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RISK: Chan Zuckerberg Initiative set up as an LLC, not as a non-profit | Canadian Insurance

RISK: Chan Zuckerberg Initiative set up as an LLC, not as a non-profit

This allows the Facebook founder to retain voting control of the shares he donates

The Chan Zuckerberg Initiative, launched to celebrate the birth of the Facebook founder’s daughter Max, isn’t your run-of-the-mill charity. For starters, it will be funded by 99 percent of Mark Zuckerberg’s Facebook shares, valued at $45 billion.

And then there’s the fact that the Initiative is set up as an LLC, not as a non-profit, which allows Zuckerberg to retain the voting and allocation of the donated shares.

“This enables us to pursue our mission by funding non-profit organizations, making private investments and participating in policy debates — in each case with the goal of generating a positive impact in areas of great need,” Zuckerberg explained on a Facebook post. “Any net profits from investments will also be used to advance this mission.”

“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. 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. And just like everyone else, we will pay capital gains taxes when our shares are sold by the LLC.”

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