LLC is somewhere between a corporation and a business partnership. Unlike the LLC, charitable foundations do not have authority to invest in for-profit businesses or even take part in the political lobbying.

Facebook founder Mark Zuckerberg has defended the unusual company structure chosen for the eye-catching philanthropic venture launched to celebrate the birth of his daughter. Instead of praising Zuckerberg, Eisinger contends, we should ask fundamental questions about why an individual, and not the government, gets to decide how to spend this money. That has some people annoyed, claiming Zuckerberg must be doing something nefarious, probably dodging taxes or some such.

Moreover, if the L.L.C.is sued, the partners’ personal assets are exempt.

The “generous” implications that Eisenger is referencing is just normal tax law, in that the LLC may offset gains with charitable contributions.

“Our education work has been funded through a non-profit organisation, Startup:Education, the recently announced Breakthrough Energy Coalition will make private investments in clean energy, and we also fund public government efforts, like the CDC Ebola response and San Francisco General Hospital”, he said. Despite it being an altruistic gesture, many criticized Zuck over the use of the money i.e. giving it to a limited liability firm (Chan Zuckerberg Initiative) and not to any foundation.

“In fact, 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”, Zuckerberg added. “Any net profits from investments will also be used to advance this mission”. “And just like everyone else, we will pay capital gains taxes when our shares are sold by the LLC”, he wrote.

In a post penned on Facebook on Thursday, Zuckerberg said he and Chan would receive no tax benefit from transferring shares to the Chan Zuckerberg Initiative.