Now with more money than anyone else, Elon Musk faces a new challenge: How to give it away

Now with more money than anyone else, Elon Musk faces a new challenge: How to give it away

2021-01-11 19:20:00

The richest person in the world would like your help in giving away his billions of dollars.

One of the first things Elon Musk, Tesla's founder and CEO, did when he climbed to the top of American capitalism last week was to ask for advice on how to climb the ranks of philanthropy. Now that he has more money than anyone else on the planet, Musk will likely be scrutinized much more than ever as to how he gives it away – or not.

Amazon founder Jeff Bezos, who pushed Musk from the top, attracted more and more negative attention for his penny-pinching philanthropy as he got richer and richer, and Musk is likely to encounter a similar dynamic. Bezos turned to Twitter for advice as that investigation began, and Musk follows the same playbook.

Musk's tweet exposes two truths: He's certainly right that billionaire philanthropy is hard – many of his fellow tech titans have struggled to give their money away effectively. But it's also true that many billionaires have refused to give away large amounts of their money – in part for fear of screwing it up to make a difference – and that describes Musk's own giving up so far. Musk has given relatively small amounts of his wealth, a history that highlights his tweet and his rise to top billionaire status.

Musk & # 39; s main charitable instrument was the Musk Foundation, which he founded in 2002. In an age of philanthropic showmanship, the Musk Foundation is almost entertaining in its simplicity, yet strikingly opaque: entire website consists of 33 words on a plain text Yahoo page with no links, personnel information or contact forms ("I wrote that masterpiece myself in HTML 1.0", Musk said at one pointAll that's included are five bullet points that outline the fields the foundation supports.

Musk has also signed the Giving Pledge – the pledge to give at least half of someone's money to charity – but he is one of the few signatories not to disclose their pledge on the program's website.

Of course, the main place Musk has been more clearly is on Twitter, where he regularly reveals tidbits about his philanthropic thinking to Tesla fans begging him for gifts or details. Sometimes he promises to reward money from his foundation to followers who tweet to him.

Until 2016, Musk gave relatively little money to his foundation, which then gave little to nonprofits, according to the tax returns that foundations are required to file. Then, in May 2016, Musk donated $ 250 million worth of Tesla stock to his foundation, but that money also slowly came out the door. And so, during the 16-year period between the foundation's inception in 2002 and mid-2018, the last year on file, the philanthropy has given only about $ 25 million directly to nonprofits, of which $ 10 million in support of OpenAI , a non-profit organization. founded by Musk and entrepreneur Sam Altman.

After 2016, the foundation has forwarded approximately $ 50 million to donor-advised funds (DAFs), which are individual philanthropic vehicles that do not disclose their donations and also allow foundations to bypass the requirement to send 5 percent of their assets each year. send elsewhere. A Musk spokesperson told Forbes last year that those DAFs had donated a total of $ 75 million to nonprofits over their lifetime.

That $ 75 million, coupled with his foundation's $ 25 million in direct donations through 2018, means that Musk has given away about $ 100 million to charity through his foundation and his DAFs (this figure is excluding money that may have been donated by his foundation after 2018 or money not donated through a foundation or DAF.) That math boils down to Musk donating about 0.05 percent of his current net worth to charity so far. That figure also follows with what Musk has said publicly – in 2018, he said that he sold approximately $ 100 million worth of Tesla stock to fund his charity.

Musk representatives did not respond to Recode's request for comment.

Because about three-quarters of Musk's donations to date have come from DAFs, who are not required to file similar public tax documents, it is more difficult to keep track of which specific nonprofits he supports. That's somewhat intentional: Musk has said his grants are "(almost always) anonymous," although that would technically only be true for donations from outside the foundation's walls (although Musk said wrongly claiming that his foundation's donations are also "anonymous".)

However, some announcements have been made of large donations from beneficiaries. In addition to the foundation's $ 10 million to OpenAI, Musk donated at least $ 10 million to the Future of Life Institute, which conducts research into security in artificial intelligence; $ 10 million for an award aimed at promoting global literacy; and $ 6 million to the Sierra Club, a donation originally anonymous and then made public after Musk had encouraged the organization to do so. Musk also said that he is "one of the top donors" of the American Civil Liberties Union, without disclosing an exact amount.

But those donations all happened at a quiet time in Musk's wealth history. Just a year ago, Musk testified under oath there he was worth about $ 20 billion, although, as with other billionaire tech founders, most of that money is in illiquid stock that a CEO often doesn't like to sell. Now Bloomberg estimates his net worth at more than 10 times that.

And as the world's richest person, there will be more eyeballs with every move. Progressive activists and politicians have increasingly directed their anger at a few high-profile billionaires by one guillotine to Bezos & # 39; mansion at one point, for example – as a way to criticize US income inequality. Billionaires, however, have used their philanthropy as a counter-argument to higher taxes that would eliminate inequality, pointing to the good they are doing with fortune for the world today.

Musk, who has the label & # 39; billionaire & # 39; lit and recently moved himself and his foundation to Texas, has said his large philanthropic investments are decades away, however, which could frustrate the Left. The entrepreneur has said that while he would sell some more Tesla stock for philanthropy "every few years", "big payouts" from his charities won't happen until about 20 years from now, "when Tesla is steady." That would be when Musk is almost 70 years old.

But he does seem to have a clear idea of ​​how he wants to spend his fortune at the time. He has already outlined two broad buckets for his wealth: half for Earth and the other half for Mars.

“Will use that to make life multiplanetary, help education and environment on Earth with my foundation. I just don't want us to be sad about the future, " he said of his wealth in 2018. “About half of my money is for problems on Earth, the other half to help build a city on Mars that can sustain itself so we can live in case we get hit by a meteor or WW3 takes place and we destroy ourselves, " he said to another follower a few months later.

He's already starting to make some more gifts. On Friday Barstool Sports announced that Musk had set up a fund it organized to support Barstool Sports for small businesses.

Musk isn't quite as flashy with his material comforts as other tech billionaires – he's in the process to sell all his houses, and has not shown the same taste for yachts or other trifles. From Musk's point of view, he's saving.

"It takes a lot of resources to build a city on Mars," he says told an interviewer last month. "I want to contribute as much as possible."


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