Modern-Day Robin Hood Or Just A PR Facade? The Truth Behind Elon Musk’s $6 Billion Donation
Musk is actually one of the least charitable billionaires in the world, and this charity donation is only yet another episode from the soap opera that is Elon Musk’s life
Today the world woke up to its favourite billionaire, Elon Musk, trending on Twitter. A recent Securities and Exchange Commission (SEC) filing surfaced, claiming that Musk had donated a whopping $5.7 billion worth of Tesla stock to charity in November 2021. Many speculate that Elon Musk delivered on his promise of donating $6 billion worth of Tesla shares if the UN’s World Food Programme (WFP) can give an account of how “$6B will solve world hunger.”
Of course, this divided the internet, with one side praising the billionaire’s action while the other calling it a PR stunt. In between this tug of war, the reality of this donation has fallen into a grey area. A recent article by Forbes looked into many into the actions of Elon Musk.
WFP Never Got The Money
If WFP can describe on this Twitter thread exactly how $6B will solve world hunger, I will sell Tesla stock right now and do it.
— Elon Musk (@elonmusk) October 31, 2021
While speaking to Forbes, WFP’s Executive Director David Beasley claimed that they received no such donation from the Tesla CEO, saying “Whether WFP receives any of this money is yet to be seen, but I am excited to hear that Elon is engaged.” Similarly, no other charities announced a donation of this magnitude. So, the question remains, where did the money go?
A “philanthropic” holding account
It is more likely that the American CEO’s fund landed in a ‘donor-advised fund (DAF),’ which is designed to function like a philanthropic holding account. Unlike charitable organisations, DAF does not carry any requirements relating to annual distributions, or public disclosure. The money can sit in a DAF account for years, without going to a cause.
Forbes estimates that out of the $280 million that Musk has donated to charity, about 20 percent of it has been done through a DAF account. By making use of the DAF, the billionaire gets a tax deduction of as much as 30 per cent, even if the money never leaves the holding tank’s account.
Much is made lately of unrealized gains being a means of tax avoidance, so I propose selling 10% of my Tesla stock.
Do you support this?
— Elon Musk (@elonmusk) November 6, 2021
This isn’t the first time the billionaire has misdirected his followers. Back in November 2021, Musk conducted a Twitter poll, claiming he was willing to sell 10 percent of Tesla stock. However, according to an SEC document, it was later revealed that Musk already knew he was selling his stock back in September.
Exactly. Only time I sell Tesla stock is when my stock options are expiring & I have no choice.
Btw, I will continue to pay income taxes in California proportionate to my time in state, which is & will be significant.
— Elon Musk (@elonmusk) June 9, 2021
According to Wedbush Securities analyst Dan Ives, Musk was looking at a heft tax bill from his 23 million stock options awarded in 2012, which were set to expire in August 2022. “With a tax bill that we calculate at north of $10 billion, selling stock over the coming months before year-end is not a surprise, although holding a Twitter poll to sell 10 percent of his stock is another soap opera that can only happen to one company and one CEO in the world, Musk,” Ives said
A PR facade?
The same Forbes article claims Musk to be among one of the least charitable billionaires in the world, relative to his fortune, which currently stands at $246 billion. If you take a look at Musk’s fiscal record for 2020, his foundation has given out only $24 million of its total assets of $941 million. Out of which, about $20 million have so far landed in a DAF.
By donating only .001 per cent of his $246 billion fortune, Musk is far behind his peers. For instance, Warren Buffett has donated about 40 per cent of his $115.6 billion fortune to philanthropic endeavours. Similarly, Bill and Melinda Gates have donated about 26 per cent of their $140.7 billion estimated net worth.
All of this does not mean the money will not go to the causes Musk has promised. The billionaire has been stepping up his philanthropy game, by funding schools or donating to medical studies. However, we’re yet to see the receipts of the fabled $6 billion figure.