Better Offline - Musk's Uncharitable Charity ft. David Fahrenthold

Episode Date: March 13, 2024

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.htmlSee omnystudio.com/listener for privacy information.

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Another podcast from some SNL late-night comedy guy, not quite. Unhumor me with Robert Smygel and friends. Me and hilarious guests from Bob Odenkirk to David Letterman help make you. you funnier. This week, my guest, S&L's Mikey Day and headwriter, Streeter Seidel, help an a cappella band with their between songs banter. Where does your group perform? We do some retirement homes. Those people are starving for banter. Listen to humor me with Robert Smigel and friends on the I-Heart Radio app, Apple Podcasts, or wherever you get your podcasts. The story I told myself can then shape my behavior, and that can lead me to sabotage the

possibility of connection. This mental health awareness month, tune into the podcast Deeply Well with Debbie Brown if you've been searching for a soft place to land while doing the work to become whole. This podcast is for you to hear more. Listen to Deeply Well with Debbie Brown from the Black Effect Podcast Network on the Iheart Radio app, Apple Podcasts, or wherever you get your podcast. AllZone Media Hello, welcome to Bear Offline. I'm Ed Zetron. Since 2020, Elon Musk has been.

preceded his charitable foundation, an innovatively called the Musk Foundation, with billions of dollars of Tesla stock, which has netted him a multi-billion dollar tax break. Yet a massive New York Times investigation by reporters Ryan Mack and David Farenthold 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 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 inside a SpaceX compound, and a UN program

to help countries find internet for rural schools, where two 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 laptops for students. While this is unquestionably a good thing, he failed to do much more than that. All he did was send a Tesla goon down there to offer, and I'm not kidding, rides around the parking lot in his car. Since the middle of 2019, the Times reports that Musk has done little more for three.

Flint than that. According to the Times, in 2021, the Musk Foundation fell $41 million short of the minimum required donation, and in 2022 missed it by an astonishing $234 million. That year, Musk's Foundation only gave way the 2.25% of the 5% it was required to from its $7 billion in assets. Today I'm joined by New York Times investigative reporter David Tharenthold, who won a Pulitzer Prize for his work at the Washington Post investigating our big wet president, Donald J. Trump, and his dodgy charitable deals. David, thank you so much for joining me. Hey, it's great to be here. So, on a very basic level, what makes this Elon Musk charity story so remarkable?

What's so different about it? 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 $5 billion in assets, mostly Tesla stock. That makes it one of the 20 largest foundation. 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 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 Mr. Musk uses the money in his foundation to help himself or to help his businesses. So can you give me an example of some of the ways he's using it to help himself. Well, one of the biggest ones was in 2021, there's a guy named Jared Isaacman, who's a billionaire 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 $200 million with this space flight for St. Jude's Children's Research Hospital. Right.

He goes up in a space, he comes back down, and he hasn't raised $200 million. 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 $50 million. He eventually gives $55 million, 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 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 in the very, very southern tip of Texas where Musk has the SpaceX launch site.

It had never given any money down there until March 2021, 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 are 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 Mr. 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 to serve you. It's not 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

that Mr. Musk started. There's another school called The Foundation. That's its legal name, The Foundation, Mr. Musk has given 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? And 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, a property to turn into a Montessori school that happens to be two minutes away from a huge subdivision, Mr. Musk is building for his own employees outside Bastrop, Texas. And which employees for SpaceX? Well, he's got a whole complex there that includes SpaceX, but it's mainly boring company employees.

Right. 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. So taking a step back.

On a very basic level, how does it actually work? So he's put this stock in escrow, I assume? What happened was in 2021, he's facing this giant tax bill. He exercised a bunch of Tesla stock options, and he says he owed $11 billion in taxes. He takes $5 billion of Tesla stock. Now, that's not what he paid for the stock. That's what it's appreciated to. He donates it to charity.

And now the tax law allows you to take a deduction based on the appreciated value. of a stock. So the deduction to him could have been worth as much as $2 billion off of his tax bill. He gives that stock to the Musk Foundation. Now, it's confusing because 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 sounds like something that he's, you know, that's like another sort of pocket of his wallet, it's not. It's a separate thing. So once the money goes, 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 IRS requires foundations to give away

5% of their assets every year. You can imagine why. It's to keep people from just dumping money into their foundation, get in a tax break, and never actually helping the world. You have to send 5% of your money out the door to the real world every year. And he hasn't. He didn't in 2021. He didn't in 2021. In fact, By the end of 2022, he was $234 million behind the minimum for what this foundation was supposed to have given away. Right. But as far as the stock goes, does it sit separate to Musk? Is it in a separate holding account? It is legally the property of this foundation now, which means he's still in control of it, but it belongs to the foundation.

Does it have any liquid funds in there? There's some. I think they've sold a few. There's a small amount of liquid cash. I think mostly what he does is it sells stock. in order to make donations 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?

This is complicated. But what we were told was that in that year, they expected that the $5 billion, so he gives $5 billion 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 37% of $5 billion. which is about $2 billion. So there's a lot of other math involved involving his income and other things,

but that was the guess was $2 billion office taxes. And who gave you this estimate, just so we're clear? We talked to a couple of professors of tax law. Right. So what he gets out of this is just a tax break, but he's not donating enough money. Right. He's not actually giving away what he's meant to. Yeah, it's confusing to think about him and his foundation as separate entities.

But in this case, he gives his foundation the $5 billion. And if he'd taken this $5 billion worth of Tesla stock and given it to St. 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 or whoever then uses the shares for whatever. Right. But 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 as the head of the Musk Foundation to start giving this newfound money away.

And that's when the 5% minimum matters to him. He has to get 5% of the foundation's assets away to other charities to actually do good in the world every year. And he isn't doing this enough. No, he missed it in 2021 by $41 million. And then in 2022, he missed it by $234 million. And so what's meant to happen to a regular person? Well, actually, one quick question.

Does he get this tax break every year for holding it? Or is it just a one-off? He got a one-off. Just the, you know, he gets it based on what he's donated to the foundation in that year. Okay. And how much is in there right now, just so we're clear, because I know there's a lot of numbers going on. Yeah, I know. It depends on, it's dependent so much on the rise and fall of Tesla stock, but the last time we got a snapshot was at the end of 2022, and it was a little bit more than $5 billion at that point. So what is meant to happen to him and who is meant to exact justice here? 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 2022,

he was, his foundation was $234 million behind. He has a one-year grace period, 2023, to give that money away, in addition to the 5% again for 2023. If he doesn't give, he doesn't give the money away after that one-year grace period, the foundation faces a 30% penalty tax. And if it still doesn't pay, then it, then it faces 100% penalty tax. So it would basically, the IRS would confiscate all the money that they were supposed to give away, 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, 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 2023, we don't know about it. The other regulator in most

states is the estate attorney general. They also can regulate people who violate tax laws. I mean, One example that just ended was the New York Attorney 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 Paxson and the Attorney General of Texas. I'm 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. Wasn't he also threatening media matters when Musk sued them as well? Yes. He seems very much in his pocket.

Another podcast from some SNL late-night comedy guy, not quite. Unhumor me with Robert Smygel and friends. Me and hilarious guests from Jim Gaffigan to Bob Odenkirk to David Letterman, help make you funnier. This week, my guest, SNL's Mikey Day and headwriters, Streeter Seidel, help an a cappella band with their between songs banter. There's the worst singer in the group. The worst?

Yeah. Me. Is there anything to the idea that because you're from Harvard, uh, you only got in because you? Your parents made a huge donation. The group. The yard birds, right? That's the name.

The Harvard Yard. But they're open. Do you have a name suggestion? We're open. Since you guys are middle-aged. One erection. Listen to humor me with Robert Smigel and Friends on the I-Heart Radio app, Apple Podcasts, or wherever you get your podcast. Humor me.

I need some jokes to make me seem funny. Run a business and not think. about podcasting, think again. More Americans listen to podcasts than ad-supported streaming music from Spotify and Pandora. And as the number one podcaster, IHearts twice as large as the next two combined. So whatever your customers listen to, they'll hear your message. Plus, only IHeart can extend your message to audiences across broadcast radio.

Think podcasting can help your business. Think IHeart. Streaming, radio, and podcasting. Call 844-844-I-Hart to get started. That's 844-8-4-I-Hart. Hey, I'm Jared Adano. You might know me as that loud guy who yells out, help on the internet.

Help! Somebody! Please! But there's so much more to me than that. I'm an actor. I'm a comedian. And recently, I've become quite the helper myself. And on my new podcast, Hope from a Hypocrite,

I'll be changing lives, helping people in need with my sage advice and thoughtful solutions. Sike! I'm a comedian. I'm not qualified to give good advice. Join me and my comedian friends as we riff, Grant recommends some of the most legally dubious advice known to man. If I'm calling you, even if you're on your phone, let it ring twice.

One ring is too scary. Oh, cream a chicken suit. Hey, cream a chicken suit. This is Help from a Hypocrite, the worst advice from the dumbest people you know. Listen to Help from Hypocrite as part of the Mike Cultura podcast network available on the IHartRadio app, Apple Podcasts, or wherever you get your podcasts. So let's go back to this Ad Astra school. What exactly happened there? Because it's very bizarre there is a school inside SpaceX. 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. And it's a nonprofit, 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, 14 students, five of whom were Musk's own 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 half the students were related to SpaceX employees. And Musk's own children also went there for a long time. Then in 2020, Musk starts to shift his own residency, his own company center of gravity to Texas.

So then the Ad Astra School picks up from California, moves to Texas. And from what we can tell, this sort of small amount of open. this they had, you know, the 50% of students they had who were not employees of SpaceX, they seemed to have changed their model. We're 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. And as you drive down there, there's a little fence on the side of the highway. And you can see behind it, there's a building, there's some basketball courts. So you can see is 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 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, you know, if you stop for 10 seconds as I did, come over and ask what you're doing. So do you know how one sends one's kids there? Is it a private school? 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 do 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. Does it seem to flawn any nonprofit guidelines you've seen? Or is it just classic driving capitalism? It is a nonprofit. It remains legally a nonprofit. The IRS has given a tax exempt 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 really serving the public and not the private benefit of Mr. Musk or the private benefit of SpaceX, you know, where's the evidence of that? And that's what we asked them for and didn't get a response. So in this other school, the foundation, what is that it 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 $100 million to? What have you found there?

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. Then the exception, one of the exceptions was this thing called the Foundation. And the Musk Foundation gave it money in 2022. You can pull the IRS documents for the Foundation to see what it is and what they told the IRS they 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 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. 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, oh, you know, is Mr. Musk?

is he's starting sort of a competitor of the University of Austin? What would Elon Musk University be like? Is this where he's going to combat the forces of wokeness or the other things he talks about a lot? And so my question was just, where is this school?

Does it exist? Has it done anything? Because it doesn't have a web presence. It doesn't have, you know, there's no evidence. If you or I said, I want to go to the University of Elon Musk or whatever this is going to be, there's no way to find information about it.

And so it took a lot of sleuthing. But here's what we found. The foundation, the entity that the startup charity that's run by Musk's associates, it has a shell company. The shell company last year bought a former horse farm in Bastrop, Texas, a 40-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, that Musk wants to build for his employees. outside Bastrop. Bastrop is an excerpt is an excerpt of 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 110 home subdivision. He's going to call it Snailbrook, just sort of like an inside joke, I guess, in the world of the boring company. God. Yeah, I guess the boring company moves as fast as a snail,

so this is Snailbrook. But the one thing that, and he's trying to convince people to move from Austin, San Francisco, 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 that subdivision did not have was a school. And so the foundation, again, nominally independent, not supposed to be serving Mr. Musk's

interest, 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. internet for another ad aster 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, a university for Austin, Texas. And all they've done so far, which is, it looks like build a Montessori school

for Elon Musk's employees. So let's talk about the Musk Foundation itself. So by the sounds of it, it's what, three people, including Elon Musk? And you're break down the vast corporate structure here? This bit drove me a little insane. Yeah, this is really different, too. So, you know, the, you remember the company that they keep, right? We're talking about the top 20 largest foundations in the United States. That's, you know, the Gates Foundation. That's, you know, the George Soros's group, the Walton Foundation for a moment. How big are those organizations by comparison? So the most foundation is a lot, I mean, the Gates Foundation is a lot bigger. It's in the hundreds of millions. 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. And the Walton family's the Walmart. The Walmart. Yeah. And they support charter schools and other things. It's common, although not always, but most of these places have payrolls 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 of whom are volunteers. There's Elon Musk who says he works for an hour a week on it. This guy Jared Burchall, who is Musk's longtime money manager, Consigliary. 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 for 0.1 hours a week, which is six minutes. Are they compensated at all? No. They work for free. So, yes, there's no – and 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 $350 million a year.

How are you handling that? How much time do you spend on that? We didn't get answers about that. Did they not answer at all? They didn't answer at all. Okay. But in practice, though. Well, and what we 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 $30 million to all these different groups and the area where the rocket exploded. Okay, so now he's made a, 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, decide how much money each one of them should get. So he deputizes this guy named Igor Kierganov, 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, friend of Musk's. So now he's in charge. And you can see him, it was really funny. So 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. And it's fascinating to see that this guy supposedly has, you know, hundreds of millions of dollars to give away. But he was extremely detail-oriented and, like, 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's Foundation's giving us to put up Christmas lights for Christmas.

We're going to have a big display in downtown Brunsville. The children. Yeah. And here's the estimate we got from the contractor. This is how much it'll cost to put those lights up. Will you pay for it? And Kuganov 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? You 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 that's 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 is given him, you know, set up a $5 billion

dollar charity. And 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, like, 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. shortly. Or can charities donate stock directly? They can donate stock directly too. It's so interesting because if he's not talking about it, this feels like just a basic tax

dodge, just 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. Yeah, three people who work a total of two hours and six minutes a week. 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 with charities of his size, either hire a big staff

or they just choose one cause and give all their money to that. But he's kind of got them in between where he 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. You know, we believe you're doing this. You know, there's rules that get 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 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. Is there any historical regulation of people who have messed up at this scale? There are not that many foundations of this scale. Actually, it's a good point. I'm not aware of the IRS coming down on anybody who is a foundation this big. 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 one of the real I mean if I wrote 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 much less money

than the Musk Foundation does but it operated in sort of in a similar way in that case the New York Attorney General came down on them but 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 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 nonprofit law often isn't 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 is 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? Yeah, and that would last a long time. You know, they also have to consider a 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?

Another podcast from some SNL late-night comedy guide, not quite. Unhumor me with Robert Smigel and friends. Me and hilarious guests from Jim Gaffigan to Bob Odenkirk to David Letterman, help make you funnier. This week, my guest, SNL's Mikey Day and headwriter Streeter Seidel, help an a cappella band with their between songs banter. There's that worst singer in the group. The worst?

Yeah. Me. Is there anything to the idea that because you're from Harvard, you only got in because your parents made a huge donation. The group. The yard birds, right? That's the name. The Harvard yard, but they're open.

Do you have a name suggestion? We're open. Since you guys are middle aged. One erection. Listen to humor. with Robert Smygel and Friends on the IHeart Radio app, Apple Podcasts, or wherever you get your podcast. Humor me. I need some jokes to make me seem funny. Run a business and not thinking about podcasting, think again.

More Americans listen to podcasts than ad-supported streaming music from Spotify and Pandora. And as the number one podcaster, IHearts twice as large as the next two combined. So whatever your customers listen to, they'll hear your message. Plus, only IHeart can extend your message to audiences. across broadcast radio. Think podcasting can help your business. Think I-Hart. Streaming, radio, and podcasting.

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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. The 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 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 buy an autographed football helmet for himself. He was using it in a way that was like directly benefiting himself, not, and Mr. Musk is doing it in a way that's a little more oblique. And I think that matters into 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 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. And the Musk is the same way. way. I mean, just to give you another example, he gave $5 million to UNICEF. Right.

Who, you know, the sort of like buy word for an unimpeachable charity. Classic charity. Yeah, right. 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 whether schools needed connections, they paid Mr. Musk'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 was a nonprofit, or 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 million out of his own pocket. So 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, where 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. 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, 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. You know, 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. I think she was 10 at the time, Little Miss Flint, Mari Koppany. And she had tweeted at Musk like, hey, you know, he was thinking of buying Twitter. This is an earlier iteration of him thinking and buying Twitter. You know, you have that much money.

Why don't you use it to buy, you know, supplies for Flint, Michigan, when 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 they had been this huge epidemic of lead in water pipes and water supply. 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 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 and Flint, both the schools.

put water filters in the school and to buy laptops for middle schoolers. He also gives a little bit more to a charity that was sort of associated with Little Miss Flint. Now Flint people, 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 said, you know, they sent him this letter that said, you know, you've, 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 to invest? Just to just to 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. 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. 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, beyond the things I already mentioned, the only additional thing they did was send a guy from Tesla. He came sort of a guy from Tesla who was thinking about setting up 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 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. But they were sort of being inundated by offers from various celebrities. They had become, Flynn 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? Yeah, I mean, I think 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 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.

Mark Zuckerberg is the one I'm thinking of his $100 million to what's Newark's 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 organization, is it actually quite difficult to deploy this capital? I think it is, the answer is yes, that it is a very, it's hard to give this much money away away. You can do it in one of two ways. You can do it the McKenzie Bezos way. I mean, she's an example of somebody who has a lot of money and is given away a lot of money, but she's not, you know, she is like dropping it from heaven. You 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 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. 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 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, you know, the bandwidth to put money into the, to like 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 has, he has, doing a similar thing? 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, a 5% 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, 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,

so the shortfall that Musk had at the end of 2022, where his foundation was $234 million under what it should have given away, there 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? I 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. The actual required deadline for them to release something publicly is not until November. And we may know then that 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 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? That's a good question. I mean, the reason I, so I cover nonprofits. That's what I do all the time. And 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 doogooderism that makes people both in government and outside government not want to look any closer. And so some people use that, you know, they use that goodwill. They use those privileges as kind of a shield to hide self-dealing, to hide, you know, foreign influence, to hide enrichment, embezzlement, all kinds of things. And 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 goodwill.

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 groups sometimes. David, thank you for joining me. Thank you. 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 must growl of overpromising and underdelivering. It's genuinely despicable to watch him send $100 million to an 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. 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 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. But 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. Probably 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 $6 billion to fight world hunger, but only, only if they tell him how they'd spend him. 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. He'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 Brian 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. 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 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. But you should check out David's story. You can find him on Twitter at Faranthal. That's F-A-H-R-E-N-T-H-O-L-D.

He's 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 Matt Osowski. You can check out more of his music and audio projects at Mattisowski.com. M-A-T-T-O-S-O-S-K-I.com. You can email me at easy at betteroffline.com or check out Better Offline.com to find my newsletter and more links to this podcast. Thank you so much for listening.

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