Private foundations must donate 5 percent of their assets every year. Elon Musk’s enormous charity missed that standard for three consecutive years.
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Private foundations must donate 5 percent of their assets every year. Elon Musk’s enormous charity missed that standard for three consecutive years.
New tax filings show that the Musk Foundation fell $421 million short of the amount it was required to give away in 2023. Now, Mr. Musk has until the end of the year to distribute that money, or he will be required to pay a sizable penalty to the Internal Revenue Service.
Mr. Musk’s group has fallen further and further behind. In 2021, his foundation was $41 million short, then $234 million the following year. Now, the hole is deeper still.
Private foundations do have a way to solve the problem if they do not give away enough money. They can distribute more the following year as a make-good. Mr. Musk could choose to do so in 2024.
Mr. Musk, who on Wednesday became the first person with a net worth of over $400 billion, has been an unusual philanthropist. He has been critical of the effectiveness of large charitable gifts, and his foundation maintains a minimal, plain-text website that offers very little about its overarching philosophy. That is different from some other large foundations that seek to have national or even worldwide impact by making large gifts to causes like public health, education or the arts.
The Musk Foundation’s largess primarily stays closer to home. The tax filings show that last year the group gave at least $7 million combined to charities near a launch site in South Texas used by Mr. Musk’s company SpaceX.
Other large charitable foundations have also failed to distribute the I.R.S.’s minimum required amount in recent years, sometimes by more than $100 million, according to tax filings compiled by the company CauseIQ, which analyzes charity data.
But Mr. Musk’s foundation is unusual even among those, both for the amount of its shortfall and the speed at which it is increasing. In 2022, the last year for which full data is available, the Musk Foundation had the fourth-largest gap of any private foundation in the country, according to CauseIQ data.
Mr. Musk’s charity, which he founded in 2002, has never hired paid employees, according to tax filings.
Its three directors — Mr. Musk and two people who work for his family office — all work for free. The filings show they did not spend very much time on the foundation: just two hours and six minutes per week for the past three years.
But the board’s task grew enormously in 2021 and 2022, when Mr. Musk tripled the foundation’s assets by giving it billions of dollars’ worth of Tesla stock. Tax experts said if he claimed those donations on his personal taxes in the year given, those gifts would have been very beneficial to him. Because of the deductions allowed for charitable gifts, they potentially saved Mr. Musk as much as $2 billion on his tax bills.
Because of the skyrocketing growth in assets, the three-person board had to give away hundreds of millions of dollars per year just to meet the minimum. That group entered 2023 needing to pay off the previous year’s $234 million shortfall, or they would have to pay a penalty tax of 30 percent on whatever was left over at the end of the year.
The foundation met that, giving away a total of $236 million and avoiding the penalty.
But it also had to give away another $424 million to meet its obligation for 2023. The filings show it did not come close, leaving an even bigger deficit to make up this year.
“The distributions made by the foundation are meeting the bare minimum to avoid penalties,” said Brian Mittendorf, an accounting professor at the Ohio State University who studies nonprofits. “It is clear that the organization is not in a hurry to spend its money.”
In 2023, as in other years, many of the foundation’s gifts went to organizations that were closely tied to Mr. Musk or his businesses. In 2023, for instance, he gave $25 million to a donor-advised fund, a separate charitable account over which Mr. Musk retains effective control.
Mr. Musk began donating to schools in the Brownsville, Texas, area just after his company’s reputation took a major hit: One of its rockets exploded, showering the area with twisted metal.
The foundation’s largest gift for the year — $137 million in cash and stock — went to a nonprofit called The Foundation. That charity, run by Mr. Musk’s close associates, has set up a private elementary school in Bastrop, Texas. The school is a short distance from large campuses operated by Mr. Musk’s businesses and a 110-home subdivision planned for his employees.
Dr. Mittendorf noted that Mr. Musk gave that school $102 million on Dec. 28 — days before the deadline to give away the unspent millions from the year before.
The Musk Foundation’s gifts for 2023 gave little hint of the political transformation that would follow this year, as he spent hundreds of millions of dollars to support Mr. Trump’s presidential campaign. Throughout 2023, Mr. Musk became increasingly right-wing in his public statements, especially on issues like crime and immigration.
But his foundation’s only gift with an apparent political tilt was a small one: The Musk Foundation gave $100,000 to a libertarian think tank in Utah.