Elon Musk seems to have had a fairly generous 2021, philanthropy-wise, according to a recent securities filing. That filing indicates that Musk gave an impressive $5.7 billion worth of shares in Tesla to charity over the course of last year in several different stock sales. This staggering amount places Musk among the year’s top philanthropic donors, showcasing his commitment to giving back.
Unlike many of his fellow billionaires, Musk doesn’t seem to have publicized these gifts extensively. In fact, the filing doesn’t even reveal the identities of the receiving organizations. However, it does report a total of 5,044,000 Tesla shares given away to various charities, valued at about $5.7 billion altogether. Notably, those sales are part of a total of $16 billion in Tesla stock Musk sold in the latter part of 2021.
The Tax Implications of Charitable Giving
Selling that much stock leads to a significant tax bite, so it’s reasonable to speculate that the charitable giving was an attempt to offset the Internal Revenue Service's cut. As pointed out by a Wall Street Journal article, donations of appreciated stock are particularly attractive for wealthy individuals.
The forgone capital gains from these donations aren’t taxed, the value of the stock can serve as a charitable deduction, and the stock itself is removed from the person’s taxable estate. This strategic approach not only benefits the charities but also provides significant tax advantages to Musk.
Calculating the Value of the Charitable Gift
The $5.7 billion figure comes from calculating the value of the gift using the same methodology favored by the IRS. This method involves taking an average of the stock’s highest and lowest values on the day the gift is made. This careful calculation ensures that the donation is accurately valued, highlighting the substantial impact of Musk's contributions.
Musk is a signatory of the Giving Pledge, which is an open challenge to ultra-wealthy individuals to commit to giving away most of their fortunes during their lifetimes. While Musk has kept much of his philanthropic activity private, he has shared a few details on social media, illustrating his commitment to charitable efforts.
Public and Private Donations
Despite keeping much of his philanthropy under wraps, Musk has revealed some of his donations. For instance, he made a $20 million donation to a Texas county school system in March of last year and another $10 million to a Texas city for a downtown revitalization project. These contributions show that Musk is not only focused on large-scale donations but also on community-level support.
Additionally, Musk tweeted in 2018 about selling over $100 million in Tesla stock to give money to charity. This earlier commitment to philanthropy sets the stage for his more recent, larger donations, proving that Musk's charitable spirit has been a consistent part of his financial strategy.
