Yesterday, Twitter CEO Jack Dorsey got a break from being the near-constant punching bag for tech "journalists" (a solid 50% of whom are leftwing hacks who lazily press him to hire more minorities while banning every conservative under the sun) and was lauded for dedicating (notice we didn't say "donating") one-third of his net worth, supposedly, to fighting the coronavirus, and then, whatever is left will be used to advance causes Dorsey cares about, namely, the advancement of women, and UBI.
In an attempt to appear "transparent", Dorsey issued a few tweets explaining why he structured this new organization dedicated to seeing these efforts (the so-called "Start Small" initiative) as a "Donor-Advised Fund" or DAF.
I’m moving $1B of my Square equity (~28% of my wealth) to #startsmall LLC to fund global COVID-19 relief. After we disarm this pandemic, the focus will shift to girl’s health and education, and UBI. It will operate transparently, all flows tracked here: https://t.co/hVkUczDQmz— jack (@jack) April 7, 2020
Why pull just from Square and not Twitter? Simply: I own a lot more Square. And I’ll need to pace the sales over some time. The impact this money will have should benefit both companies over the long-term because it’s helping the people we want to serve.— jack (@jack) April 7, 2020
Why now? The needs are increasingly urgent, and I want to see the impact in my lifetime. I hope this inspires others to do something similar. Life is too short, so let’s do everything we can today to help people now. ✌🏼— jack (@jack) April 7, 2020
Why the transparency? It’s important to show my work so I and others can learn. I’ve discovered and funded ($40mm) many orgs with proven impact and efficiency in the past, mostly anonymously. Going forward, all grants will be public. Suggestions welcome. Drop your cash app ;)— jack (@jack) April 7, 2020
However, one thing he neglected to explain, or even mention, was how this decision would allow Dorsey maximum tax benefi.
As it turns out, Recode published a lengthy investigation into these "DAFS" last year. The rise of these "DAFs" in the philanthropy world, particularly within Silicon Valley, has raised questions about their founders' motives. As the story points out, not only is there an instant tax benefit, but the fund is under zero pressure to spend that money. Legally, Dorsey could simply leave it alone, then claim it as an asset for his children.
Our point here is: He's benefiting from a massive tax windfall before he even contributes anything to a noble cause. Then afterwards, he'd be free to do little or nothing with the money. Though the funds can't be returned to Dorsey, and they must be spent on the fund's intended purpose, many have pointed out that the structure lends itself to tax abuse.
One Silicon Valley VC said as much on twitter, and was soundly bashed for making Dorsey "look bad" by raising a legitimate point.
Jack is smart— Josh Wolfe (@wolfejosh) April 7, 2020
Jack's PR people very smart
Jack's tax-advisers are smartest
The REAL INEQUALITY is not wealth of the 1%––but the cynical knowing of stuff––the masses don't.
This is not illegal, not tax evasion
But it IS tax avoidance––spun brilliantly
WIT https://t.co/UgzIbUHg0S https://t.co/7Wl4l5kRDz
2/ IF— Josh Wolfe (@wolfejosh) April 8, 2020
Jack gives to charity (so far $100k—not $1B even though tax benefits accrue go to full $1B)
he is heroic + humanitarian + awesome
BUT if it is used like others than it deserves public scrutiny.
Don’t read if you just prefer headline good newshttps://t.co/z0IpqXUBP7
3/ You can interpret the take as overly cynical. This is a system that was set up for good intentions but is abused. https://t.co/KY7GIDfD4T— Josh Wolfe (@wolfejosh) April 8, 2020
In response to one of his interlocutors, Wolfe clarified that the tax benefits accrued to Dorsey can be used the same year the fund is established, meaning before the money is actually spent on anything charitable.
Few probably remember this, but Dorsey pledged to give away a huge chunk of his Square wealth years ago, but that never materialized.
Like everything else he does, this definitely deserves scrutiny.
Remember when Jack Dorsey said he would give away nearly a third of his stake in Square?— Owen Thomas (@owenthomas) April 8, 2020
That was five years ago. Spoiler: He never did.
Why we should be asking @jack more questions about his new philanthropic promises, in my latest @techchronicle: https://t.co/7C31iALg25
For everyone on twitter complaining that this is a "harsh" or "uncharitable" (no pun intended) interpretation of Dorsey's motives here, we wonder: Would you say the same if it was Trump, not Dorsey, doing the giving?
No, in that case it would be critical analysis that the public deserves to understand.