What Does Mark Zuckerberg Gain From Giving Away His Facebook Stock?


Mark Zuckerberg and his wife Priscilla Chan are giving away 99% of their Facebook stock to charity. That stock is currently worth $45 billion. This may seem like an amazing gesture of philanthropy, but all is not as it seems.

The company he plans to donate the stock to will be Chan Zuckerberg Initiative LLC. A family-run foundation that he’s the head of. So basically Mark Zuckerberg is transferring his stock from Mark Zuckerberg the individual, to Mark Zuckerberg’s company.

So what does this all mean? What’s the point of all of this? Well, he’s been able to transfer the stock without paying capital gains tax. Normally if you transfer stock, you’ve got to pay tax on it. Also, his heirs will be able to inherit the stock without having to pay estate tax on it.

Now, if you were extra observant, you’d have noticed something. Zuckerberg is donating his fortune to a Chan Zuckerberg Initiative LLC. Notice the “LLC” part? It stands for Limited Liability Company. A Limited Liability Company isn’t a charity is it?

It’s not. Since the initiative is structured as an LLC, Zuckerberg will be able to spend the money generated from the stock on whatever he wants. For private or investment purposes. According to a Facebook release,

“The Chan Zuckerberg Initiative will pursue its mission by funding non-profit organizations, making private investments and participating in policy debates, in each case with the goal of generating positive impact in areas of great need,” it said. “Any profits from investments in companies will be used to fund additional work to advance the mission.”

It must be made clear though, that not all of the stock will be transferred instantly. Instead it will be done over his lifetime, with the first payment being made of $1 billion. This will gain him a nice tax benefit of $330 million.

This has been a shrewd business move by Zuckerberg:

  1. He gets to transfer ownership of his Facebook stock, while still controlling the company.
  2. He gets a tax benefit of $330 million on his first donation of $1 billion
  3. He will be able to pass on his Facebook stock to heirs without paying any estate tax

Featured Image via Facebook

After graduating from City University London with a degree in law, Craig is now a freelance blogger and writer. He works on his own blog that speaks on social and cultural millennial issues.