Elon Musk, among other hyper-rich, transfer billions to funds recommended by donors to obtain tax breaks. Photo: Getty Images.
Billionaires have found a way to evade huge taxes. How do they do that? A Bloomberg investigation reveals that private philanthropic foundations are using the funds to circumvent federal laws designed to make sure the rich give money to the poor.
According to the outlet, the key is the donor-advised fund, or DAF, which is so flexible that charity dollars can stay in one indefinitely, and so opaque that no one needs to know either way.
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Organizations are generally required to pay 5% of their assets annually and report each charitable donation to the public. Donor-recommended funds, which are considered charities, fulfill that mandate, making them an ideal way for foundations to postpone giving.
Millionaires and billionaires in every corner of the US have adopted the same strategy, including the founders of Tesla and Google, Elon Musk and Sergey Brin, respectively, who collectively amass billions of dollars in DAF by exploiting a loophole that allows them to keep the tax benefits of philanthropy while delaying payments.
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The investigation showed that, in more than a thousand cases, the foundations would not have reached the required payment for the year if it were not for the contributions to the DAF. Had there been no evasion, the charities would have received an additional $800 million.
Translation: Orinoco Tribune
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