March 13, 2024 • 45 mins
A New York Times investigation revealed this week that Musk's $7 billion "Musk Foundation" regularly fails to donate enough money to get its multi-billion dollar tax break. Ed brings on Pullitzer-prize winning reporter David Fahrenthold of the New York Times to walk through the extremely questionable world of Elon Musk's non-profit.
Link to the New York Times story: https://www.nytimes.com/2024/03/10/us/elon-musk-charity.html
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Episode Transcript
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Speaker 1 (00:02):
All Zone Media.
Speaker 2 (00:05):
Hello, Welcome to bear offline. I'm at Zetron. Since twenty twenty,
Elon Musk has seeded his charitable foundation in innovatively called
the Musk Foundation, with billions of dollars of test the stock,
(00:26):
which has neted him a multi billion dollar tax break.
Yet a massive New York Times investigation by reporters Ryan
Mack and Dave vid Farenthald has found that the Musk
Foundation has failed to donate the minimum amount of money
required by law to get that tax break. The investigation
found that Musk had not hired any staff for the
foundation and that its board was made up of Musk
(00:47):
and two volunteers, one of whom The Times reports works
an average of six minutes a week on a charitable
operation with billions of dollars of dry powder, and Musk's
donations regularly benefited causes related to his own interests, like
a school insert, a SpaceX compound, and a UN program
to help countries find internet for rural schools, where two
(01:08):
of them became Starlink customers. And Starlink is, of course,
Musk's wireless internet company. And while Elon Musk initially promised
to help and I quote fund fixing the water in
any house in Flint, Michigan that has water contamination above
FDA levels. He would only end up donating about a
million dollars to local schools, installing water filters and buying
(01:28):
laptops for students. While this is unquestionably a good thing,
he failed to do much more than that. All he
did was send the tes Lagoon down there to offer
and I'm not kidding rides around the parking lot in
his car. Since the middle of twenty nineteen, The Times
reports that Musk has done little more for Flint than that.
According to The Times, in twenty twenty one, the Musk
(01:51):
Foundation fell forty one million dollars short of the minimum
required donation, and in twenty twenty two missed it by
an astonishing two hundred and thirty four million dollars. That year,
Musk's foundation only gave away the two point twenty five
percent of the five percent it was required to from
its seven billion dollars in assets. Today, I'm joined by
(02:18):
New York Times investigative report to David Tarenthald, who won
a Pulitzer Price for his work at The Washington Post
investigating our big Web President Donald J. Trump and his
dodgy charitable deals. David, thank you so much for joining me.
Speaker 1 (02:30):
Hey, it's great to be here.
Speaker 2 (02:31):
So, on a very basic level, what makes this Elon
Musk charity story so remarkable? What's so different about it?
Speaker 1 (02:40):
Well, there's two things that really stand out about the
Musk Foundation. One is how big it is. So the
Musk Foundation is more than five billion dollars in assets,
mostly Tesla stock. That makes it one of the twenty
largest foundations in the United States. But the second thing
is how small it is in its actions. It's big
in its resources and small in its actions. So the
Musk Foundation has repeatedly failed to give away just the
(03:02):
bare minimum it's required to by law. And it also
when it does give its money away, the money doesn't
go very far. By that, I mean often mister Musk
uses the money in his foundation to help himself or
to help his businesses.
Speaker 2 (03:16):
So can you give me example of some of the
ways he's using it to help himself.
Speaker 1 (03:21):
Well, one of the biggest ones was in twenty twenty one.
There's a guy named Jared Isaacman who's a billionaire in Pennsylvania.
He charters a rocket from SpaceX to go up into space,
and as a way of sort of celebrating or ennobling
what he's doing, he says, you know, I'm going to
raise two hundred million dollars with this spaceflight for Saint
Jude's Children's Research Hospital. He goes up into space, he
(03:43):
comes back down and he hasn't raised two hundred million dollars.
They're still short, and so Elon Musk then jumps in
to save his customer from failing on this charitable pledge
and says, I'll give fifty million dollars. Eventually gives fifty
five million dollars, not from his own pocket but from
the Musk Foundation. A few weeks later, the same billionaire says,
you know what, I'm going to order three more flights
(04:03):
from SpaceX. So he goes from being a good SpaceX
customer to a really good SpaceX customer, and part of
that process was the Musk Foundation. Another example was the
Musk Foundation had never given any money to Cameron County, Texas.
That's an area of the very very southern tip of
Texas where Musk has the SpaceX launch site. He never
had never given any money down there until March twenty
(04:26):
twenty one SpaceX rocket explodes there and rains metal down
all over this area, an area, by the way, where
he needs lots of regulatory approvals, goodwill, all kinds of
help from the people who were the politicians down there.
About an hour after the rocket explodes, the Musk Foundation
starts giving to schools to downtown beautification. And the third
example I'll bring up are these two schools that mister
(04:49):
Musk has started and supported with the Musk Foundation. On paper,
these are supposed to be, like every charity, to serve
the public. Right, that's the point of the charity. It's
not your it's not to serve you. It's not a
even if it's got your name on it, it doesn't serve
your interest. It serves the public. So there's a school
called ad Astra mister Musk started. There's another school called
the Foundation. That's its legal name, the foundation that mister
(05:11):
Muskus give it a bunch of money to from the
Musk Foundation. So we went to look, Okay, where are
these schools, who are they serving how are they serving
the public? The answer is that one of them is
behind the locked gates of a SpaceX compound in Boca Chica, Texas.
You can only get in if you were a SpaceX employee.
And the other one the foundation, it's bought a school
(05:31):
a property to turn into a Montessori school that happens
to be two minutes away from a huge subdivision mister
Musk is building for his own employees outside Basstrop, Texas.
Speaker 2 (05:40):
So and which employees for SPICEX for.
Speaker 1 (05:43):
Well, he's got a whole complex there that includes SpaceX,
but it's mainly boring company employees.
Speaker 2 (05:47):
Right.
Speaker 1 (05:48):
Both these places are rural areas. He's trying to bring
these highly talented, sought after people to a pretty rural
area of Texas. You can imagine one of the questions
people would ask is, well, where are my kids going
to go to school? Right? And so these two charities
are helping Musk recruit by building schools to serve his employees.
Speaker 2 (06:04):
So, taking a step back on a very basic level,
how does it actually work? So has he he's put
this stock in escrow?
Speaker 1 (06:13):
ISU, what happened was in twenty twenty one, he's facing
this giant tax bill. Is he he exercised a bunch
of Tesla stock options and he says he owed eleven
billion dollars in taxes. He takes five billion dollars of
Tesla stock. Now, this is that's not what he paid
for the stock. That's what it's appreciated too. He donates
it to charity. And now the tax law allows you
(06:34):
to take a deduction based on the appreciated value of
the stock. So the deduction to him could have been
worth as much as two billion dollars off of his
tax bill. Right, he gives that stock to the Musk Foundation.
Now it's confusing because it's got his he's in charge
of the Musk Foundation. It's got his name on it.
But again, the Musk Foundation is by law, a separate
entity with its own strictly charitable goals. Even though it
(06:56):
sounds like something that he's you know, that's like another
sort of pocket of his wallet. It's a separate thing.
So once the money go, once the shares go into
the to the Musk Foundation. Now he's given himself a responsibility,
he's given himself a job, and that is the IRIS
requires foundations to give away five percent of their assets
every year. You can imagine why. It's to keep people
(07:17):
from just dumping money into their foundation, getting a tax
break and never actually helping the world. You have to
send five percent of your money out the door to
the real world every year, and he hasn't. He has
didn't in twenty twenty one, he didn't in twenty twenty two.
In fact, by the end of twenty twenty two, he
was two hundred and thirty four million dollars behind the
minimum for what this foundation was supposed to have given away.
Speaker 2 (07:39):
Right, but as far as the stalt goes, does it
sit separate to musk is in a separate holding?
Speaker 1 (07:46):
It is legally the property of this foundation now, which
means he's still in control of it, but it belongs
to the foundation.
Speaker 2 (07:51):
Does it have any liquid funds in there?
Speaker 1 (07:54):
There's some I think they've sold a few sids. There's
a small amount of liquid cash. I think mostly what
he does is it sells stock in order to make donations.
Speaker 2 (08:01):
When it does so, how does the tax break actually work?
How much does he get off of his tax bill
as a result of this?
Speaker 1 (08:09):
So this is complicated. But what we were told was
that in that year they expected that the five billion.
So he gives five billion dollars worth of Tesla stock
to his charity. The folks we talked to said that
they thought the actual break from that, the actual production
in his taxes would be thirty seven percent of five
(08:30):
billion dollars, which is about two billion dollars. So there's
a lot of other math involved in involving his income
and other things, but that was the guess, was two
billion dollars off his taxes?
Speaker 2 (08:39):
And who gave you this estimate? Just to a cliar.
Speaker 1 (08:41):
We talked to a couple of professors of tax law.
Speaker 2 (08:44):
Right, So what he gets out of this is just
a tax break, but he's not donating enough money, right,
actually giving away what he's meant to.
Speaker 1 (08:53):
Yeah, it's confusing to think about him and his foundation
has separate entities. But in this case, he gives his
foundation the five billion dollar. Enough. If he'd taken this
five billion dollars worth of Tesla stock and given it
to Saint Jude's or UNICEF or some other charity that
he didn't control, that would have been the end of
the story for him. He's given all the money, he's
given these shares away. He takes the tax break, UNICEF
(09:14):
or whoever's then uses the shares for whatever. Right, So
now he's like taking off his hat as donor and
putting on the hat as the guy who runs the
Musk Foundation, and now he has this responsibility, is the
head of the Musk Foundation, to start giving this newfound
money away. And that's when the five percent minimum matters
to him. He has to give five percent of the
foundation's assets away to other charities out to actually do
(09:37):
good in the world every year.
Speaker 2 (09:39):
And he isn't doing this enough.
Speaker 1 (09:41):
No, he missed it in twenty twenty one by forty
one million dollars, and then in twenty twenty two he
missed it by two hundred and thirty four million.
Speaker 2 (09:48):
And so what's meant to happen to a regular person? Well, actually,
one one quick question. Does he get this tax break
every year for holding it? Or is it just the
one off? He got a one off?
Speaker 1 (10:00):
You know, he gets it based on what he's donated
to the foundation in that year.
Speaker 2 (10:04):
Okay, and how much is in there right now? Just
a week clip, because I know there's a lot of
numbers going on.
Speaker 1 (10:08):
Yeah, No, it depends on It's depended so much on
the rise and fall of Tesla stock. But the last
time we got a snapshot was at the end of
twenty twenty two, and it was a little bit more
than five billion at that point.
Speaker 2 (10:19):
So what is meant to happen to him and who
is meant to exact justice here?
Speaker 1 (10:23):
Well, there's two primary regulators of nonprofits. One is the IRS,
the Internal Revenue Service. They're the ones who Okay, so
we said at the end of twenty twenty two, he
was this foundation was two hundred and thirty four million
dollars behind. He has a one year grace period twenty
twenty three to give that money away in addition to
the five percent again for twenty twenty three. If he
(10:45):
doesn't give a doesn't give the money away after that
one year grace period, the foundation faces a thirty percent
penalty tax, and if it still doesn't pay then then
it faces one hundred percent penalty tax. So it would
basically the IRS would confiscate all the money that they
were supposed to give A but they did not, So
that's what would happen. That's the IRS. The problem with
that for me as a reporter is that the IRS
(11:06):
all of that enforcement is private hidden. We can't see
it unless somebody sues in tax court or federal court
to stop it. So if it happened at the end
of twenty twenty three, we don't know about it. The
other regulator in most states is the estate attorney general.
They also can regulate people who bilate tax laws. I mean,
one example that just ended was the New York Attorney
(11:29):
General and the National Rifle Association. She had the right
to regulate and sue the NRA because it was a
New York nonprofit. The Musk Foundation is a Texas nonprofit.
So the authority lands with Ken Paxton, an Attorney General
of Texas. Not to say it won't happen, but he's
a very political actor and a very political actor who's
very friendly to Musk.
Speaker 2 (11:48):
Wasn't he also threatening media matters when Musk suit them
as well? He seems very much in his pocket. So
let's go back to this ad Astra school. What exactly
(12:10):
happened there, because it's very bizarre. There is a school
inside SpaceX.
Speaker 1 (12:14):
Yes, so it began as a school basically for Musk's children.
He started it back in California when he and SpaceX
were both there.
Speaker 2 (12:23):
And it's a nonprofit.
Speaker 1 (12:24):
Right, it's a nonprofit. So again from the beginning, it
faced this requirement to serve the public and not the
private good of its leader. The first class fourteen students,
five of whom were Musk's owned children. Later it moves
from his house to the SpaceX campus in Hawthorne, California,
so it's within the gates of SpaceX. There. We talked
to the guy who was the headmaster. He said about
(12:45):
half the students were related to SpaceX employees, and Musk's
owned children also went there for a long time. Then
in twenty twenty, Musk starts to shift his own residency,
his own company center of Gravity, to Texas. So then
the Astro school picks up from California, moves to Texas,
and from what we can tell, this sort of small
(13:06):
amount of openness they had, you know, the fifty percent
of students they had who were not employees of SpaceX.
They seem to have changed their model where now they're
behind this security gate. I went down there. If you
could picture, if you've ever seen pictures of where the
SpaceX rocket launch site is in South Texas, it's a
very remote area close to the Gulf of Mexico. There's
nothing around there, there's no people, there's no other schools,
(13:28):
and as you drive down there, there's a little fence
on the side of the highway and you see you
could see behind it, there's a building, there's some basketball courts.
You can see what looks like a school, but there's
no sign for a school. There's nothing that tells you
there's a school there. Certainly nothing tells you there's a
school there that you might go to if you're a
member of the public. The only signs say, you know,
keep out, no trespassing, and there's a security guard who
(13:49):
you know if you stop for ten seconds, sieted come
over and ask what you're doing.
Speaker 2 (13:53):
So, do you know how one sends one's kids?
Speaker 1 (13:57):
There?
Speaker 2 (13:57):
Is it a private school?
Speaker 1 (13:58):
Like it is private? It does not have a website,
which it used to in California, but it does not
now in Texas. We asked Musk and the people who
run the other people who are the directors of that school? Yeah,
how you get in? Who chooses it? What's the criteria?
Can you go if you're not a SpaceX employee? And
we did not get answers to any of those questions.
Speaker 2 (14:17):
Does it seem to flown any nonprofit guidelines you've seen
or is it just classic craven capitalism?
Speaker 1 (14:24):
It is a nonprofit that it remains legally a nonprofit.
The IRS is given a tax exem status, so if
you donate money to it, you can get a tax
break for it. But you know, that's the question here is,
you know, if this is really a nonprofit, it's truly
serving the public and not the private benefit of mister
Musk or the private benefit of SpaceX. You know, where's
the evidence of that? And that's what we asked them
(14:45):
for and didn't get a response.
Speaker 2 (14:47):
So in this other school, the foundation, what is that?
This feels? See this is the thing with things like this.
When people talk about conspiracy theories and the rich doing
weird things, they always point to made up stuff versus this.
So this other secret school that Musk gave what one
hundred million dollars do what if you found there?
Speaker 1 (15:08):
Yeah, that was really surprising. So the Musk Foundation, despite
the fact that it's very big, doesn't give very many
really large donations. And then the exception, one of the exceptions,
was this thing called the Foundation and they first the
Musk Foundation gave it money in twenty twenty two. You
can pull the IRS documents for the foundation to see
what it is and what they told the IRS they
(15:29):
were going to do when they got tax exempt status
and you can see that it's very very closely tied
to Elon Musk. So he's not on the board of directors,
but the head of it is his money manager. The
two other directors are his accountants. So there are people
who are very close to him. And if you look
at the what they told the irs they were going
to do, and this got some attention at the time
last year, it sounds grand. We're going to start a school,
(15:52):
We're going to start a secondary school, We're going to
start a university in Austin, Texas. And a lot of
people cover that at the time and said, ooh, you knows,
mister Musk is he's starting sort of a competitor or
the University of Austin is you know, what would an
Elon Musk university be like? Is this where he's going
to combat you know, the forces of wokeness or you
know the other things he talks about a lot. And
so my question was just you know, where is this school?
(16:13):
Does it exist? Does it has it done anything? Because
it doesn't have a web presence, it doesn't have you know,
there's no evidence. You know, if you if you or
I said, you know, I want to go to the
University of Elon Musk or you know, whatever this is
going to be. There's there's no way to find information
about it, and so it took a lot of sleuth thing.
But here's what we found. The foundation, the entity that
the startup charity that is run by Musk's associates. It
(16:36):
has a shell company. The shell company last year bought
a former horse farm in Bastrop, Texas a forty acre
horse farm. Okay, so maybe that's the college, maybe that's
the University of Elon Musk. When you go look at
that property, you can see that it actually matches well.
You can see two things about it. One is that
it's right around the corner from this company town essentially
(16:56):
that Musk wants to build for his employees outside Bastrop.
Bastrop is is an extra of a Austin, But where
he's building is kind of in the middle of nowhere.
There's no schools or development. But he's put a boring
company installation, a giant SpaceX warehouse, he's got a there's
like a live music venue and a store, and he's
putting in one hundred and ten home subdivision. He's going
(17:16):
to call it Snailbrook, just sort of like an inside joke.
I guess in the world of the boring Company, Oh yeah,
I guess, the boring company moves as fast as a snail.
So this is Snailbrook. So but the one thing that
he's trying to convince people to move from Austin San Francisco,
where you know, wherever people who have choices about what
they're going to live, he's going to say, move to
this rural part of central Texas. And the thing that
(17:38):
that subdivision did not have was a school. And so
the foundation, again nominally independent, not supposed to be serving
mister Musk's interest, is just supposed to be doing its
own charitable thing. The place they've selected for their first
campus is right around the corner from this place where
Elon Musk's company needs a school. And if you look,
you can find job listings on the internet for another
(18:00):
ad Astra school that's being opened, and if you compare it,
it's the same place. So they're going to open another
ad Astra school in this building. And that's what really
struck me was the huge contrast between what these folks
told the irs they were going to be university for Austin,
Texas and all they've done so far, which is it
looks like build a monassory school for Elon Musk's employees.
Speaker 2 (18:21):
So let's talk about the Musk Foundation itself. So by
the sounds of it, it's what three people including Elon Musk.
Can you just break down the vast corporate structure here?
Is this? This bit drove me a little insane.
Speaker 1 (18:34):
Yeah, this is really different too. So you know the
you remember the company that they keep right and we're
talking about the top twenty largest foundations in the United States.
That's you know, the Gates Foundation, that's the you know,
the George Soros's group, the Walton.
Speaker 2 (18:47):
How big of them? How big are those organizations by comparison?
Speaker 1 (18:50):
So the most foundation is I mean, the Gates Foundation
is a lot bigger. It's in the hundreds of hundreds
of billions. But these other groups are it's around the
size of other groups like the Walton Family Foundation, things
like that. It's in the same ballpark.
Speaker 2 (19:02):
And the Walton Families, the Walmart the Walmart.
Speaker 1 (19:04):
Yeah, so they and they support charter schools and other things.
It's common, although not always, but most of these places
have pay roles in the you know, dozens or hundreds
of millions of dollars. They have lots of employees figuring
out where they should give their money. By contrast, the
Musk Foundation, as you said, has no paid employees at all.
It's never had paid employees. It has three directors, all
(19:27):
of whom are volunteers. There's Elon Musk who says he
works for an hour a week on it. This guy,
Jared birch Hall, who is Musk's longtime sort of money
manager consiglieri, he also works for an hour a week.
And then a woman named Matilda Simon who works for
the money manager, and this part was striking. She says
she works forer point one hours a week, which is
(19:47):
six minutes.
Speaker 2 (19:48):
Are they compensated at all?
Speaker 1 (19:50):
No, they work for free. So yes, there's no And
you know we've asked them, do you have board meetings?
You know? What do you you know? How you have
this huge responsibility now you have to give out three
hundred and fifty million dollars a year. How are you
handling that? We know, how much time do you spend
on that? We didn't get answers about that.
Speaker 2 (20:08):
Did they not answer at all?
Speaker 1 (20:10):
They didn't answer it at all?
Speaker 2 (20:11):
Okay, but in practice though.
Speaker 1 (20:14):
Well, and what we've found was that in some cases
when there was something that complicated that needed to be done.
I mean, so for instance, I talked about how after
the rocket exploded in South Texas, Musk says, I'm going
to give thirty million dollars to all these different groups
in the area where the rocket exploded. Okay, So now
he's made a that's he's taken on sort of a
(20:34):
task that either is too complicated for these three volunteers.
He needs somebody to find the school districts in the area,
listen to their project ideas, decide how much money each
one of them should get. So he deputizes this guy
named Igor Kirganov, who, as far as I can tell,
was never an employee of the foundation, but he was
seeming to act in its stead. So he was He's
a professional poker player or a former professional poker player,
(20:56):
friend of Musks. So now he's in charge and you
can see him. It was really funny because we got
a lot of emails back and forth between him and
the school districts that he's giving the Musks Foundations money to.
And it's fascinating to see this guy supposedly has you know,
hundreds of millions of dollars to give away. But he
was extremely detail oriented and like pressing these these schools
(21:17):
and the city of Brownsville on the smallest details of
the things they were going to use and the smallest
dollar figures. Just to give one example, the city of
Brownsville says, Hey, we want to use some of the
money that the Musk Foundations giving us to put up
Christmas lights for a Christmas We're gonna have a big
display in downtown Bronswelle with children. Yeah, and here's the
here's the estimate we got from the contractor. You know,
this is how much it'll cost to put those lights up.
(21:39):
Will you pay for it? And Kirganov says, you know,
I want to talk about the color the temperature of
the lights that you've chosen. You've chosen cool white, and
I don't believe cool white is appropriate. I think it
should be a warmer color. So then they scramble around
and find some warmer lights. So it's funny. It was
a huge contrast between the sort of general what seemed
(21:59):
to be kind of hands off approach that the Foundation
normally runs on, and then all of a sudden there
was this guy who was extremely hands on in a
way that I think people found sort of hard to
deal with.
Speaker 2 (22:09):
So do you think the reason they're not investing comes
down to like mismanagement or is there something else going
on here?
Speaker 1 (22:19):
You know, it's difficult to tell that. The thing I
think you can it's hard to mean to know what
his motivations are. The two things I would say is
number one, he mister Musk has always said philanthropy is
a mistake. You know, he has always said publicly philanthropy
is not the way to save the world. My companies
do that for me, you know, Tesla, SpaceX, they make
a difference in the world is far greater than any
(22:41):
philanthropic effort could. He's mocked Bill Gates for believing that
philanthropy is a way to change the world. I mean,
that's a fine attitude to have. It's a weird attitude
to square with a guy who now has given him,
you know, set up a five billion dollar charity. And
the other thing is talking to people. My co co
reporter Ryan Mack talk to some people who knew mister
Musk well from Tesla and SpaceX and other places, and
(23:04):
what they said was just that like this is not
something he talks about or thinks about. He's got a
lot going on, He's got a lot of a lot
of balls in the air, and this was just not
something they ever heard him thinking about or really considering.
Speaker 2 (23:14):
So could it also be that he just wanted to
park some Tesla stock without it being sold, just to
be clear, to invest money from that stock, you would
have to liquidate shortly or can charities donate stock directly?
Speaker 1 (23:27):
Like they can donate stock directly too.
Speaker 2 (23:29):
That's so it's so interesting because if he's not talking
about it, this feels like just a basic tax dotch
just a the lowest possible hanging through because three people
does not feel including one of them being in musk,
that doesn't feel like enough people to run a small
business let alone.
Speaker 1 (23:47):
Yeah, three people who work a total of two hours
and six minutes a week. Yeah, it is something that,
you know, way he's doing it is not the way
a lot of other people do it, either, other people
of his size of his with charities of his size
either higher a big staff, or they just choose one
cause and give all their money to that, you know. So,
but he's kind of got them in between where he's
not hasn't chosen one cause to sort of, you know,
(24:10):
focus all his giving around, and he also hasn't picked
out any staff to handle a diffuse kind of giving.
So he's sort of in the middle.
Speaker 2 (24:16):
So if regulators wake up and go, hey, this is
very obviously bad, what would be the process that worked
against Musk? What would happen?
Speaker 1 (24:25):
I think the thing that would happen would be in
an audit from the IRS. The IRS would start setting
him letters and say, look, we think that you're you know,
we have questions about the way you're operating these charities,
either the Musk Foundation or one of the schools. You know,
we've we believe you doing this that you know there's
a rules to get in the tax code against using
your nonprofit for private benefit. We think maybe you're violating that.
(24:46):
Tell us more, and in the end they could shut
it down. They could make him pay you know, back,
payback basically the tax benefits he got. Those remedies are
pretty rare. The IRS is a pretty weak regulator of
this space, but that would be how it would work.
Speaker 2 (24:58):
Is there any historical regulation of people who have messed
up at this scale?
Speaker 1 (25:03):
There are not that many foundations of this scale. I
actually it's a good point. I'm not aware of the
IRS coming down on anybody who is a foundation this big.
Speaker 2 (25:12):
It feels like stuff like this just incentivizes more activity
like this because this is in public, like this is
out there. This is very obvious.
Speaker 1 (25:22):
One of the real I mean. So I read a
lot about Donald Trump's foundation back in the day, and
that is a lot was a lot smaller than this,
that he had much much less less money than the
Musk Foundation does, but it operated in sort of in
a similar way. In that case in the New York
Attorney General came down on them. It wasn't the IRS
as far as we know. I think the IRS has
always been understaffed, and you have to think you have
to remember about them. I've always been told this by
(25:44):
IRS veterans is the point of the IRS is not
to police. The point of the IRS is to collect money,
and so they prioritize the things that bring in the
most money, and in nonprofit law often is not that.
So they do it, they regulate it, but it's not
something they put a lot of energy into. And they've
obviously shied away in recent years from fights with rich
people and fights with people who are politically conservative. They've
(26:06):
been burned by that in the past, so they would
really have to be to gird their loins before taking
on somebody like Elon Musk who was obviously both rich
and now very conservative.
Speaker 2 (26:15):
And would such an effort be, I'm guessing be quite expensive.
Speaker 1 (26:19):
Yeah, and that would last a long time. You know.
They also have to consider sort of cost benefit. You know,
how much money in time would you have to spend
on this and how much money would you get back?
Speaker 2 (26:38):
So how does this compare You mentioned mister Donald Trump,
how does it compare to his situation? How agregious is
it in comparison?
Speaker 1 (26:47):
They're different in a couple of ways. As I said,
the Musk Foundation is much bigger than the Trump Foundation
ever was. Trump foundation was like two million dollars at
the most. They were similar in that they often use
the money. If you look hard enough, they're charitable get ways,
you'd realize that they were spending money in ways that
helped themselves. Trump was a little more direct about it,
and that's what got him into trouble. He would use
it to He would use his foundation to do things
(27:08):
like buy a portrait of himself and then hanging on
the wall of his golf club. He would use it
to pay off legal settlements for his businesses. He would
use it to, you know, buy an autographed football helmet
for himself. He was using it in a way that
was like directly benefiting himself, not and mister Musk is
doing it in a way that's a little more oblique.
And I think that matters under the law. It certainly
would matter to the irs. They if they want to
(27:30):
take on an open and shutcase, the Musk Foundation may
not be it. But the thing that I kept so
striking to me is the same way that when I
was covering the Trump Foundation, you would find things that
looked innocuous or donations that looked just like regular charity,
and if you pulled on the string hard enough, you'd realize,
actually there was a story underneath where it was Trump
helping himself. Then the Musk the same way. I mean,
(27:53):
just to give you another example, he gave five million
dollars to UNICEF, who you know, the sort of like
buy word for an unimpeachable charity, classic charity. Yeah, right,
when you when you pull on that a little bit,
you realize that he was giving money to a UNISF
program that helped countries around the world identify schools that
need connection to the internet. So let's find a schools
(28:15):
in Rwanda or Kazakhstand or whatever that aren't connected to
the internet, and then help those countries find ways to
connect those schools. So effectively, he was investing in a
program that created customers for Starlink, his satellite service. So
at least two cases the countries that the UNSEF helped,
then once they realized where their schools needed connections, they
(28:35):
paid mister Musk's company to connect them. So you know,
even there, even in the UNISF, there's there's a line
that goes back to his own interests.
Speaker 2 (28:42):
That's it's genuinely despicable. But here's another Did you find
anything or much about open ai, which is of course
the nonprofit wing of the company that makes chat GPT.
Speaker 1 (28:55):
Yeah, Musk has had always said that he'd given one
hundred million dollars to open up to get started. Obviously
he was on the original board. He was one of
the co founders of open ai when it was a
nonprofit or when it started as a nonprofit. What we
found was that he gave about ten million dollars from
the Musk Foundation to open Ai at the start, and
then he and open Ai agree that he gave about
(29:16):
thirty four milk more million dollars out of his own pocket.
So he gave forty four million dollars between September twenty
sixteen or six twenty sixteen and twenty twenty apart from
the foundation, apart from his own pocket. So that's a lot,
but it's a lot less than he had gone around
saying for years that he gave.
Speaker 2 (29:32):
And that kind of seems to be the theme with
a lot of his maybe good donations. He says he'll
do one thing and then he does another. Let's talk
about Flint, Michigan, where what he promised there in what
he actually did.
Speaker 1 (29:47):
So there was a period in the Musk Foundation when
it had a lot of money, but not billions of
dollars in which he this is like twenty sixteen, seventeen,
eighteen nineteen. It seemed like the motivator behind a lot
of his giving was Twitter, Like he was doing it
in response to people who kind of called him out
on Twitter. He was becoming more of a Twitter celebrity,
and so like mister Beast would say, hey, I'm raising
(30:08):
money to plant trees. You know, Elon, will you give
you money? And Elan will say yes, I'll give you
a million dollars to plant a million trees. That came
from the Musk Foundation. Dave Portnoy, the guy from Barstool Sports,
was raising money to help small businesses during COVID. You know,
he pushes Musk and Musk responds with the million dollars
from the Musk Foundation. One of the more unusual sort
of instances of that was there was a girl in Flint, Michigan.
(30:30):
I think she was ten at the time, little Miss Flint,
Mariy Copeney, and she had tweeted at Musk like, hey,
you know he was thinking of buying Twitter. This is
an earlier iteration of him thinking of buying Twitter. You
know you have that much money, why don't you use
it to buy, you know, supplies for Flint, Michigan where
we have this horrible water crisis. And he responds and says,
I will pay to fix every home in Flint that
(30:51):
has too much lead in the water. This is at
a time, obviously, when they had been this huge epondemic
of lead and water pipes and water supply and still
kind of a problem today as well. Yes, and so
the mayor reaches out to him. The mayor says, actually,
you know what we need right now is helping the schools.
You know, the schools they need help. You know, the water,
you know, water and houses is being handled by the state.
(31:12):
And so he gives about a million dollars in the
Musk Foundation to schools in Flint, both to put water
filters in the school and to buy laptops for middle schoolers.
He also gives a little bit more to the to
a back charity that was sort of associated with little
Miss Flint now Flint. People that you know, the mayor
and other people in the city of Flint see how
rich he is and see that he cares about Flint,
and they want more. They ask for more, they said,
(31:33):
you know, they sent him this letter that said, you know,
you've you know, you have the potential to make such
a huge difference in Flint. Can you give us more
to do things like replace large scale water infrastructure too.
Speaker 2 (31:42):
I mean, just just the one thing, the exact thing
that Musk said, and quoting both the article in the
Eland Musk himself, he will fund fixing the water in
any house in Flint that has water contamination above FDA levels.
So just to be clear, he promised the world they
were not asking him for too much. This is just
what city do.
Speaker 1 (32:01):
I think He's followed up by saying like no kidding
or something. So yeah, so they ask, okay, you know,
we also want can you invest in this fund to
help us build small businesses here? Will you move one
of your own businesses here? And it seems like out
of that came only one, you know, beyond the things
I already mentioned. The only additional thing they did was
send a guy from Tesla. He came sort of a
(32:23):
guy from Tesla who was thinking about setting up like
an operation there, some sort of Tesla building or operation.
And so he came and sort of met people at
the city hall, gave rides in the Tesla around the
city hall parking lot, and that was it. Nothing more
came of it, just.
Speaker 2 (32:37):
Just around the parking lot.
Speaker 1 (32:39):
I don't know why, just around the parking line, but
just around the parking lot.
Speaker 2 (32:42):
Very bizarre.
Speaker 1 (32:43):
And so the mayor said, you know, look, we were
happy he gave something. You know, I didn't have to
give anything. She said that this was a time when
you know, that twenty eighteen, twenty nineteen was a time
when they were hearing from sort of a lot of celebrities,
you know, well meeting celebrities, but they were sort of
being innundated by offers from various celebrit But he said,
become Flint had become that much of a cause celebrity people.
All these people wanted to help, and so Elon was
(33:06):
one of them, and he gave. You know, it sounds
like he gave about a million dollars. They definitely wanted more,
but they were happy with what they got.
Speaker 2 (33:13):
It's weird because a situation like that, it's good. He
gave like money for water filters and laptops of kids,
like unquestionably be good. But also he didn't actually fix
the problem, didn't actually fix Flint's water problem, and it
sounds like that was a problem with celebrities in general.
Speaker 1 (33:29):
Then yeah, I mean, I think his problem was his
promise to fix the water in the houses was more specific,
and he also probably had the capacity to do it
more than a lot of the other celebrities that offered.
But yes, that is the striking thing is Yes, the
city steered him into schools and the mayor said we
steered him into schools first, thinking that, you know, we
(33:51):
let the state try to fix the houses and if
that didn't work, then Elon could fix those two. So
he didn't do the thing that he was going to
he said he was going to do in this tweet.
Speaker 2 (33:59):
So on a large scale, it seems like a lot
of tech people outside of maybe Bill Gates, seem very
bad at the philanthropy thing, Like Mark Zuckerberg is the one.
I'm thinking of his one hundred million dollars to what's
New York schools systems? Why is it the this is
a very dumb guy question of it is why is
it just having a lot of money doesn't help? How
(34:19):
is it that? Is it an organized Is it actually
quite difficult to deploy this capital?
Speaker 1 (34:25):
I think it is. The answer is yes, that it.
It is a very it's hard to give this much
money away. You can do it in one of two ways.
You can do it the Mackenzie Bezos way. I mean
that she's an example of somebody who has a lot
of money and has given away a lot of money.
But she's not you know, it's she is like dropping
it from heaven. You know, there's she's not trying to
sort of come in and help you manage your organization.
She doesn't want a grand proposal. She just shows up
(34:47):
and gives you a lot of money and then leaves.
Other folks who have tried to sort of invest in
something over the longer term. You mentioned Mark Zuckerberg. You know,
I think it also is just a matter of time,
Like it's really really hard to give money away effect,
especially for trying to like have a specific outcome in
the world. And maybe these guys are too busy. I mean,
the one of the other sort of people who have
(35:09):
a foundation about as big as Elons is Larry Page,
the guy from Google, and his foundation both fails to
make its minimum payouts but also gives its money, all
of its money into something called the donor Advised Fund,
which is basically like a warehouse for money, and it
disappears into there. We don't know where it when or
if any of it actually went out into the world.
So it does seem like maybe these folks don't have
(35:31):
the time or the you know, the bandwidth to put
money into the to like put the attention commensurate with
the money they're putting in.
Speaker 2 (35:38):
So but just to be clear, Larry Page, co founder
for Google. He has he is doing a similar thing.
Speaker 1 (35:44):
He is doing a similar well, it's not similar in
that I don't have any proof that he's doing things
that benefit himself. But he is a huge amount of money.
He's failed to meet that goal or that minimum of
five percent payout, And what he's doing with his money
in some ways is you know, he basically is giving
it to a middleman, and then there's no sense of
(36:04):
a charitable middleman, the special sort of class of charitable middleman,
and we don't know what happens to it after that.
So he is what he's doing is less transparent than
what Musk is doing.
Speaker 2 (36:13):
Are the other tech people doing similar maybe not saying size,
but there are other other philanthropic efforts failing to invest.
Speaker 1 (36:20):
And no if you look at the people who were
above Musk. So the shortfall that Musk had at the
end of twenty twenty two where he was his foundation
was two hundred and thirty four million dollars under what
it should have given away. There are only three foundations
that were worse than that had a bigger shortfall that year,
Larry Page's one, the Hewlett Foundation was another, and then
the Lily Foundation, tied to the drugmaker ELI. Lilly was
(36:42):
the first. So there are not that many. Out of
the hundreds and hundreds of foundations in the US, those
four had the biggest shortfalls.
Speaker 2 (36:48):
But they still managed to get billions of dollars in
tax breaks out of this.
Speaker 1 (36:53):
Yeah, this is a field that is not that well policed,
as I said, by the IRS or anybody else.
Speaker 2 (36:58):
And is it just that expensive and time consumed? Would
there be a massive legal fight to try and actually
get this thing done?
Speaker 1 (37:05):
I mean, Congress could change the laws, or they could
give the IRS more money to go after it. I
think the Yeah, this has suffered from a sense of
neglect and also the IRS is general weakness that they're
going to use political capital. They're going to use it
on collecting taxes, not fighting nonprofits.
Speaker 2 (37:19):
So where do you think this goes from here? Do
you think it just continues doing nothing or doing less
than the bare minimum?
Speaker 1 (37:25):
Well, we will not know the reporting, you know, the
filing deadlines are so slow that we won't know until
this November whether the Musk Foundation made its goals for
twenty twenty three, unless they choose to tell us first.
The actual required deadline for them to release something publicly
is not till November, and we may know then if
the IRS has taken some action against them, but we
(37:46):
may never know if they take an action against them.
So we're going to keep watching it and see what
else it's done. But there's no expectation that I have
that we're going to see any changes anytime soon.
Speaker 2 (37:56):
I am with a personal question, does any of this
work kind of depress you make you a little cynical
because you see these people just getting these massive benefits.
Speaker 1 (38:05):
That's a good question. I mean, the reason I so
I cover nonprofits, That's that's what I do all the time.
And the reason I got into this is because there
is such a like obviously, the find nonrofit sector does
such amazing work. There's so many incredible things that nonprofits too,
but it also is a shield. You know, we give
nonprofits legal rights, we give them text breaks, and we
(38:27):
also give them this sort of you know, veneer of
do gooderism that makes people both in government and outside
government and not want to look any closer. And so
some people use that, you know, they use that good will,
they use that those privileges as kind of a shield
to hide self dealing, to hide, you know, you know,
foreign influence, to hide enrichment, embezzlmoun all kinds of things.
(38:48):
And so that's the sort of stuff that I do
every day, is to try to find out what people
are doing beyond behind that kind of screen of of
philanthropy or screen of sort of good will. So it
doesn't depress me. It's just that's what I do every day,
and I think it makes it for it makes a
fascinating beat, this contrast of like the great potential and
the great trust and the reality of these of these groups.
Speaker 2 (39:11):
Sometimes, David, thank you for joining me.
Speaker 1 (39:13):
Thank you.
Speaker 2 (39:23):
So what's remarkable about this story to me is that
Musk has, for all intents and purposes, received a multi
billion dollar tax break in exchange for about a quarter
of a billion dollars. That which he has spent has
mostly gone to things that directly benefit him, and the
few times he's actually spent it well on people that
need it, he's gone the Musk row of over promising
(39:43):
and under delivering. It's genuinely despicable to watch him send
one hundred million dollars to an barely incorporated school in Texas.
Now campus exists. They own some land, and it's very
clearly lining up with the other companies. And that's about
one hundred times more than they provided to Flint, Michigan,
a place where he promised and he received a ton
(40:04):
of positive press for fixing their contaminated water system. He
didn't do it. He did some stuff, and it's good
that he did something. But you can see how much
money this man deploys, and you see how little he's
actually done with it. And it's also sickening to watch
this unfathomably rich man, this ultra rich ghoul, receive a
(40:24):
massive massive return for doing very little and actively conning
the nonprofit system. And as David kind of hinted at,
there just isn't the regulatory framework or action or political
capital to actually fight a man like Elon Musk. As
I've said before, the US government just and Queezer society
are just not capable of dealing with billionaires. But there
(40:47):
is another side of this story. Musk doesn't want this
money spent. Most of this they have a terribly small
amount of money, less than a hundred thousand dollars. I
believe he doesn't want this money spent anywhere because he
wants to hoard that Tesla stock as much as he can.
Putting any downward pressure on Tesla would be a bad idea,
and almost all the money that this foundation has is
(41:10):
Tesla stock. But this is still a very important story
even if nothing changes, because it's another way of showing
how empty the legend of Elon Musk really is. He
got so much positive press around this foundation. He promised
to fix Flint, Michigan's water system. He got tons of
press in twenty eighteen, and he's given away what a
(41:32):
million dollars for him, that is something he finds in
his pockets or between the couch cushions, probably has more there.
He got another bunch of press for giving away eleven
point six million Tesla shares to charity, and that's kind
of close to what the Wall Street Journal actually wrote.
He didn't give away anything, by the way. He put
it in a charity literally with his name on it,
(41:53):
or a nonprofit in this case, and as we've heard,
he hasn't really spent it. And he even at one
point tweeted that he sent this to the UN saying
he would spend six billion dollars to fight world hunger,
but only only if they tell him how they'd spend it,
which I don't know. There's always a condition with this man,
(42:13):
there's always a trick, and I just think it's because
he doesn't really care that much, and he'll continue to
do stuff like this as long as the media is
unable or unwilling to call him out, and indeed, as
long as they're willing to buy his bullshit. This man
is a liar, He's a billionaire con artist. He's mastered
exploiting the law and society and the media to get
(42:35):
even richer. Yet I'm not freaking out too much because
every farrenh Old he's won a Pulitzer for work exactly
like this with Donald Trump. There is more to this
story that I'm sure David will bring out, and his
colleague Grime Mack, who worked on the story with him,
is one of the most industrious Elon Musk reporters out there.
The media is turning on this man, and this work
(42:57):
is deep, it's dangerous, and it's going up against the
man who has proven to a hostile relationship to the
press and to society. But these stories are so important
and as they accumulate, most reality distortion field will fall apart.
More it's already going. And I'm not saying this man
can be brought down. I don't think there's anything that
could truly, quote unquote stop Elon Musk, but we can
(43:19):
close the wound that he's opened in society where he's
just drinking money from the blood of others. And I
really want you to read David's work, and I put
a link to it in the show notes of this episode.
It's important you read this. It's important you try and
understand exactly how little Elon Musk is done for the world,
because it's time to turn on this man. It's time
(43:40):
to stop calling him an inventor. He didn't invent anything.
It's time to even stop calling him a philanthropist. At
the scale he's done things here, it's barely done anything.
You should check out David's story. You can find him
on Twitter at farenthal that's fahr e nt hold. He's
(44:00):
a great guy. Thank you for listening, Thank you for
listening to Better Offline. The editor and composer of the
Better Offline theme song is Matasowski. You can check out
more of his music and audio projects at Matasowski dot com.
(44:22):
M A T T O S O w s Ki
dot com. You can email me at easy at better
offline dot com or check out better offline dot com
to find my newsletter and more links to this podcast.
Thank you so much for listening. Better Offline is a
production of cool Zone Media. For more from cool Zone Media,
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(44:44):
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All Zone Media.
Speaker 2 (00:05):
Hello, Welcome to bear offline. I'm at Zetron. Since twenty twenty,
Elon Musk has seeded his charitable foundation in innovatively called
the Musk Foundation, with billions of dollars of test the stock,
(00:26):
which has neted him a multi billion dollar tax break.
Yet a massive New York Times investigation by reporters Ryan
Mack and Dave vid Farenthald has found that the Musk
Foundation has failed to donate the minimum amount of money
required by law to get that tax break. The investigation
found that Musk had not hired any staff for the
foundation and that its board was made up of Musk
(00:47):
and two volunteers, one of whom The Times reports works
an average of six minutes a week on a charitable
operation with billions of dollars of dry powder, and Musk's
donations regularly benefited causes related to his own interests, like
a school insert, a SpaceX compound, and a UN program
to help countries find internet for rural schools, where two
(01:08):
of them became Starlink customers. And Starlink is, of course,
Musk's wireless internet company. And while Elon Musk initially promised
to help and I quote fund fixing the water in
any house in Flint, Michigan that has water contamination above
FDA levels. He would only end up donating about a
million dollars to local schools, installing water filters and buying
(01:28):
laptops for students. While this is unquestionably a good thing,
he failed to do much more than that. All he
did was send the tes Lagoon down there to offer
and I'm not kidding rides around the parking lot in
his car. Since the middle of twenty nineteen, The Times
reports that Musk has done little more for Flint than that.
According to The Times, in twenty twenty one, the Musk
(01:51):
Foundation fell forty one million dollars short of the minimum
required donation, and in twenty twenty two missed it by
an astonishing two hundred and thirty four million dollars. That year,
Musk's foundation only gave away the two point twenty five
percent of the five percent it was required to from
its seven billion dollars in assets. Today, I'm joined by
(02:18):
New York Times investigative report to David Tarenthald, who won
a Pulitzer Price for his work at The Washington Post
investigating our big Web President Donald J. Trump and his
dodgy charitable deals. David, thank you so much for joining me.
Speaker 1 (02:30):
Hey, it's great to be here.
Speaker 2 (02:31):
So, on a very basic level, what makes this Elon
Musk charity story so remarkable? What's so different about it?
Speaker 1 (02:40):
Well, there's two things that really stand out about the
Musk Foundation. One is how big it is. So the
Musk Foundation is more than five billion dollars in assets,
mostly Tesla stock. That makes it one of the twenty
largest foundations in the United States. But the second thing
is how small it is in its actions. It's big
in its resources and small in its actions. So the
Musk Foundation has repeatedly failed to give away just the
(03:02):
bare minimum it's required to by law. And it also
when it does give its money away, the money doesn't
go very far. By that, I mean often mister Musk
uses the money in his foundation to help himself or
to help his businesses.
Speaker 2 (03:16):
So can you give me example of some of the
ways he's using it to help himself.
Speaker 1 (03:21):
Well, one of the biggest ones was in twenty twenty one.
There's a guy named Jared Isaacman who's a billionaire in Pennsylvania.
He charters a rocket from SpaceX to go up into space,
and as a way of sort of celebrating or ennobling
what he's doing, he says, you know, I'm going to
raise two hundred million dollars with this spaceflight for Saint
Jude's Children's Research Hospital. He goes up into space, he
(03:43):
comes back down and he hasn't raised two hundred million dollars.
They're still short, and so Elon Musk then jumps in
to save his customer from failing on this charitable pledge
and says, I'll give fifty million dollars. Eventually gives fifty
five million dollars, not from his own pocket but from
the Musk Foundation. A few weeks later, the same billionaire says,
you know what, I'm going to order three more flights
(04:03):
from SpaceX. So he goes from being a good SpaceX
customer to a really good SpaceX customer, and part of
that process was the Musk Foundation. Another example was the
Musk Foundation had never given any money to Cameron County, Texas.
That's an area of the very very southern tip of
Texas where Musk has the SpaceX launch site. He never
had never given any money down there until March twenty
(04:26):
twenty one SpaceX rocket explodes there and rains metal down
all over this area, an area, by the way, where
he needs lots of regulatory approvals, goodwill, all kinds of
help from the people who were the politicians down there.
About an hour after the rocket explodes, the Musk Foundation
starts giving to schools to downtown beautification. And the third
example I'll bring up are these two schools that mister
(04:49):
Musk has started and supported with the Musk Foundation. On paper,
these are supposed to be, like every charity, to serve
the public. Right, that's the point of the charity. It's
not your it's not to serve you. It's not a
even if it's got your name on it, it doesn't serve
your interest. It serves the public. So there's a school
called ad Astra mister Musk started. There's another school called
the Foundation. That's its legal name, the foundation that mister
(05:11):
Muskus give it a bunch of money to from the
Musk Foundation. So we went to look, Okay, where are
these schools, who are they serving how are they serving
the public? The answer is that one of them is
behind the locked gates of a SpaceX compound in Boca Chica, Texas.
You can only get in if you were a SpaceX employee.
And the other one the foundation, it's bought a school
(05:31):
a property to turn into a Montessori school that happens
to be two minutes away from a huge subdivision mister
Musk is building for his own employees outside Basstrop, Texas.
Speaker 2 (05:40):
So and which employees for SPICEX for.
Speaker 1 (05:43):
Well, he's got a whole complex there that includes SpaceX,
but it's mainly boring company employees.
Speaker 2 (05:47):
Right.
Speaker 1 (05:48):
Both these places are rural areas. He's trying to bring
these highly talented, sought after people to a pretty rural
area of Texas. You can imagine one of the questions
people would ask is, well, where are my kids going
to go to school? Right? And so these two charities
are helping Musk recruit by building schools to serve his employees.
Speaker 2 (06:04):
So, taking a step back on a very basic level,
how does it actually work? So has he he's put
this stock in escrow?
Speaker 1 (06:13):
ISU, what happened was in twenty twenty one, he's facing
this giant tax bill. Is he he exercised a bunch
of Tesla stock options and he says he owed eleven
billion dollars in taxes. He takes five billion dollars of
Tesla stock. Now, this is that's not what he paid
for the stock. That's what it's appreciated too. He donates
it to charity. And now the tax law allows you
(06:34):
to take a deduction based on the appreciated value of
the stock. So the deduction to him could have been
worth as much as two billion dollars off of his
tax bill. Right, he gives that stock to the Musk Foundation.
Now it's confusing because it's got his he's in charge
of the Musk Foundation. It's got his name on it.
But again, the Musk Foundation is by law, a separate
entity with its own strictly charitable goals. Even though it
(06:56):
sounds like something that he's you know, that's like another
sort of pocket of his wallet. It's a separate thing.
So once the money go, once the shares go into
the to the Musk Foundation. Now he's given himself a responsibility,
he's given himself a job, and that is the IRIS
requires foundations to give away five percent of their assets
every year. You can imagine why. It's to keep people
(07:17):
from just dumping money into their foundation, getting a tax
break and never actually helping the world. You have to
send five percent of your money out the door to
the real world every year, and he hasn't. He has
didn't in twenty twenty one, he didn't in twenty twenty two.
In fact, by the end of twenty twenty two, he
was two hundred and thirty four million dollars behind the
minimum for what this foundation was supposed to have given away.
Speaker 2 (07:39):
Right, but as far as the stalt goes, does it
sit separate to musk is in a separate holding?
Speaker 1 (07:46):
It is legally the property of this foundation now, which
means he's still in control of it, but it belongs
to the foundation.
Speaker 2 (07:51):
Does it have any liquid funds in there?
Speaker 1 (07:54):
There's some I think they've sold a few sids. There's
a small amount of liquid cash. I think mostly what
he does is it sells stock in order to make donations.
Speaker 2 (08:01):
When it does so, how does the tax break actually work?
How much does he get off of his tax bill
as a result of this?
Speaker 1 (08:09):
So this is complicated. But what we were told was
that in that year they expected that the five billion.
So he gives five billion dollars worth of Tesla stock
to his charity. The folks we talked to said that
they thought the actual break from that, the actual production
in his taxes would be thirty seven percent of five
(08:30):
billion dollars, which is about two billion dollars. So there's
a lot of other math involved in involving his income
and other things, but that was the guess, was two
billion dollars off his taxes?
Speaker 2 (08:39):
And who gave you this estimate? Just to a cliar.
Speaker 1 (08:41):
We talked to a couple of professors of tax law.
Speaker 2 (08:44):
Right, So what he gets out of this is just
a tax break, but he's not donating enough money, right,
actually giving away what he's meant to.
Speaker 1 (08:53):
Yeah, it's confusing to think about him and his foundation
has separate entities. But in this case, he gives his
foundation the five billion dollar. Enough. If he'd taken this
five billion dollars worth of Tesla stock and given it
to Saint Jude's or UNICEF or some other charity that
he didn't control, that would have been the end of
the story for him. He's given all the money, he's
given these shares away. He takes the tax break, UNICEF
(09:14):
or whoever's then uses the shares for whatever. Right, So
now he's like taking off his hat as donor and
putting on the hat as the guy who runs the
Musk Foundation, and now he has this responsibility, is the
head of the Musk Foundation, to start giving this newfound
money away. And that's when the five percent minimum matters
to him. He has to give five percent of the
foundation's assets away to other charities out to actually do
(09:37):
good in the world every year.
Speaker 2 (09:39):
And he isn't doing this enough.
Speaker 1 (09:41):
No, he missed it in twenty twenty one by forty
one million dollars, and then in twenty twenty two he
missed it by two hundred and thirty four million.
Speaker 2 (09:48):
And so what's meant to happen to a regular person? Well, actually,
one one quick question. Does he get this tax break
every year for holding it? Or is it just the
one off? He got a one off?
Speaker 1 (10:00):
You know, he gets it based on what he's donated
to the foundation in that year.
Speaker 2 (10:04):
Okay, and how much is in there right now? Just
a week clip, because I know there's a lot of
numbers going on.
Speaker 1 (10:08):
Yeah, No, it depends on It's depended so much on
the rise and fall of Tesla stock. But the last
time we got a snapshot was at the end of
twenty twenty two, and it was a little bit more
than five billion at that point.
Speaker 2 (10:19):
So what is meant to happen to him and who
is meant to exact justice here?
Speaker 1 (10:23):
Well, there's two primary regulators of nonprofits. One is the IRS,
the Internal Revenue Service. They're the ones who Okay, so
we said at the end of twenty twenty two, he
was this foundation was two hundred and thirty four million
dollars behind. He has a one year grace period twenty
twenty three to give that money away in addition to
the five percent again for twenty twenty three. If he
(10:45):
doesn't give a doesn't give the money away after that
one year grace period, the foundation faces a thirty percent
penalty tax, and if it still doesn't pay then then
it faces one hundred percent penalty tax. So it would
basically the IRS would confiscate all the money that they
were supposed to give A but they did not, So
that's what would happen. That's the IRS. The problem with
that for me as a reporter is that the IRS
(11:06):
all of that enforcement is private hidden. We can't see
it unless somebody sues in tax court or federal court
to stop it. So if it happened at the end
of twenty twenty three, we don't know about it. The
other regulator in most states is the estate attorney general.
They also can regulate people who bilate tax laws. I mean,
one example that just ended was the New York Attorney
(11:29):
General and the National Rifle Association. She had the right
to regulate and sue the NRA because it was a
New York nonprofit. The Musk Foundation is a Texas nonprofit.
So the authority lands with Ken Paxton, an Attorney General
of Texas. Not to say it won't happen, but he's
a very political actor and a very political actor who's
very friendly to Musk.
Speaker 2 (11:48):
Wasn't he also threatening media matters when Musk suit them
as well? He seems very much in his pocket. So
let's go back to this ad Astra school. What exactly
(12:10):
happened there, because it's very bizarre. There is a school
inside SpaceX.
Speaker 1 (12:14):
Yes, so it began as a school basically for Musk's children.
He started it back in California when he and SpaceX
were both there.
Speaker 2 (12:23):
And it's a nonprofit.
Speaker 1 (12:24):
Right, it's a nonprofit. So again from the beginning, it
faced this requirement to serve the public and not the
private good of its leader. The first class fourteen students,
five of whom were Musk's owned children. Later it moves
from his house to the SpaceX campus in Hawthorne, California,
so it's within the gates of SpaceX. There. We talked
to the guy who was the headmaster. He said about
(12:45):
half the students were related to SpaceX employees, and Musk's
owned children also went there for a long time. Then
in twenty twenty, Musk starts to shift his own residency,
his own company center of Gravity, to Texas. So then
the Astro school picks up from California, moves to Texas,
and from what we can tell, this sort of small
(13:06):
amount of openness they had, you know, the fifty percent
of students they had who were not employees of SpaceX.
They seem to have changed their model where now they're
behind this security gate. I went down there. If you
could picture, if you've ever seen pictures of where the
SpaceX rocket launch site is in South Texas, it's a
very remote area close to the Gulf of Mexico. There's
nothing around there, there's no people, there's no other schools,
(13:28):
and as you drive down there, there's a little fence
on the side of the highway and you see you
could see behind it, there's a building, there's some basketball courts.
You can see what looks like a school, but there's
no sign for a school. There's nothing that tells you
there's a school there. Certainly nothing tells you there's a
school there that you might go to if you're a
member of the public. The only signs say, you know,
keep out, no trespassing, and there's a security guard who
(13:49):
you know if you stop for ten seconds, sieted come
over and ask what you're doing.
Speaker 2 (13:53):
So, do you know how one sends one's kids?
Speaker 1 (13:57):
There?
Speaker 2 (13:57):
Is it a private school?
Speaker 1 (13:58):
Like it is private? It does not have a website,
which it used to in California, but it does not
now in Texas. We asked Musk and the people who
run the other people who are the directors of that school? Yeah,
how you get in? Who chooses it? What's the criteria?
Can you go if you're not a SpaceX employee? And
we did not get answers to any of those questions.
Speaker 2 (14:17):
Does it seem to flown any nonprofit guidelines you've seen
or is it just classic craven capitalism?
Speaker 1 (14:24):
It is a nonprofit that it remains legally a nonprofit.
The IRS is given a tax exem status, so if
you donate money to it, you can get a tax
break for it. But you know, that's the question here is,
you know, if this is really a nonprofit, it's truly
serving the public and not the private benefit of mister
Musk or the private benefit of SpaceX. You know, where's
the evidence of that? And that's what we asked them
(14:45):
for and didn't get a response.
Speaker 2 (14:47):
So in this other school, the foundation, what is that?
This feels? See this is the thing with things like this.
When people talk about conspiracy theories and the rich doing
weird things, they always point to made up stuff versus this.
So this other secret school that Musk gave what one
hundred million dollars do what if you found there?
Speaker 1 (15:08):
Yeah, that was really surprising. So the Musk Foundation, despite
the fact that it's very big, doesn't give very many
really large donations. And then the exception, one of the exceptions,
was this thing called the Foundation and they first the
Musk Foundation gave it money in twenty twenty two. You
can pull the IRS documents for the foundation to see
what it is and what they told the IRS they
(15:29):
were going to do when they got tax exempt status
and you can see that it's very very closely tied
to Elon Musk. So he's not on the board of directors,
but the head of it is his money manager. The
two other directors are his accountants. So there are people
who are very close to him. And if you look
at the what they told the irs they were going
to do, and this got some attention at the time
last year, it sounds grand. We're going to start a school,
(15:52):
We're going to start a secondary school, We're going to
start a university in Austin, Texas. And a lot of
people cover that at the time and said, ooh, you knows,
mister Musk is he's starting sort of a competitor or
the University of Austin is you know, what would an
Elon Musk university be like? Is this where he's going
to combat you know, the forces of wokeness or you
know the other things he talks about a lot. And
so my question was just you know, where is this school?
(16:13):
Does it exist? Does it has it done anything? Because
it doesn't have a web presence, it doesn't have you know,
there's no evidence. You know, if you if you or
I said, you know, I want to go to the
University of Elon Musk or you know, whatever this is
going to be. There's there's no way to find information
about it, and so it took a lot of sleuth thing.
But here's what we found. The foundation, the entity that
the startup charity that is run by Musk's associates. It
(16:36):
has a shell company. The shell company last year bought
a former horse farm in Bastrop, Texas a forty acre
horse farm. Okay, so maybe that's the college, maybe that's
the University of Elon Musk. When you go look at
that property, you can see that it actually matches well.
You can see two things about it. One is that
it's right around the corner from this company town essentially
(16:56):
that Musk wants to build for his employees outside Bastrop.
Bastrop is is an extra of a Austin, But where
he's building is kind of in the middle of nowhere.
There's no schools or development. But he's put a boring
company installation, a giant SpaceX warehouse, he's got a there's
like a live music venue and a store, and he's
putting in one hundred and ten home subdivision. He's going
(17:16):
to call it Snailbrook, just sort of like an inside joke.
I guess in the world of the boring Company, Oh yeah,
I guess, the boring company moves as fast as a snail.
So this is Snailbrook. So but the one thing that
he's trying to convince people to move from Austin San Francisco,
where you know, wherever people who have choices about what
they're going to live, he's going to say, move to
this rural part of central Texas. And the thing that
(17:38):
that subdivision did not have was a school. And so
the foundation, again nominally independent, not supposed to be serving
mister Musk's interest, is just supposed to be doing its
own charitable thing. The place they've selected for their first
campus is right around the corner from this place where
Elon Musk's company needs a school. And if you look,
you can find job listings on the internet for another
(18:00):
ad Astra school that's being opened, and if you compare it,
it's the same place. So they're going to open another
ad Astra school in this building. And that's what really
struck me was the huge contrast between what these folks
told the irs they were going to be university for Austin,
Texas and all they've done so far, which is it
looks like build a monassory school for Elon Musk's employees.
Speaker 2 (18:21):
So let's talk about the Musk Foundation itself. So by
the sounds of it, it's what three people including Elon Musk.
Can you just break down the vast corporate structure here?
Is this? This bit drove me a little insane.
Speaker 1 (18:34):
Yeah, this is really different too. So you know the
you remember the company that they keep right and we're
talking about the top twenty largest foundations in the United States.
That's you know, the Gates Foundation, that's the you know,
the George Soros's group, the Walton.
Speaker 2 (18:47):
How big of them? How big are those organizations by comparison?
Speaker 1 (18:50):
So the most foundation is I mean, the Gates Foundation
is a lot bigger. It's in the hundreds of hundreds
of billions. But these other groups are it's around the
size of other groups like the Walton Family Foundation, things
like that. It's in the same ballpark.
Speaker 2 (19:02):
And the Walton Families, the Walmart the Walmart.
Speaker 1 (19:04):
Yeah, so they and they support charter schools and other things.
It's common, although not always, but most of these places
have pay roles in the you know, dozens or hundreds
of millions of dollars. They have lots of employees figuring
out where they should give their money. By contrast, the
Musk Foundation, as you said, has no paid employees at all.
It's never had paid employees. It has three directors, all
(19:27):
of whom are volunteers. There's Elon Musk who says he
works for an hour a week on it. This guy,
Jared birch Hall, who is Musk's longtime sort of money
manager consiglieri, he also works for an hour a week.
And then a woman named Matilda Simon who works for
the money manager, and this part was striking. She says
she works forer point one hours a week, which is
(19:47):
six minutes.
Speaker 2 (19:48):
Are they compensated at all?
Speaker 1 (19:50):
No, they work for free. So yes, there's no And
you know we've asked them, do you have board meetings?
You know? What do you you know? How you have
this huge responsibility now you have to give out three
hundred and fifty million dollars a year. How are you
handling that? We know, how much time do you spend
on that? We didn't get answers about that.
Speaker 2 (20:08):
Did they not answer at all?
Speaker 1 (20:10):
They didn't answer it at all?
Speaker 2 (20:11):
Okay, but in practice though.
Speaker 1 (20:14):
Well, and what we've found was that in some cases
when there was something that complicated that needed to be done.
I mean, so for instance, I talked about how after
the rocket exploded in South Texas, Musk says, I'm going
to give thirty million dollars to all these different groups
in the area where the rocket exploded. Okay, So now
he's made a that's he's taken on sort of a
(20:34):
task that either is too complicated for these three volunteers.
He needs somebody to find the school districts in the area,
listen to their project ideas, decide how much money each
one of them should get. So he deputizes this guy
named Igor Kirganov, who, as far as I can tell,
was never an employee of the foundation, but he was
seeming to act in its stead. So he was He's
a professional poker player or a former professional poker player,
(20:56):
friend of Musks. So now he's in charge and you
can see him. It was really funny because we got
a lot of emails back and forth between him and
the school districts that he's giving the Musks Foundations money to.
And it's fascinating to see this guy supposedly has you know,
hundreds of millions of dollars to give away. But he
was extremely detail oriented and like pressing these these schools
(21:17):
and the city of Brownsville on the smallest details of
the things they were going to use and the smallest
dollar figures. Just to give one example, the city of
Brownsville says, Hey, we want to use some of the
money that the Musk Foundations giving us to put up
Christmas lights for a Christmas We're gonna have a big
display in downtown Bronswelle with children. Yeah, and here's the
here's the estimate we got from the contractor. You know,
this is how much it'll cost to put those lights up.
(21:39):
Will you pay for it? And Kirganov says, you know,
I want to talk about the color the temperature of
the lights that you've chosen. You've chosen cool white, and
I don't believe cool white is appropriate. I think it
should be a warmer color. So then they scramble around
and find some warmer lights. So it's funny. It was
a huge contrast between the sort of general what seemed
(21:59):
to be kind of hands off approach that the Foundation
normally runs on, and then all of a sudden there
was this guy who was extremely hands on in a
way that I think people found sort of hard to
deal with.
Speaker 2 (22:09):
So do you think the reason they're not investing comes
down to like mismanagement or is there something else going
on here?
Speaker 1 (22:19):
You know, it's difficult to tell that. The thing I
think you can it's hard to mean to know what
his motivations are. The two things I would say is
number one, he mister Musk has always said philanthropy is
a mistake. You know, he has always said publicly philanthropy
is not the way to save the world. My companies
do that for me, you know, Tesla, SpaceX, they make
a difference in the world is far greater than any
(22:41):
philanthropic effort could. He's mocked Bill Gates for believing that
philanthropy is a way to change the world. I mean,
that's a fine attitude to have. It's a weird attitude
to square with a guy who now has given him,
you know, set up a five billion dollar charity. And
the other thing is talking to people. My co co
reporter Ryan Mack talk to some people who knew mister
Musk well from Tesla and SpaceX and other places, and
(23:04):
what they said was just that like this is not
something he talks about or thinks about. He's got a
lot going on, He's got a lot of a lot
of balls in the air, and this was just not
something they ever heard him thinking about or really considering.
Speaker 2 (23:14):
So could it also be that he just wanted to
park some Tesla stock without it being sold, just to
be clear, to invest money from that stock, you would
have to liquidate shortly or can charities donate stock directly?
Speaker 1 (23:27):
Like they can donate stock directly too.
Speaker 2 (23:29):
That's so it's so interesting because if he's not talking
about it, this feels like just a basic tax dotch
just a the lowest possible hanging through because three people
does not feel including one of them being in musk,
that doesn't feel like enough people to run a small
business let alone.
Speaker 1 (23:47):
Yeah, three people who work a total of two hours
and six minutes a week. Yeah, it is something that,
you know, way he's doing it is not the way
a lot of other people do it, either, other people
of his size of his with charities of his size
either higher a big staff, or they just choose one
cause and give all their money to that, you know. So,
but he's kind of got them in between where he's
not hasn't chosen one cause to sort of, you know,
(24:10):
focus all his giving around, and he also hasn't picked
out any staff to handle a diffuse kind of giving.
So he's sort of in the middle.
Speaker 2 (24:16):
So if regulators wake up and go, hey, this is
very obviously bad, what would be the process that worked
against Musk? What would happen?
Speaker 1 (24:25):
I think the thing that would happen would be in
an audit from the IRS. The IRS would start setting
him letters and say, look, we think that you're you know,
we have questions about the way you're operating these charities,
either the Musk Foundation or one of the schools. You know,
we've we believe you doing this that you know there's
a rules to get in the tax code against using
your nonprofit for private benefit. We think maybe you're violating that.
(24:46):
Tell us more, and in the end they could shut
it down. They could make him pay you know, back,
payback basically the tax benefits he got. Those remedies are
pretty rare. The IRS is a pretty weak regulator of
this space, but that would be how it would work.
Speaker 2 (24:58):
Is there any historical regulation of people who have messed
up at this scale?
Speaker 1 (25:03):
There are not that many foundations of this scale. I
actually it's a good point. I'm not aware of the
IRS coming down on anybody who is a foundation this big.
Speaker 2 (25:12):
It feels like stuff like this just incentivizes more activity
like this because this is in public, like this is
out there. This is very obvious.
Speaker 1 (25:22):
One of the real I mean. So I read a
lot about Donald Trump's foundation back in the day, and
that is a lot was a lot smaller than this,
that he had much much less less money than the
Musk Foundation does, but it operated in sort of in
a similar way. In that case in the New York
Attorney General came down on them. It wasn't the IRS
as far as we know. I think the IRS has
always been understaffed, and you have to think you have
to remember about them. I've always been told this by
(25:44):
IRS veterans is the point of the IRS is not
to police. The point of the IRS is to collect money,
and so they prioritize the things that bring in the
most money, and in nonprofit law often is not that.
So they do it, they regulate it, but it's not
something they put a lot of energy into. And they've
obviously shied away in recent years from fights with rich
people and fights with people who are politically conservative. They've
(26:06):
been burned by that in the past, so they would
really have to be to gird their loins before taking
on somebody like Elon Musk who was obviously both rich
and now very conservative.
Speaker 2 (26:15):
And would such an effort be, I'm guessing be quite expensive.
Speaker 1 (26:19):
Yeah, and that would last a long time. You know.
They also have to consider sort of cost benefit. You know,
how much money in time would you have to spend
on this and how much money would you get back?
Speaker 2 (26:38):
So how does this compare You mentioned mister Donald Trump,
how does it compare to his situation? How agregious is
it in comparison?
Speaker 1 (26:47):
They're different in a couple of ways. As I said,
the Musk Foundation is much bigger than the Trump Foundation
ever was. Trump foundation was like two million dollars at
the most. They were similar in that they often use
the money. If you look hard enough, they're charitable get ways,
you'd realize that they were spending money in ways that
helped themselves. Trump was a little more direct about it,
and that's what got him into trouble. He would use
it to He would use his foundation to do things
(27:08):
like buy a portrait of himself and then hanging on
the wall of his golf club. He would use it
to pay off legal settlements for his businesses. He would
use it to, you know, buy an autographed football helmet
for himself. He was using it in a way that
was like directly benefiting himself, not and mister Musk is
doing it in a way that's a little more oblique.
And I think that matters under the law. It certainly
would matter to the irs. They if they want to
(27:30):
take on an open and shutcase, the Musk Foundation may
not be it. But the thing that I kept so
striking to me is the same way that when I
was covering the Trump Foundation, you would find things that
looked innocuous or donations that looked just like regular charity,
and if you pulled on the string hard enough, you'd realize,
actually there was a story underneath where it was Trump
helping himself. Then the Musk the same way. I mean,
(27:53):
just to give you another example, he gave five million
dollars to UNICEF, who you know, the sort of like
buy word for an unimpeachable charity, classic charity. Yeah, right,
when you when you pull on that a little bit,
you realize that he was giving money to a UNISF
program that helped countries around the world identify schools that
need connection to the internet. So let's find a schools
(28:15):
in Rwanda or Kazakhstand or whatever that aren't connected to
the internet, and then help those countries find ways to
connect those schools. So effectively, he was investing in a
program that created customers for Starlink, his satellite service. So
at least two cases the countries that the UNSEF helped,
then once they realized where their schools needed connections, they
(28:35):
paid mister Musk's company to connect them. So you know,
even there, even in the UNISF, there's there's a line
that goes back to his own interests.
Speaker 2 (28:42):
That's it's genuinely despicable. But here's another Did you find
anything or much about open ai, which is of course
the nonprofit wing of the company that makes chat GPT.
Speaker 1 (28:55):
Yeah, Musk has had always said that he'd given one
hundred million dollars to open up to get started. Obviously
he was on the original board. He was one of
the co founders of open ai when it was a
nonprofit or when it started as a nonprofit. What we
found was that he gave about ten million dollars from
the Musk Foundation to open Ai at the start, and
then he and open Ai agree that he gave about
(29:16):
thirty four milk more million dollars out of his own pocket.
So he gave forty four million dollars between September twenty
sixteen or six twenty sixteen and twenty twenty apart from
the foundation, apart from his own pocket. So that's a lot,
but it's a lot less than he had gone around
saying for years that he gave.
Speaker 2 (29:32):
And that kind of seems to be the theme with
a lot of his maybe good donations. He says he'll
do one thing and then he does another. Let's talk
about Flint, Michigan, where what he promised there in what
he actually did.
Speaker 1 (29:47):
So there was a period in the Musk Foundation when
it had a lot of money, but not billions of
dollars in which he this is like twenty sixteen, seventeen,
eighteen nineteen. It seemed like the motivator behind a lot
of his giving was Twitter, Like he was doing it
in response to people who kind of called him out
on Twitter. He was becoming more of a Twitter celebrity,
and so like mister Beast would say, hey, I'm raising
(30:08):
money to plant trees. You know, Elon, will you give
you money? And Elan will say yes, I'll give you
a million dollars to plant a million trees. That came
from the Musk Foundation. Dave Portnoy, the guy from Barstool Sports,
was raising money to help small businesses during COVID. You know,
he pushes Musk and Musk responds with the million dollars
from the Musk Foundation. One of the more unusual sort
of instances of that was there was a girl in Flint, Michigan.
(30:30):
I think she was ten at the time, little Miss Flint,
Mariy Copeney, and she had tweeted at Musk like, hey,
you know he was thinking of buying Twitter. This is
an earlier iteration of him thinking of buying Twitter. You
know you have that much money, why don't you use
it to buy, you know, supplies for Flint, Michigan where
we have this horrible water crisis. And he responds and says,
I will pay to fix every home in Flint that
(30:51):
has too much lead in the water. This is at
a time, obviously, when they had been this huge epondemic
of lead and water pipes and water supply and still
kind of a problem today as well. Yes, and so
the mayor reaches out to him. The mayor says, actually,
you know what we need right now is helping the schools.
You know, the schools they need help. You know, the water,
you know, water and houses is being handled by the state.
(31:12):
And so he gives about a million dollars in the
Musk Foundation to schools in Flint, both to put water
filters in the school and to buy laptops for middle schoolers.
He also gives a little bit more to the to
a back charity that was sort of associated with little
Miss Flint now Flint. People that you know, the mayor
and other people in the city of Flint see how
rich he is and see that he cares about Flint,
and they want more. They ask for more, they said,
(31:33):
you know, they sent him this letter that said, you know,
you've you know, you have the potential to make such
a huge difference in Flint. Can you give us more
to do things like replace large scale water infrastructure too.
Speaker 2 (31:42):
I mean, just just the one thing, the exact thing
that Musk said, and quoting both the article in the
Eland Musk himself, he will fund fixing the water in
any house in Flint that has water contamination above FDA levels.
So just to be clear, he promised the world they
were not asking him for too much. This is just
what city do.
Speaker 1 (32:01):
I think He's followed up by saying like no kidding
or something. So yeah, so they ask, okay, you know,
we also want can you invest in this fund to
help us build small businesses here? Will you move one
of your own businesses here? And it seems like out
of that came only one, you know, beyond the things
I already mentioned. The only additional thing they did was
send a guy from Tesla. He came sort of a
(32:23):
guy from Tesla who was thinking about setting up like
an operation there, some sort of Tesla building or operation.
And so he came and sort of met people at
the city hall, gave rides in the Tesla around the
city hall parking lot, and that was it. Nothing more
came of it, just.
Speaker 2 (32:37):
Just around the parking lot.
Speaker 1 (32:39):
I don't know why, just around the parking line, but
just around the parking lot.
Speaker 2 (32:42):
Very bizarre.
Speaker 1 (32:43):
And so the mayor said, you know, look, we were
happy he gave something. You know, I didn't have to
give anything. She said that this was a time when
you know, that twenty eighteen, twenty nineteen was a time
when they were hearing from sort of a lot of celebrities,
you know, well meeting celebrities, but they were sort of
being innundated by offers from various celebrit But he said,
become Flint had become that much of a cause celebrity people.
All these people wanted to help, and so Elon was
(33:06):
one of them, and he gave. You know, it sounds
like he gave about a million dollars. They definitely wanted more,
but they were happy with what they got.
Speaker 2 (33:13):
It's weird because a situation like that, it's good. He
gave like money for water filters and laptops of kids,
like unquestionably be good. But also he didn't actually fix
the problem, didn't actually fix Flint's water problem, and it
sounds like that was a problem with celebrities in general.
Speaker 1 (33:29):
Then yeah, I mean, I think his problem was his
promise to fix the water in the houses was more specific,
and he also probably had the capacity to do it
more than a lot of the other celebrities that offered.
But yes, that is the striking thing is Yes, the
city steered him into schools and the mayor said we
steered him into schools first, thinking that, you know, we
(33:51):
let the state try to fix the houses and if
that didn't work, then Elon could fix those two. So
he didn't do the thing that he was going to
he said he was going to do in this tweet.
Speaker 2 (33:59):
So on a large scale, it seems like a lot
of tech people outside of maybe Bill Gates, seem very
bad at the philanthropy thing, Like Mark Zuckerberg is the one.
I'm thinking of his one hundred million dollars to what's
New York schools systems? Why is it the this is
a very dumb guy question of it is why is
it just having a lot of money doesn't help? How
(34:19):
is it that? Is it an organized Is it actually
quite difficult to deploy this capital?
Speaker 1 (34:25):
I think it is. The answer is yes, that it.
It is a very it's hard to give this much
money away. You can do it in one of two ways.
You can do it the Mackenzie Bezos way. I mean
that she's an example of somebody who has a lot
of money and has given away a lot of money.
But she's not you know, it's she is like dropping
it from heaven. You know, there's she's not trying to
sort of come in and help you manage your organization.
She doesn't want a grand proposal. She just shows up
(34:47):
and gives you a lot of money and then leaves.
Other folks who have tried to sort of invest in
something over the longer term. You mentioned Mark Zuckerberg. You know,
I think it also is just a matter of time,
Like it's really really hard to give money away effect,
especially for trying to like have a specific outcome in
the world. And maybe these guys are too busy. I mean,
the one of the other sort of people who have
(35:09):
a foundation about as big as Elons is Larry Page,
the guy from Google, and his foundation both fails to
make its minimum payouts but also gives its money, all
of its money into something called the donor Advised Fund,
which is basically like a warehouse for money, and it
disappears into there. We don't know where it when or
if any of it actually went out into the world.
So it does seem like maybe these folks don't have
(35:31):
the time or the you know, the bandwidth to put
money into the to like put the attention commensurate with
the money they're putting in.
Speaker 2 (35:38):
So but just to be clear, Larry Page, co founder
for Google. He has he is doing a similar thing.
Speaker 1 (35:44):
He is doing a similar well, it's not similar in
that I don't have any proof that he's doing things
that benefit himself. But he is a huge amount of money.
He's failed to meet that goal or that minimum of
five percent payout, And what he's doing with his money
in some ways is you know, he basically is giving
it to a middleman, and then there's no sense of
(36:04):
a charitable middleman, the special sort of class of charitable middleman,
and we don't know what happens to it after that.
So he is what he's doing is less transparent than
what Musk is doing.
Speaker 2 (36:13):
Are the other tech people doing similar maybe not saying size,
but there are other other philanthropic efforts failing to invest.
Speaker 1 (36:20):
And no if you look at the people who were
above Musk. So the shortfall that Musk had at the
end of twenty twenty two where he was his foundation
was two hundred and thirty four million dollars under what
it should have given away. There are only three foundations
that were worse than that had a bigger shortfall that year,
Larry Page's one, the Hewlett Foundation was another, and then
the Lily Foundation, tied to the drugmaker ELI. Lilly was
(36:42):
the first. So there are not that many. Out of
the hundreds and hundreds of foundations in the US, those
four had the biggest shortfalls.
Speaker 2 (36:48):
But they still managed to get billions of dollars in
tax breaks out of this.
Speaker 1 (36:53):
Yeah, this is a field that is not that well policed,
as I said, by the IRS or anybody else.
Speaker 2 (36:58):
And is it just that expensive and time consumed? Would
there be a massive legal fight to try and actually
get this thing done?
Speaker 1 (37:05):
I mean, Congress could change the laws, or they could
give the IRS more money to go after it. I
think the Yeah, this has suffered from a sense of
neglect and also the IRS is general weakness that they're
going to use political capital. They're going to use it
on collecting taxes, not fighting nonprofits.
Speaker 2 (37:19):
So where do you think this goes from here? Do
you think it just continues doing nothing or doing less
than the bare minimum?
Speaker 1 (37:25):
Well, we will not know the reporting, you know, the
filing deadlines are so slow that we won't know until
this November whether the Musk Foundation made its goals for
twenty twenty three, unless they choose to tell us first.
The actual required deadline for them to release something publicly
is not till November, and we may know then if
the IRS has taken some action against them, but we
(37:46):
may never know if they take an action against them.
So we're going to keep watching it and see what
else it's done. But there's no expectation that I have
that we're going to see any changes anytime soon.
Speaker 2 (37:56):
I am with a personal question, does any of this
work kind of depress you make you a little cynical
because you see these people just getting these massive benefits.
Speaker 1 (38:05):
That's a good question. I mean, the reason I so
I cover nonprofits, That's that's what I do all the time.
And the reason I got into this is because there
is such a like obviously, the find nonrofit sector does
such amazing work. There's so many incredible things that nonprofits too,
but it also is a shield. You know, we give
nonprofits legal rights, we give them text breaks, and we
(38:27):
also give them this sort of you know, veneer of
do gooderism that makes people both in government and outside
government and not want to look any closer. And so
some people use that, you know, they use that good will,
they use that those privileges as kind of a shield
to hide self dealing, to hide, you know, you know,
foreign influence, to hide enrichment, embezzlmoun all kinds of things.
(38:48):
And so that's the sort of stuff that I do
every day, is to try to find out what people
are doing beyond behind that kind of screen of of
philanthropy or screen of sort of good will. So it
doesn't depress me. It's just that's what I do every day,
and I think it makes it for it makes a
fascinating beat, this contrast of like the great potential and
the great trust and the reality of these of these groups.
Speaker 2 (39:11):
Sometimes, David, thank you for joining me.
Speaker 1 (39:13):
Thank you.
Speaker 2 (39:23):
So what's remarkable about this story to me is that
Musk has, for all intents and purposes, received a multi
billion dollar tax break in exchange for about a quarter
of a billion dollars. That which he has spent has
mostly gone to things that directly benefit him, and the
few times he's actually spent it well on people that
need it, he's gone the Musk row of over promising
(39:43):
and under delivering. It's genuinely despicable to watch him send
one hundred million dollars to an barely incorporated school in Texas.
Now campus exists. They own some land, and it's very
clearly lining up with the other companies. And that's about
one hundred times more than they provided to Flint, Michigan,
a place where he promised and he received a ton
(40:04):
of positive press for fixing their contaminated water system. He
didn't do it. He did some stuff, and it's good
that he did something. But you can see how much
money this man deploys, and you see how little he's
actually done with it. And it's also sickening to watch
this unfathomably rich man, this ultra rich ghoul, receive a
(40:24):
massive massive return for doing very little and actively conning
the nonprofit system. And as David kind of hinted at,
there just isn't the regulatory framework or action or political
capital to actually fight a man like Elon Musk. As
I've said before, the US government just and Queezer society
are just not capable of dealing with billionaires. But there
(40:47):
is another side of this story. Musk doesn't want this
money spent. Most of this they have a terribly small
amount of money, less than a hundred thousand dollars. I
believe he doesn't want this money spent anywhere because he
wants to hoard that Tesla stock as much as he can.
Putting any downward pressure on Tesla would be a bad idea,
and almost all the money that this foundation has is
(41:10):
Tesla stock. But this is still a very important story
even if nothing changes, because it's another way of showing
how empty the legend of Elon Musk really is. He
got so much positive press around this foundation. He promised
to fix Flint, Michigan's water system. He got tons of
press in twenty eighteen, and he's given away what a
(41:32):
million dollars for him, that is something he finds in
his pockets or between the couch cushions, probably has more there.
He got another bunch of press for giving away eleven
point six million Tesla shares to charity, and that's kind
of close to what the Wall Street Journal actually wrote.
He didn't give away anything, by the way. He put
it in a charity literally with his name on it,
(41:53):
or a nonprofit in this case, and as we've heard,
he hasn't really spent it. And he even at one
point tweeted that he sent this to the UN saying
he would spend six billion dollars to fight world hunger,
but only only if they tell him how they'd spend it,
which I don't know. There's always a condition with this man,
(42:13):
there's always a trick, and I just think it's because
he doesn't really care that much, and he'll continue to
do stuff like this as long as the media is
unable or unwilling to call him out, and indeed, as
long as they're willing to buy his bullshit. This man
is a liar, He's a billionaire con artist. He's mastered
exploiting the law and society and the media to get
(42:35):
even richer. Yet I'm not freaking out too much because
every farrenh Old he's won a Pulitzer for work exactly
like this with Donald Trump. There is more to this
story that I'm sure David will bring out, and his
colleague Grime Mack, who worked on the story with him,
is one of the most industrious Elon Musk reporters out there.
The media is turning on this man, and this work
(42:57):
is deep, it's dangerous, and it's going up against the
man who has proven to a hostile relationship to the
press and to society. But these stories are so important
and as they accumulate, most reality distortion field will fall apart.
More it's already going. And I'm not saying this man
can be brought down. I don't think there's anything that
could truly, quote unquote stop Elon Musk, but we can
(43:19):
close the wound that he's opened in society where he's
just drinking money from the blood of others. And I
really want you to read David's work, and I put
a link to it in the show notes of this episode.
It's important you read this. It's important you try and
understand exactly how little Elon Musk is done for the world,
because it's time to turn on this man. It's time
(43:40):
to stop calling him an inventor. He didn't invent anything.
It's time to even stop calling him a philanthropist. At
the scale he's done things here, it's barely done anything.
You should check out David's story. You can find him
on Twitter at farenthal that's fahr e nt hold. He's
(44:00):
a great guy. Thank you for listening, Thank you for
listening to Better Offline. The editor and composer of the
Better Offline theme song is Matasowski. You can check out
more of his music and audio projects at Matasowski dot com.
(44:22):
M A T T O S O w s Ki
dot com. You can email me at easy at better
offline dot com or check out better offline dot com
to find my newsletter and more links to this podcast.
Thank you so much for listening. Better Offline is a
production of cool Zone Media. For more from cool Zone Media,
visit our website cool Zonemedia dot com, or check us
(44:44):
out on the iHeartRadio app, Apple Podcasts, or wherever you
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