Manoj Bhargava, richest Indian in US commits 90% earnings to charity | Hacker News Reader

Manoj Bhargava, richest Indian in US commits 90% earnings to charity

articles.economictimes.indiatimes.com

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Harsh and cynical comments in this thread.

I'm waiting to hear how much you've committed to give away once you've made your first million (never mind billion).

Do you think Manoj's first million went to charity, or invested in his businesses and self?

The article actually says he says he will give 90 pct of his money away. This is not the same as having done so.

hm, a little bit about the charity part : http://www.forbes.com/sites/clareoconnor/2012/02/08/manoj-bh...

Respect.

He is giving the money to his own charity.

With this guys track record, I wouldn't chalk this up to anything more than a clever tax-avoidance strategy.

http://www.forbes.com/sites/clareoconnor/2012/02/08/manoj-bh...

Bhargava claims to have given away $1 billion in 2009, with a letter to FORBES from his attorney, David Lieberman of the Michigan firm Seyburn Kahn, to back him up. Tax returns of Bhargava’s U.S. charity, the Rural India Supporting Trust, suggest a different narrative. Virtually the entire donation was in the form of a 45% stake in the privately held Living Essentials. Only a few million dollars was in cash.

Rural India then sold that 45% stake to Nevada 5, a private for-profit company. In exchange, Rural India got a note worth $623.6 million. Bhargava’s accountant Paul Edwards of Plante Moran says his client is not a beneficial owner in Nevada 5—but another one of his associates says it is a vehicle for Bhargava’s philanthropy and affiliated with Innovation Ventures, the parent company of Living Essentials.

This kind of deal raises questions, says Roger Colinvaux, professor at Catholic University’s Columbus School of Law and an expert on tax and philanthropy. “If it were a private foundation, it would be prohibited from selling to a company related to a major donor.”

Rural India itself appears not to be giving much away. It lists total grants paid out in 2010 of just $4 million off a total asset base that by the end of that year had been stepped up to just over $1 billion. Bhargava can get away with this because he set up Rural India as something called a supporting organization, or a group that financially supports other charities. Unlike a traditional private foundation, a supporting organization has no mandated 5% minimum outlay, pays no excise taxes on investment income and has fewer self-dealing restrictions. Bhargava is not doing anything illegal here, just exploiting a loophole in the tax code many other big philanthropists have used as well.

That puts it into perspective and now this topic becomes startup worthy ...

Supported by his comments that governments "get in the way"

This is nothing new.

Looking at BMGF (bill gates foundation) annual reports for 2010. Total assets: $37b. Grants: $2b (barely over 5% minimum mandated by law)

http://www.gatesfoundation.org/annualreport/Pages/annual-rep...

The BMGF operates through endowment, which a lot of organizations do. Basically, they don't expect many regular small donations (like a lot of smaller charities do), they expect just a couple of very big ones. Because the donations don't come every year, they need to last. So they invest the money, and use the interest for operation costs and grants. This way, they can give that $2b a year[1], in perpetuity. Another big donation means that they only give out slightly more per year, but that the donation will basically last forever.

There may be a better model, but this is a well respected method for making a big charitable gift last.

[1] more in years when the economy does well. E.g., in 2009 they gave slightly over $3B.

Giving $2b/yr in perpetuity is definitely not the mission of the Gates Foundation. They have set it up to run out of money within X years (10 IIRC) of Bill and Melinda's death.

Did you just equate 5% (close to a standard annuity rate) with 0.4% (close statistical noise)?

How is this tech or startup related?

Submissions need not be tech or startup related -- http://ycombinator.com/newsguidelines.html

On-Topic: Anything that good hackers would find interesting. That includes more than hacking and startups. If you had to reduce it to a sentence, the answer might be: anything that gratifies one's intellectual curiosity.

Off-Topic: Most stories about politics, or crime, or sports, unless they're evidence of some interesting new phenomenon. Videos of pratfalls or disasters, or cute animal pictures. If they'd cover it on TV news, it's probably off-topic.

Seems off-topic to me.

Seems on-topic to me. See how subjective life is?

It concerns someone who is a founder, personal wealth and its relation to society. That's pretty interesting to a group of people.

In the sense that general business stuff overlaps with startups.

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