Earlier this week, Zuckerberg and his wife, Priscilla Chan, following the birth of their first child announced that they each would donate 99% of their shares – worth around $45 billion – to the causes of "advancing human potential" and "promoting equality."
Still, some have criticized the way Zuckerberg is using the money, setting up the Chan Zuckerberg Initiative instead of donating it directly to a charitable organization.
In a message posted to his Facebook account on Thursday, Zuckerberg writes: "The Chan Zuckerberg Initiative is structured as an LLC rather than a traditional foundation. This enables us to pursue our mission by funding non-profit organizations, making private investments and participating in policy debates.”
"Unlike limited liability companies, charitable foundations are restricted from investing in for-profit businesses and cannot engage in political lobbying, activities that the Facebook founder said the Chan Zuckerberg Initiative was designed to do in order to further the development of humanity."
Others have suggested that the Initiative is a scheme to avoid taxes, saying that by gifting shares rather than cash, Zuckerberg avoids paying higher costs in capital gains tax.
Zuckerberg said that "by using an LLC instead of a traditional foundation, we receive no tax benefit from transferring our shares to the Chan Zuckerberg Initiative, but we gain flexibility to execute our mission more effectively."
If he wanted to avoid taxes, Zuckerberg said, he could have simply founded a charity himself.
"If we transferred our shares to a traditional foundation," he wrote, "then we would have received an immediate tax benefit, but by using an LLC we do not. And just like everyone else, we will pay capital gains taxes when our shares are sold by the LLC."
According to Zuckerberg, initial areas of focus for the Initiative will include "personalized learning, curing disease, connecting people, and building strong communities."
