Mark Zuckerberg has answered critics who said his donation of $45 billion in Facebook stock may be linked to paying lower taxes.
Last week Zuckerberg announced he will give away 99% of his Facebook shares to make the world a better place.
He made the announcement in an open letter to his newborn daughter Max – announcing the formation of the Chan-Zuckerberg Initiative.
Jesse Eisinger wrote in the New York Times that Zuckerberg did not create a charitable foundation, which has non-profit status.
Instead, he created an investment vehicle called a limited liability company (LLC) that can invest in for-profit companies, make political donations, and lobby for changes in the law.
Zuckerberg hit back, saying that the initiative is structured as an LLC because it enables them to pursue their mission by funding non-profit organisations.
It also helps them to make “private investments and participate in policy debates – in each case with the goal of generating a positive impact in areas of great need”.
“Any net profits from investments will also be used to advance this mission,” said Zuckerberg.
He added that by using an LLC instead of a traditional foundation, they receive no tax benefit from transferring shares to the initiative.