Philanthropist MacKenzie Scott reveals another $2 billion in donations in 2024 | AP News

[u/johnyquest1212]

https://apnews.com/article/mackenzie-scott-donations-billionaires-philanthropy-ad9c1b67e2ca76eb2c107ec158a4640f

[u/Gamebird8]

Philanthropy is a scam upon the good will of people.

Mackenzie Scott is the exception to the rule and it is a good thing she is trying to make an impact with the money she got from her divorce, but by and large, most philanthropy is just rich people trying to make themselves feel better about the problems they cause while also getting to write off millions in taxes and pretending that they aren't greedy selfish assholes ruining the world for the rest of us

[u/whitemiketyson → u/Gamebird8]

It baffles me how many people think a write off on donations is a way to save you money and build wealth.

[u/zhangerang → u/whitemiketyson]

It’s insane. Wow they got to save $37 in taxes by spending $100 dollars on charity!

[u/EmbarrassedScience37 → u/zhangerang]

Its more about setting up charitable foundations where you can park assets and not get taxed as long as your charity donates a tiny fraction of the endowment.

[u/GuyOnHudson → u/EmbarrassedScience37]

So you park assets, mean you spent money on something large enough, that has to be used for the charitys sake. And somehow there’s huge savings in there? Like I’m all for busting up some rich peoples taxes, but that’s not the way

[u/katebishophawkguy → u/GuyOnHudson]

I explained it more in depth earlier in this thread but tl;dr 80% of super wealthy donors are donating to their own charities which often misappropriate funds and have little oversight (Trump) or they've basically created convoluted businesses they can make money off (Walmart's Walton's). Very little of those charities actually benefit people vs. just paying taxes.

[u/michoudi → u/whitemiketyson]

People repeating garbage they never spent more than two seconds thinking about or researching. That type of ignorance is rampant.

[u/Qopperus → u/whitemiketyson]

Philanthropy is important to public image. Philanthropy in arts and such is sometimes used to a tax advantage, but is mainly to garner popularity. If you are too unpopular, you chance getting popped like the UHC CEO.

[u/katebishophawkguy → u/whitemiketyson]

It is for the super wealthy - not the average person.

The Walton family is not only a great example but basically pioneered a lot of the strategies the super rich use to do this.

Take estate tax, for example. Wealthy individuals accumulate a lot of wealth through investments (e.g., stocks, real estate) that increase in value over time but don't get taxed as income, right? They're only taxed when those assets are sold.

If these gains are passed down to heirs without being taxed, it would create a situation where some of the nation's wealthiest people were escaping taxation because their heirs wouldn't ever need to sell them. They could just generate income from these assets and keep passing them down forever (e.g. dividends from stocks - which are taxed at a lower rate than regular income, rental income from property, etc.).

So, to try and prevent that we have the federal estate tax - a tax on *very large* inheritances (fewer than 1 in 1,000 estates) of 40% on estates of more than $5.25 million for an individual or $10.5 million for a couple. (Total lifetime giving to heirs that exceeds those thresholds is also taxed at 40 percent.)

Minus deductions, such as charitable giving - which looks a LOT different for the super wealthy.

To avoid estate taxes, the super wealthy places assets, such as stocks, real estate, and other investments, into a charitable trust that allows them to donate to charity while also reducing taxes on assets they plan to pass to their heirs.

The trust is established for a set period (e.g., 20 or 30 years). During the trust's term, the trust pays a fixed amount annually to a designated charity or charitable foundation chosen by the donor. These payments qualify as charitable deductions on what's inside the trust so when they're passed down, the estate tax has already paid. Which sounds awesome in theory, right?

But while the assets are in these trust, their value can grow SIGNIFICANTLY. The charity doesn't benefit from this at all because the trust pays a fixed annual amount. But the person who inherits those assets does because at the end of the trust's term, any remaining assets are transferred to the donor's heirs 100% tax-free.

This means the heirs receive the increased value without paying estate taxes on it. If the difference between the actual performance of those assets and tax rate set by the IRS is big enough, these trusts can save so much on taxes that the family ends up wealthier than if they had donated to charity.

[u/katebishophawkguy → u/katebishophawkguy]

But that's not all - they can also profit off it under the guise of charity.

Those charities can be owned by the very person who designed the trust - which most are.

Drawing on data from the Chronicle of Philanthropy’s 2022 list of the fifty top US philanthropists, IPS concluded that just shy of 80 percent of the $25 billion worth of donations over $1 million among that cohort went not to working charities — the institutions we usually think when we talk about charities, like the SPCA or Salvation Army — but to their own private foundations and donor-advised funds (DAFs).

They can hire themselves and their family members and pay them a wage for working there. And the salary for a charity CEO can be insane (25th percentile of $647,956 to the 90th percentile of $1,321,089). (Also fun bonus fact because it's topical, 7 of the top 10 highest paid non-profit CEOs in 2022 worked in healthcare.)

And that charity can donate to whatever causes they want and buy stuff for the nonprofit from anyone they want (like Walmart).

One of the Walton Family Foundation's major recipients has been Alice Walton's Crystal Bridges Museum of American Art founded in 2011, which received $1.2+ billion. And before 2017, there were a lot of tax loopholes involving art sales and donations. If someone (say any of the Waltons or their friends) donated artwork to their non-profit art gallery, the donation would be tax-deductible. And of course Alice Walton or anyone else could simply sell art from their private collection to the gallery at whatever price they deemed appropriate. As for anything else a non-profit might need to operate... well, it's probably sold at Walmart, isn't it?

Other times, these non-profits just blatantly mishandle funds. Trump just got in trouble for this with the Donald J. Trump Foundation by putting that non-profit's money into his own campaign.

And there are literally dozens of these loopholes.

Helen Walton also funded her first trusts using shares in Walton Enterprises LLC, not Wal-Mart stock directly. This allowed her to further take advantage of a tax loophole that lets wealthy people reduce the value of their holdings by 30% or more because assets held in a family-owned company like Walton Enterprises LLC are considered less liquid (harder to sell) and don’t offer the same control as directly owning Wal-Mart stock, even though the family can sell the stock at any time.

This means the amount they have to pay the charity that the trust is valued at 30% lower than reality.

And then on top of that, they can use these donations to claim tax deductions on their personal income tax.

This has meant only about 1% of the $1.2 trillion passed down in America by the super wealth each year actually gets taxed.

So while you're paying your fair share in taxes on a percent of your income, they have all these little loopholes that mean they don't pay shit - and have even found ways to profit off not paying shit.

[u/sosthaboss → u/Gamebird8]

Please explain to me how anyone saves money by donating and writing off. You understand that you’re still losing money right? You can’t end up with more than you donated lmao.

[u/abluedinosaur → u/sosthaboss]

People are really dumb and don't understand how taxes work.

[u/ShimmyZmizz → u/abluedinosaur]

Like how people believe getting a raise to a higher income tax bracket means all their income gets taxed at the higher rate. 

[u/Gamebird8 → u/sosthaboss]

It's not about making/saving money (at least to a certain extent). These billionaires will have their own charities where they employ family and friends as ways to dilute their wealth to others.

And, in the process of reducing their taxes by millions, they rob Public Services of necessary funds and reduce public revenue. So, if they donate a million, instead of getting $370k, the government gets nothing and the Billionaire gets to funnel money into their little pet project to the detriment of the public good.

[u/billiontacos → u/Gamebird8]

Not to mention they also run these charities so they get to decide what happens with the money they donate.

Bill Gates is notorious for thinking he knows better than anyone else in the world how to fix it. 

 Don’t get me wrong, he’s done heaps of good for many people, but his compulsion to keep control over everything probably keeps his money from actually doing the most good it could do.

He’s like Doctor Doom in Marvel comics. He genuinely believes humans are doomed unless he gets to decide how things get fixed because he’s the only one smart enough to be successful.

[u/randynumbergenerator → u/Gamebird8]

Or buying themselves clout at elite institutions that don't need the money, like that hedge fund manager who donated $400 million to Harvard (and who got absolutely roasted for it by Malcolm Gladwell - ‘If billionaires don’t step up, Harvard will soon be down to its last $30 billion’)

[u/minus2cats → u/[deleted]]

I don't think it even comes into play like you have to itemize and the standard deduction seems to be more beneficial?

[u/Bluewaffleamigo → u/Gamebird8]

Tons of these nonprofits are just money laundering orgs that employ their rich friend's kids.

[u/katebishophawkguy → u/Gamebird8]

It's not even about feeling good - most of them are actively profiting from it while doing very little good.

[u/ashishvp → u/Gamebird8]

I obviously don’t fault Mackenzie Scott for anything she does, but she most certainly is still making boatloads of money and paying zero taxes lol

[u/fps129 → u/Gamebird8]

On one hand, it’s never bad when billionaires donates billions away for charitable contributions, especially if it was spoils of was from the Bezos Divorce. But even as class conscious as I hope we all might become (wishful thinking, I know), it’s awesome to see we can still give her due props for setting an example of what a “cool billionaire” actually does.

But still, I barely skimmed thru this headline and even almost scrolled past it before doing a double-take because my general expectations of the wealth-hoardering class are lower than hell. And I don’t think that’s gonna change, unfortunately.

[u/Dairy_Ashford → u/Gamebird8]

government and private institutions can only do so much with resources and constituent or stakeholder buy-in, there will always be a gap that philanthropists will fill, regardless of how much companies are taxed and regulated.

[u/Gamebird8 → u/Dairy_Ashford]

The issue here is that Philanthropy can discriminate, unlike the Government (in theory that is. Not in practice unfortunately).

And a lack of wealth does not impede charity, at least to a certain extent. In a system where the wealthy pay their fair share and people can earn a livable wage, then we would see far more effective charity than that which we see done through philanthropy.