Written by / Ma Xiaolei
Edited / Tu Yanping
Design / Shi Yuchao
Source/Forbes By Eliza Haverstock
Elon Musk has never been a big philanthropist relative to his astronomical net worth.
As of Feb. 15, Musk's net worth was about $246 billion. A Feb. 14 SEC filing showed that the Tesla CEO transferred about 5 million shares of Tesla stock between November 19 and 29, 2021, worth $5.7 billion, for "philanthropy."
"Forced donation" success?
If the news is true, it would be about 2.3 percent of his net worth, a modest percentage that would be more than 20 times more than all his previous donations.
When the document first came to light, some speculated that Musk, as the world's richest man, had been forced to donate by the United Nations World Food Programme (WFP), which must have been provided to the WFP to solve the problem of world hunger.
Going back a month before he transferred his stake, Musk tweeted that if WFP could elaborate on how to tackle world hunger with $6 billion, he would donate $6 billion to the organization. Of course, there are also some people who think that musk's tweets are not necessary.
However, WFP revealed to the US media "Forbes" on February 15 that it did not receive the donation. David Beasley, the group's executive director, who was the one who "forced" Musk to donate on Twitter, said in a statement: "WFP has not received the money at this time, but I am glad to hear that Musk has joined the charity brigade." ”
No other charity has announced receipts, and Musk has not responded to multiple requests for comment.
Possible destinations
Elon Musk visits the construction site of Tesla's Gigabit Factory
Based on Forbes' knowledge of the world's richest men, the media analyzed that the huge donation may first flow into the donor-advised fund (DAF) or Musk's own charitable organization, the Musk Foundation, and then donate to other nonprofits for charity.
A DAF is like a charitable bank account. It doesn't have as many hard requirements, such as not requiring annual distribution ratios or public disclosure of grants related to specific donors, so that funds can be kept in DAFs for years without going to operating nonprofits.
That's why Forbes doesn't count such funds when evaluating philanthropists, unless the billionaires disclose the details of their DAF actual grants.
The DAF's tax avoidance function is one of the reasons why it is favored by the world's richest people. As soon as Musk donates his shares, he will receive tax breaks, exempting up to 30 percent of his 2021 adjusted gross income.
With that alone, musk's donations are highly likely to flow into DAF. Forbes estimates that of musk's $280 million to charity (not including this latest huge donation), about 20 percent was donated through DAF.
In the second case, Musk may inject that money into his own foundation. In this case, he can still get tax exemption immediately.
However, unlike donating directly to DAF, the foundation needs to allocate about 5% of it outward each year. If the foundation allocates more than 5% of the amount in a year, it can carry forward the excess for five years. If this percentage is not reached, more taxes will need to be paid.
Increase the amount of "kindness" contained
Musk visits los Angeles' largest and oldest homeless shelter
So far, Musk has been one of the world's less "philanthropic" billionaires, at least, but there are signs that he may be stepping up his work on this.
In February 2021, he announced a $100 million "XPRIZE" initiative to fund teams that create scalable mechanisms to decarbonize the atmosphere.
According to a representative of Musk, he has so far provided just over half of the total prize money to the X-Prize Foundation, which oversees the award. The foundation has already distributed $5 million to 23 student teams to support the early stages of their carbon removal program, but the entire competition won't end until 2025.
In 2021, Musk donated $55 million to St. Jude Children's Research Hospital. He also donated about $30 million to several public schools and nonprofits in the Grand Valley of southern Texas, where SpaceX builds rockets.
The donations were all announced in March 2021, when criticism of Tesla grew from local activists, who said the company was damaging the region's ecosystem and squeezing out residents who had long lived here.
In the fiscal year ending June 2020, the most recent fiscal year documented, the Musk Foundation had total assets of $941 million, of which less than $24 million was disbursed, about $20 million went to the DAF, and the remaining $2.9 million was spent primarily in the education sector.
The Mercatus Center, a liberal think tank at George Mason University in northern Virginia that aims to advance the idea of a free market, received $1 million from Musk.
According to the Musk Foundation's tax filing, the Makatus Center's donation was intended for "coronavirus scientific research." Another $1 million went to the Wikimedia Foundation, the nonprofit behind Wikipedia.
The second largest donation, $500,000, went to hack club, a Vermont-based nonprofit that oversees a network of nearly 500 student code clubs around the world. Musk donated another $1 million to the Hacker Club in the fall of 2021.
He has also dedicated his time to the organization, which is more rare for a billionaire like Musk than a donation.