Musk's Uncharitable Charity ft. David Fahrenthold

24:33Okay, so now he's taken on sort of a 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, is decide how much money each one of them should get. So he deputizes this guy named Igor Kurganov, 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's a professional poker player, or a former professional poker player, friend of Musk's. So now he's in charge. And you can see him, it was really funny, we got a lot of emails back and forth between him and the school districts that he's giving the Musk's Foundation's money to.

25:11And it's fascinating to see, This guy supposedly has hundreds of millions of dollars to give away, but he was extremely detail-oriented in pressing these schools 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 Foundation is giving us to put up Christmas lights for Christmas. We're going to have a big display in downtown Brownsville. The children. Yeah. And here's the estimate we got from the contractor. This is how much it will cost to put those lights up.

25:43Will you pay for it? And Kurganov 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 this sort of general, what seemed 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. So do you think the reason they're not investing comes down to like mismanagement or is there something else going on here?

26:22You know, it's difficult to tell. The thing I think you can, it's hard to me to know what his motivations are. The two things I would say is, number one, he, Mr. 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 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$5 billion charity.

26:59And the other thing is talking to people, my co-reporter, Ryan Mack, talked to some people who knew Mr. Musk well from Tesla and SpaceX and other places. what they said was just that this is not something he talks about or thinks about. He's got a lot going on. He's got a lot of balls in the air. This was just not something they ever heard him thinking about or really considering. 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 it shortly. Or can charities donate stock directly?

27:31They can donate stock directly too. So that's so it's so interesting because if he's not talking about it, this feels like just a basic tax dodge, just a the lowest possible hanging fruit because three people does not feel including one of them being in us. That doesn't feel like enough people to run a small business, let alone. Yeah, three people who work a total of two hours and six minutes a week. Yeah, it is something that, you know, the way he's doing it is not the way a lot of other people do it. Either other people of his of his with charities of his size, either hire a big staff or they just choose one cause and give all their money to that.

28:08You 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, 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. 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? I think the thing that would happen would be an audit from the IRS. The IRS would start sending 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.

28:41You know, we believe you're doing this. You know, there's rules in the tax code against using your nonprofit for private benefit. We think maybe you're violating that. Tell us more. And in the end, they could shut it down. They could make it pay, you know, back, pay back 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. Is there any historical regulation of people who have messed up at this scale? There are not that many foundations at this scale. Actually, it's a good point. I'm not aware of the IRS coming down on anybody who has a foundation this big.

29:16Feels like stuff like this just incentivizes more activity like this. Because this is in public, like this is out there. This is very obvious. One of the real, I mean, I wrote a lot about Donald Trump's foundation back in the day, and that was a lot smaller than this. He had much, much, much less money than the Musk Foundation does. But it operated sort of in a similar way. In that case, 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 the thing you have to remember about them, I've always been told this by IRS veterans, is the point of the IRS is not to police.

29:52The point of the IRS is to collect money. And so they prioritize the things that bring in the most money. And 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 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 is obviously both rich and now very conservative. And would such an effort be, I'm guessing, be quite expensive?

30:23Yeah, and that would last a long time. You know, they also have to consider a sort of cost-benefit. You know, how much money and time would you have to spend on this, and how much money would you get back?

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31:33One, it's$15 a month. Two, seriously, it's$15 a month. Three, no big contracts. Four, I use it. Five, my mom uses it. Are you playing me off? That's what's happening, right? Okay. Give it a try at mintmobile.com slash switch. Upfront payment of$45 for three-month plan,$15 per month equivalent required. New customer offer first three months only. Then full price plan options available. Taxes and fees extra. See mintmobile.com. So how does this compare? You mentioned Mr. Donald Trump. How does it compare to his situation? How egregious is it in comparison? They're different in a couple of ways. As I said, the Musk Foundation is much bigger than the Trump Foundation ever was.

32:10The Trump Foundation was like$2 million at the most. They were similar in that they often used the money. If you looked hard enough at their charitable giveaways, 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 his foundation to do things like buy a portrait of himself and then hang it on the wall of his golf club. He would use it to pay off legal settlements for his businesses. He would use it to buy an autographed football helmet for himself. He was using it in a way that was directly benefiting himself.

32:41Not Mr. 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 if they want to take on an open and shut case. 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 look just like regular charity. And if you if you pulled on the string hard enough, you'd realize actually there was a story underneath where it was Trump helping himself. And the Musk the same way. I mean, just to give you another example, he gave five million dollars to UNICEF.

33:16Right. Who, you know, the sort of like byword for an unimpeachable charity. Classic charity. Right. When you when you pull on that a little bit, you realize that he was giving money to a UNICEF program that helped countries around the world identify schools that need connection to the Internet. So let's find schools in Rwanda or Kazakhstan 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 UNICEF helped, then once they realized where their schools needed connections, they paid Mr.

33:54Musk's company to connect them. So even there, even in the UNICEF, there's a line that goes back to his own interests. It's genuinely despicable. But here's another. Did you find anything or much about OpenAI, which is, of course, the nonprofit wing of the company that makes chat GPT? Yeah. Musk had always said that he'd given$100 million to OpenAI to get started. Obviously, he was on the original board. He was one of the co-founders of OpenAI when it started as a nonprofit. What we found was that he gave about$10 million from the Musk Foundation to OpenAI at the start. And then he and OpenAI agree that he gave about$34 million more out of his own pocket.

34:39So he gave$44 million between September 2016 and 2020, part from the foundation, part 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. 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, what he promised there and what he actually did. 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 2016, 17, 18, 19. It seemed like the motivator behind a lot of his giving was Twitter.

35:19Like 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 Mr. Beast would say, hey, I'm raising money to plant trees. Elon, will you give me money? And Elon 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. He pushes Musk and Musk responds with a million dollars from the Musk Foundation. One of the more unusual sort of instances of that was there was a girl in Flint, Michigan.

35:50I think she was 10 at the time, Little Miss Flint, Mari Kopany. 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 has too much lead in the water. This is at a time, obviously, when there had been this huge epidemic of lead in water pipes and water supply. Still kind of a problem today as well.

36:19Yes. And so the mayor reaches out to him. The mayor says, actually, you know, what we need right now is help in the schools. You know, the schools need help. You know, the water, you know, water in houses is being handled by the state. And so he gives about a million dollars, 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 charity that was was sort of associated with Little Miss Flint. Now, Flint people, the mayor and other people in the city of Flint, see how rich he is and see that he cares about Flint.

36:50And they want more. They ask for more. They sent him this letter that said, 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? And just to add one thing, the exact thing that Musk said, I'm quoting both the article and Elon Musk himself, he will fund fixing the water in any house in flint that has water contamination above fda levels right so just to be clear he promised the world they were not asking him for too much here this is just what he said he'd do and i think he's followed up by saying like no kidding or something um 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 uh 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.

37:40He came sort of a 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 around the parking lot? I don't know why just around the parking lot, but just around the parking lot. Very bizarre. And so the mayor said, you know, look, we were happy he gave something. You know, he didn't have to give anything. She said that this was a time when, you know, that 2018, 2019 was a time when they were hearing from sort of a lot of celebrities, you know, well-meaning celebrities.

38:16But they were sort of being inundated by offers from various celebrities. They had become – Flint had become that much of a cause celebrity. All these people wanted to help. And so Elon was 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. It's weird because a situation like that, it's good he gave money for water filters and laptops for kids. Like, unquestionably good. But also, he didn't actually fix the problem. He didn't actually fix Flint's water problem. And it sounds like that was a problem with celebrities in general then?

38:49Yeah, 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 it 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 let the state try to fix the houses. And if that didn't work, then Elon could fix those too. So he didn't do the thing that he said he was going to do in this tweet. 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.

39:27Mark Zuckerberg is the one I'm thinking of. his$100 million to what's New York skills systems. Why is it the, this is a very dumb guy question of risk. Why is it that just having a lot of money doesn't help? How is it that, is it an organizer, is it actually quite difficult to deploy this capital? 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, 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, she is like dropping it from heaven.

40:01You know, she's not trying to sort of come in and help you manage your organization. She doesn't want a grant proposal. She just shows up 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 effectively, especially if you're trying to like have a specific outcome in the world. And maybe these guys are too busy. I mean, one of the other sort of people who have a foundation about as big as Elon's is Larry Page, the guy from Google.

40:33And his foundation both fails to make its minimum payouts, but also gives 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 went or if any of it actually went out into the world. So it does seem like maybe these folks don't have the time or the bandwidth to put money into the – to put the attention commensurate with the money they're putting in. So – but just to be clear, Larry Page, co-founder of Google, he has – he is doing a similar thing? He is doing a similar – well, he's not similar in that I don't have any proof that he's doing things that benefit himself.

41:09But he is – he's a huge amount of money. He's failed to meet that goal, that minimum of 5 % payout. And what he's doing with his money in some ways is he basically is giving it to a middleman and then there's no sense of – a charitable middleman, the special sort of class of charitable middleman, and we don't know what happens to it after that. So what he's doing is less transparent than what Musk is doing. Are there other tech people doing similar – maybe not same size, but there are other philanthropic efforts failing to invest? No, if you look at the people who were above Musk, the shortfall that Musk had at the end of 2022, where his foundation was$234 million under what it should have given away.

41:50There were only three foundations that were worse than that, had a bigger shortfall that year. Larry Page is one. The Hewlett Foundation was another. And then the Lilly Foundation, tied to the drugmaker Eli Lilly, was the first. So there are not that many out of the hundreds and hundreds of foundations in the U.S. Those four had the biggest shortfalls. But they still managed to get billions of dollars in tax breaks out of this. Yeah, this is a field that is not that well policed, as I said, by the IRS or anybody else. And is it just that expensive and time consuming? Or would there be a massive legal fight to try and actually get this thing done?

42:24I mean, Congress could change the laws or they could give the IRS more money to go after it. I think this has suffered from a sense of neglect and also the IRS's general weakness. If they're going to use political capital, they're going to use it on collecting taxes, not fighting nonprofits. So where do you think this goes from here? Do you think it just continues doing nothing or doing less than the bare minimum? 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 2023. Unless they choose to tell us first.

42:57The actual required deadline for them to release something publicly is not until November. And we may know then if the IRS has taken some action against them, but we may never know if they've taken 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. I'll end 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? That's a good question. I mean, the reason I cover nonprofits, that's what I do all the time.

43:33And the reason I got into this is because there is such a, like, obviously the nonprofit sector does such amazing work. There's so many incredible things that nonprofits do, but it also is a shield. You know, we give nonprofits legal rights, we give them tax breaks, and we also give them this sort of, you know, veneer of do-gooderism that makes people both in government and outside government not want to look any closer. And so some people use that goodwill, they use those privileges as kind of a shield to hide self-dealing, to hide foreign influence, to hide enrichment, embezzlement, all kinds of things.

44:07And so that's the sort of stuff that I do every day is to try to find out what people are doing behind that kind of screen of philanthropy or screen of sort of goodwill. So it doesn't depress me. It's just that's what I do every day. And I think it makes a fascinating beat, this contrast of the great potential and the great trust and the reality of these groups sometimes. David, thank you for joining me. Thank you.

44:42so 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 route of over promising and under-delivering. It's genuinely despicable to watch him send$100 million to a barely incorporated school in Texas. No campus exists, they own some land, and it's very clearly lining up with his other companies. And that's about 100 times more than he provided to Flint, Michigan, a place where he promised and he received a ton of positive press for fixing their contaminated water system.

45:26He 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 massive, massive return for doing very little and actively conning the non-profit 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 we as a society, are just not capable of dealing with billionaires.

46:06But there 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$100 ,000, 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 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 2018 and he's given away what a million dollars For him, that is something he finds in his pockets or between the couch cushions.

46:57Probably has more there. He got another bunch of press for giving away 11.6 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, or a non-profit 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 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.

47:48He's a billionaire con artist. He's mastered exploiting the law and society and the media to get even richer. Yet I'm not freaking out too much because David Farenthold, he's one of 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 Ryan 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 is deep, it's dangerous And it's going up against the man who has proven to have a hostile relationship to the press and to society But these stories are so important And as they accumulate, Musk's 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 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 has done for the world because it's time to turn on this man it's time 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 he's barely done anything but you should check out David's story you can find him on Twitter at Farenthold.

49:14That's F-A-H-R-E-N-T-H-O-L-D. He's a great guy. Thank you for listening.

49:31Thank you for listening to Better Offline. The editor and composer of the Better Offline theme song is Matt Ossowski. You can check out more of his music and audio projects at mattosowski.com. M-A-T-T-O-S-O-W-S-K-I.com You can email me at easy at betteroffline.com or check out betteroffline.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, coolzonemedia.com or check us out on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.

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