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December 04, 2015

Zuckerberg Responds to Criticism of New Philanthropy Vehicle

In a Facebook post Thursday, Mark Zuckerberg defended the structure of his and wife Priscilla Chan's plan to put almost all of their wealth into achieving social ends and funding community projects, The New York Times writes.

The couple pledged Tuesday to transfer 99 percent of their Facebook stock, worth nearly $45 billion, to the Chan Zuckerberg Initiative, a limited-liability company that will award charitable grants but also make private investments and engage in policy debates. Each facet of the enterprise, Mr. Zuckerberg wrote Thursday, has "the goal of generating a positive impact in areas of great need."

Their use of a for-profit vehicle for their philanthropic work triggered a wave of discussion and debate, with critics characterizing the effort as a way for the couple to shield much of their fortune from taxes and sidestep rules traditional foundations face, including minimum annual spending requirements and restrictions on business and political activity.

Mr. Zuckerberg, Facebook's co-founder and CEO, addressed the tax concerns in his latest post, asserting that by establishing the limited-liability company his family bypassed the "immediate tax benefit" of shifting their shares to a foundation. "And just like everyone else, we will pay capital-gains taxes when our shares are sold by the LLC," he said.

Read a Chronicle of Philanthropy article on tech billionaires such as Mr. Zuckerberg, Pierre Omidyar, and Laurene Powell Jobs using for-profit entities for philanthropic ends.