Elon Musk has dismissed criticism that he should have spent $ 44 billion on charity instead of buying the social media platform Twitter.
The CEO of Tesla and Space X insisted in an interview with the Met Gala that he was already doing “many things philanthropically” and that his companies were created to “do good for the future of humanity.”
His mother, Maye Musk, a model, said she told him not to take over the world, but he didn’t listen.
Musk’s public philanthropic gestures have so far lagged behind other billionaires, giving him less than 1 percent of his wealth for good causes – the same figure as Jeff Bezos.
In contrast, billionaire investors Warren Buffett and George Soros gave away more than 20 percent last year, according to business magazine Forbes.
The CEO of Tesla and Space X (right) insisted in an interview with the Met Gala that he was already doing “many things philanthropically” and that his companies were set up to “do good for the future of humanity.” His mother, May Musk (left), a model, said she told him not to take over the world, but he did not listen.
Musk’s public philanthropic gestures (pictured at the Met Gala on Monday) have so far overtaken other billionaires, giving him less than 1% of his wealth for good causes – the same figure as Jeff Bezos
Critics question why Musk, who has enough money to change the “fabric of American society”, has instead decided to spend it on a social media platform.
“It would be good if Musk decided to make a humanitarian effort and spend more money on something meaningful, say, the homelessness and poverty of this country. Instead, he bought Twitter, “Suzette Hackney wrote in OpEd for USA Today.
Asked why he didn’t spend $ 44 billion on charity, philanthropy or “more good”, Musk told Entertainment Tonight: “Well, I do a lot of philanthropic things and really my companies aim to do good for the future of humanity.
Musk named his companies, noting that Tesla is seeking to “accelerate the entry of sustainable transportation and energy” while Space X “provides the Internet to the world’s least served people.”
Musk added: “We have also been able to help Ukraine with Starlink terminals and provide connectivity in some of the hardest hit areas.
“I am trying to do good for humanity and the future of civilization.”
His mother, May, when asked where Musk got his mentality from, said: “I told him not to take over the world and the universe, and he didn’t listen. He doesn’t listen to mom.
In November, Musk donated about 5 million shares of Tesla’s shares worth $ 5.7 billion to charity, according to regulatory documents – but it is not yet clear which charity he donated.
But the donation has sparked debate inside and outside philanthropy about transparency, tax breaks and congressional legislation, along with speculation about exactly where the money was donated.
Some experts say Musk may have donated his shares to his donor-advised fund, or DAF for short. DAFs are essentially charitable investment accounts in which donors can claim a tax deduction in advance but are not legally obliged to distribute the money.
May Musk, left, and Elon Musk attend the Costume Institute Gala Concept at the Metropolitan Museum of Art to mark the opening of the exhibition “In America: An Anthology of Fashion” on Monday in New York
Experts say this would be the most cost-effective strategy for Musk, currently the world’s richest man with an estimated net worth of more than $ 220 billion.
A donation from DAF would allow him to claim a tax relief of 30% of his adjusted gross income for 2021, instead of 20% if he had donated it instead to his foundation. Musk may also deduct the fair market value of the shares instead of their original value.
“He can do whatever he wants with his money – anyone can,” said John Arnold, a billionaire philanthropist who co-founded the Laura Foundation and John Arnold and Arnold Ventures with his wife Laura. “But if he receives a subsidy from society through this tax deduction, then there is a responsibility that goes with it.”
Whether or not Musk donated his shares to Tesla at DAF, Arnold said, the possibility of doing so underscores a dubious tax loophole for many wealthy Americans.
“Society is giving them this tax relief, this subsidy, to encourage more resources to reach communities,” Arnold said.
“But the way tax law is structured today doesn’t have to be that way. You can get tax relief today and there is no requirement for this money to reach the community. You can donate money to a fund advised by a donor and keep it in a tax-free investment account forever.
Arnold and others who want to tackle this loophole have formed a coalition, the Charitable Donation Acceleration Initiative, which seeks to tighten the requirements for the DAF and other financial resources used by the rich.
Asked why he didn’t spend $ 44 billion on charity, philanthropy or “more good”, Musk told Entertainment Tonight: “Well, I do a lot of philanthropic things and really my companies are designed to do good for the future of humanity. Pictured: Musk with his mother May at the Met Gala
If Musk had invested Tesla in DAF, the intention of the tax law was reflected, Arnold said. The community received neither the tax revenue generated by Musk’s earnings from the shares nor the charitable benefits that the tax relief was supposed to create.
In general, Musk’s approach to donations differs from that of many other wealthy donors, who are often accused of publishing their gifts as a way to improve their reputation.
About a month before donating his shares, the famous provocative Musk clashed on Twitter with the head of the UN World Food Program, who called on billionaires to donate $ 6 billion “once” to help end hunger.
Musk said he would sell shares of Tesla for $ 6 billion and donate the agency’s revenue if he could show how the money would solve world hunger. David Beasley, the organization’s chief executive, said he had not yet received a donation from Tesla’s chief executive.
Soskis of the Urban Institute suggests there is room for Musk to be more transparent about his gifts, while signaling his “contempt” for “elite public opinion,” as Tesla’s CEO often does.
Sometimes Musk provides transparency about his donations. In 2020, he donated $ 50 million to St. Jude Children’s Research Hospital. He also donated about $ 30 million to various public schools and non-profit organizations in South Texas, where SpaceX is building its rockets.
The latest dossier from his private foundation, the IRS, shows that he donated 11,000 shares of Tesla to the charity in 2019. From July of that year to June 2020, the foundation distributed $ 23.6 million in grants. Part of it went directly to working charities, but much – $ 20.7 million – went to Fidelity Charitable, a donor that sponsors the DAF.
Some who have worked with Musk explain his style of philanthropy, saying he is not focused on looking good.
Marcius Ekstavur, vice president of climate and energy at XPrize, which manages Musk’s $ 100 million carbon sequestration award, says Musk wanted the project to focus on finding impactful solutions and didn’t want to use his image everywhere. This is unlike some other donors, who, Extavour said, seem more concerned about invitations to speeches and other events.
“It was quite a pleasure to work with the Musk Foundation as a donor who doesn’t … bother about how to describe this or how we describe it,” Exavor said. “Or make sure they get the glow or the spotlight.”
Steve Greanias, general manager of fundraising decisions for the GiveSmart fundraising platform, says that like most people working in philanthropy, he is curious about where Musk’s money went and how it was or will be used. Still, he doesn’t think it’s necessarily everyone’s business to know. Its own platform, which serves about 8,000 nonprofits and has processed about $ 800 million in donations, accepts anonymous donations.
“If you have that kind of money and you want to do good with it and you don’t feel the need to be recognized for it, that’s fine,” Greanias said. – This is between you and the organization. As long as your relationship is with them, it doesn’t matter if the world wants to know where the money comes from.
That comes when Musk revealed last week that he had sold $ 8.5 billion worth of shares in Tesla after his agreement to buy Twitter.
The new financing, which could come in the form of preferred or ordinary equity, could reduce the $ 21 billion cash contribution that Musk committed to the deal, as well as the margin loan he secured against his shares in Tesla, sources said. .
Banks, which agreed last month to provide $ 13 billion in loans based on Twitter’s business, have refrained from offering more debt to Musk due to limited cash flow from the San Francisco-based company, Reuters reported last month.
Musk revealed last week that he had sold $ 8.5 billion worth of shares in Tesla after his agreement to buy Twitter. Pictured: Tesla headquarters
Musk also pledged part of his stake in Tesla to banks to arrange a $ 12.5 billion margin loan to help fund the deal.
Investors are worried that Musk will close the deal with Twitter, given that he has withdrawn in the past.
In April, he decided at the last minute not to take a seat on Twitter.
In 2018, Musk tweeted that he had “secured funding” for a $ 72 billion deal to make Tesla private, but did not continue with an offer.
Shares of Twitter ended 0.2% trading at $ 49.14 in New York on Monday, closer to the acquisition price of $ 54.20 per share, as investors interpreted the news of new funding discussions as less likely transaction to be completed.
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