The Rich List shows that Musk is currently the second richest person in the world. He runs SpaceX, Tesla and other companies that are pushing the limits of technology, as well as controlling the social media platform X, with which he promotes his often polarising political and social views.
At the same time, Musk runs a charity with billions of dollars in assets, a resource that would have allowed him to wield global influence. Bill Gates, for example, has channelled his wealth into improving healthcare in Africa, and the Walton family behind Walmart has pushed for changes to the US education system. But, unlike them, Musk’s philanthropy is spontaneous and largely self-serving, as it qualifies him for huge tax breaks and helps his businesses.
Since 2020, he has donated a large amount of tax-exempt stock to his charity, which at the time was worth more than $7 billion, making it one of the largest charities in the United States. However, in recent years, the foundation that housed the funds has failed to meet the minimum standard of giving required by law to qualify for a tax deduction, putting it at risk of paying a large financial penalty to the government.
Musk has not hired any employees for his foundation, tax filings show. Its multibillion-dollar assets are managed by a board of directors that includes him and two volunteers. One of the volunteers reports that he spends very little time on Musk’s foundation, averaging just six minutes a week.
In 2022, the last year for which records are available, the foundation gave away $160 million, $234 million less than the law requires. The Musk Foundation has the fourth largest shortfall of this giving of any foundation in the United States.
Musk is under no obligation to own charities, and he’s made it clear that he believes his for-profit ventures will change the world more than any philanthropic endeavour. But once he sets up a nonprofit organisation and fills it with tax-deductible donations, the law requires him to ensure that his foundation serves the public and does not operate for the “private benefit” of its managers.
However, media analyses have found that about half of the Musk Foundation’s donations for 2021 and 2022 are linked in some way to Musk, one of his employees or one of his businesses.
For example, $55 million of it went to help a major SpaceX customer fulfil a charitable commitment. The Musk Foundation gave millions more to Cameron County after SpaceX’s rocket exploded. He’s also donated to two schools closely associated with his businesses: one on a SpaceX campus and another next to a new housing complex for Musk’s employees.
“What’s really striking about Musk is the disconnect that exists between his huge public profile and minimal philanthropic activity.” said Benjamin Soskis, who studies philanthropy at the Urban Institute. He noted that while other billionaires aim to have a broad impact on society, Musk’s foundation “lacks any direction or any real focus outside of his private business.”
This is in line with Musk’s public stance on philanthropy. He says he’s changing the world through his for-profit companies. Last year, he told the DealBook conference, “Tesla has done more to protect the environment than all other companies combined. As the leader of the company, I’ve done more for the environment than any other person on the planet.”
Musk has used his foundation to help organisations with which he has a personal connection, including a food charity run by his brother and the Temple of Whollyness, a wooden art building that burned down at Burning Man in 2013. Burning Man is an annual event that Musk regularly attends.
He also founded his own non-profit school, Ad Astra (Latin for “to the stars”), to explore new ways of teaching maths and science.
But the school also serves Musk’s personal purposes; Ad Astra’s first year began at Musk’s home in Bel Air, Los Angeles, with 14 students, five of whom were his own children.
“Kindness and thirst for knowledge (as well as having parents who work at SpaceX) were the only criteria for admission,” wrote Joshua Dahn, the school’s first headmaster.
Ad Astra later moved to SpaceX’s headquarters in Hawthorne, California, and grew to more than 50 students. About half of those students were associated with SpaceX employees, Dahn said in an email. Dahn’s contract was even labelled that half of the intellectual property he developed at the school would go to Musk personally.
In 2016, Musk donated $254 million worth of Tesla stock to his foundation, which has since grown larger, but still seems to lack a clear direction.
Musk’s foundation also donated $10 million to OpenAI when he was a member of the company’s board of directors. In his recent lawsuit against OpenAI and its founders, Musk said that he personally donated an additional $34 million to OpenAI before he stopped giving in 2020. Musk previously said he had donated about $100 million to OpenAI.
At the end of 2021, Musk ran into a snag. He had by then exercised options in the Tesla Stock Incentive Plan, which gave him about $25 billion worth of Tesla stock. But that came at a price: taxes.
“I will pay over $11 billion in taxes this year.” He later wrote on X.
The U.S. tax code, however, offers executives sitting on a lot of company stock a way to lower their tax bill: charity. Musk could donate shares of Tesla, whose stock price has soared in recent years, to a non-profit organisation and receive a tax deduction based on the value of those shares. That way, he might get those shares for very little money.
In October of that year, Musk had publicly expressed the idea of making a large donation. He wrote on X that he would sell Tesla stock and donate $6 billion if the United Nations World Food Programme would explain how it would use the donated funds to address hunger.
The UN World Food Programme gave a plan, but Musk gave no response. Instead, Musk donated 5 million shares of Tesla stock, then worth $5.7 billion, to his foundation.
The donation tripled the size of Musk’s foundation’s assets, putting it among the top 20 foundations in the United States. Tax experts say the donation could save Musk more than $2 billion in taxes.
The more Musk donates means more liability for his foundation. The tax code requires all foundations to donate 5 per cent of their assets each year, so Musk’s foundation is expected to donate hundreds of millions of dollars each year.
However, tax filings show that in 2021, Musk’s foundation contributed $41 million less than the law’s minimum requirement. in 2022, the foundation’s gap with the tax law requirement to contribute 5 per cent of its assets widened further: $193 million. That year, Musk’s foundation gave away only 2.25 per cent of its $7 billion in assets, well below the 5 per cent minimum requirement.
As the giving gap grows wider, by the end of 2022, the Musk Foundation’s shortfall has reached $234 million. According to Cause IQ, a company that analyses philanthropic data, this endowment gap is the fourth largest of any foundation in the United States.
“This shows that the Musk Foundation is not yet a climate, it is not yet a professional organisation.” Brian Galle, a professor at Georgetown University who studies nonprofit law, said of the foundation’s minimal giving.
The Musk Foundation did not release details of its 2023 endowment or disclose whether it closed the previous year’s endowment gap. If it doesn’t close the endowment gap, it could be subject to a tax lag penalty equal to 30 per cent of the remaining 2022 endowment gap.
It’s also true that the Musk Foundation has donated to a number of groups over the years that have no apparent connection to Musk’s businesses. For example, the foundation gave $112 million to the XPRIZE Foundation to honour researchers who remove carbon dioxide from the atmosphere and oceans. It gave $10 million to the University of Texas to study population trends, something Musk worries about. He has said he is concerned that the Earth’s population may be collapsing.
But then other donations are closely tied to Musk’s own interests.