The Rocket Bar in Brownsville, Texas, is one of several new nightlife establishments that received funds from the Musk Foundation's initiative to revitalise downtown. Photo / Meridith Kohut
Before March 2021, Elon Musk’s charitable foundation had never announced any donations to Cameron County, an impoverished region at the southern tip of Texas that is home to his SpaceX launch site and local officials who help regulate it.
Then, at 8.05 one morning that month, a SpaceX rocket blew up, showering the area with a rain of twisted metal.
The Musk Foundation began giving at 9.27am local time.
Am donating $20M to Cameron County schools & $10M to City of Brownsville for downtown revitalization. Details to follow next week.
— Elon Musk (@elonmusk) March 30, 2021
“Am donating US$20M to Cameron County schools & US$10M to City of Brownsville for downtown revitalisation,” Musk said on Twitter.
Musk, the world’s second-richest person according to Forbes, presides over SpaceX, Tesla and other companies that are pushing the boundaries of technology, while also controlling a social media platform, now known as X, formerly Twitter, through which he promotes his often-polarising political and social views.
At the same time, he runs a charity with billions of dollars, the kind of resources that could make a global impact.
But, unlike Bill Gates who has deployed his fortune in an effort to improve healthcare across Africa, or Walmart’s Walton family, who have spurred change in the American education system, Musk’s philanthropy has been haphazard and largely self-serving — making him eligible for enormous tax breaks and helping his businesses.
Since 2020, he has seeded his charity with tax-deductible donations of stock worth more than US$7 billion at the time, making it one of the largest in the country.
The foundation that houses the money has failed in recent years to give away the bare minimum required by law to justify the tax break, exposing it to the risk of having to pay the government a substantial financial penalty.
Musk has not hired any staff for his foundation, tax filings show. Its billions are handled by a board that consists of himself and two volunteers, one of whom reports putting in so little time that it averages to six minutes a week.
In 2022, the last year for which records are available, they gave away US$160m, which was US$234m less than the law required — the fourth-largest shortfall of any foundation in the country.
Musk is under no obligation to have a charity, and he has made clear that he believes his for-profit enterprises will change the world for the better far more than any philanthropic venture could.
But once he set up a non-profit group and filled it with tax-deductible gifts, he was required by law to ensure his foundation served the public and did not operate for the “private benefit” of its leader.
A New York Times analysis found that, of the Musk Foundation’s giving in 2021 and 2022 — the latest years for which full data is available — about half of the donations had some link to Musk, one of his employees or one of his businesses.
Among the donations the Musk Foundation has made, there was US$55 million to help a major SpaceX customer meet a charitable pledge. There were the millions that went to Cameron County, Texas, after the rocket blew up. And there were donations to two schools closely tied to his businesses: one walled off inside a SpaceX compound, the other next to a new subdivision for Musk’s employees.
“The really striking thing about Musk is the disjuncture between his outsized public persona and his very, very minimal philanthropic presence,” said Benjamin Soskis, who studies philanthropy at the Urban Institute.
Where other billionaires have aimed for a broad impact on society, Soskis said Musk’s foundation lacks “any direction or any real focus, outside his business ventures”.
Musk did not respond to requests for comment.
Musk and his younger brother, Kimbal, started the Musk Foundation in 2001, a year before the sale of PayPal, the online payments company he co-founded, to eBay for US$1.5 billion. He made more than US$175 million in the sale and would seed his namesake foundation with about US$2 million of eBay shares.
The Musk Foundation’s website initially included slick animations, featuring pictures of satellite dishes and children in classrooms, while encouraging people to apply for grants. By 2005, however, it was wiped clean, replaced by plain black text stating the foundation was interested in “science education, paediatric health and clean energy”.
It listed no contact information. It still does not.
By September 2014, Forbes estimated Musk’s net worth was more than US$10 billion, driven up by the value of his holdings of Tesla stock. But he gave little to his own charity. That year, tax filings show, his foundation had US$40,121 in the bank.
That fitted with Musk’s public stance on philanthropy. His for-profit companies, he said, were his way of changing the world.
“Tesla has done more to help the environment than all other companies combined,” he said last year at the New York Times’ DealBook conference. “As a leader of the company, I’ve done more for the environment than any single human on Earth.”
Musk, instead, used his small foundation to help groups tied to him personally, including a food charity run by his brother and a Temple of Whollyness that was set on fire at the 2013 Burning Man festival, an annual event that he often attends.
He also founded his own non-profit school called Ad Astra — Latin for “to the stars” — to explore new ways to teach maths and science.
But that school, too, would serve a personal purpose for Musk. In its first year of operation out of his home in the Bel-Air neighbourhood of Los Angeles, five of Ad Astra’s 14 students were his own children.
“Kindness and eagerness to learn (and parents that worked at SpaceX) were the only criteria for admission,” wrote Joshua Dahn, the initial head of the school.
Ad Astra later moved to SpaceX’s Hawthorne, California, headquarters and grew to more than 50 students. About half were related to SpaceX employees, Dahn said in an email. Dahn’s contract even said the intellectual property he developed at the school would be half-owned by Musk personally, according to a copy obtained by the New York Times.
Two former SpaceX executives, who spoke on the condition of anonymity for fear of retribution, recalled Ad Astra was sometimes discussed as a perk for the children of executives, although it was understood to be nearly impossible for the offspring of rank-and-file employees to gain admission.
Musk made a US$254m gift of Tesla stock to his foundation in 2016, and its grants got bigger, but they still seemed to follow no coherent theme.
The Musk Foundation donated US$10 million to OpenAI — the groundbreaking artificial intelligence developer where he sat on the board of directors. (OpenAI was a non-profit company at the time of the gift, although it has now spun out several for-profit companies.) Musk said in a recent lawsuit against the organisation and its founders that he personally gave an additional US$34m before stopping his gifts in 2020. Musk previously said he had given about US$100 million to OpenAI.
But Musk’s giving often seemed guided by Twitter, where he made splashy promises in response to challenges from internet celebrities: He gave US$1m to plant trees after prompting from YouTuber Mr. Beast and US$1m to help small businesses during the Covid-19 pandemic after a push from Dave Portnoy, the founder of Barstool Sports.
On July 5, 2018, he began interacting with Amariyanna “Mari” Copeny, a youth activist in Flint, Michigan, who asked him for bicycles for local kids and clean water for her city, which was experiencing a crisis with its water supply. Less than a week later, Musk tweeted “a commitment” that he would “fund fixing the water in any house in Flint that has water contamination above FDA levels”.
“Will organise a weekend in Flint to add filters to those houses with issues,” he said in another tweet.
Please consider this a commitment that I will fund fixing the water in any house in Flint that has water contamination above FDA levels. No kidding.
— Elon Musk (@elonmusk) July 11, 2018
Karen Williams Weaver, a Democrat who was mayor of Flint at the time, said the city asked Musk to focus initially on helping schools. The Musk Foundation donated about US$1m to schools, paying to install water filters and buy laptops for students. It also gave US$125,000 to a charity associated with Copeny that aimed to help Flint children.
Flint asked for much more. It sent Musk a four-page letter, asking him to fund new water infrastructure and wide-scale pipe replacements in homes. It also asked Musk to open a research office or manufacturing facility in the city.
Few of those wishes came true. Tesla sent a corporate development executive, who offered rides around the City Hall parking lot in a company vehicle, and Musk briefly considered placing a self-driving AI facility in the city, according to communications obtained by the Times. He also visited Flint and Copeny’s school.
But Tesla never opened an office there. And since mid-2019, the Musk Foundation has not listed any more gifts to Flint for home water filters or other causes.
Still, the mayor said she was grateful. “He didn’t have to do anything,” she said.
At the end of 2021, Musk had a problem. He had exercised options from a stock bonus plan from Tesla that gave him about US$25b of shares in the automaker. But that came with a price.
“I will pay over US$11b in taxes this year,” he later posted.
Tax law gives executives sitting on huge stores of their companies’ stock a way to lower that bill: charity. Musk could donate shares of Tesla, whose stock price had boomed in recent years, to a non-profit company and take a tax deduction based on the value of the stock. It did not matter that he might have paid little to obtain the shares.
In October of that year, Musk had publicly flirted with the idea of a charitable mega-gift. On Twitter, he wrote that if the United Nations World Food Programme could describe how it would spend the money, he would sell Tesla stock and give the programme US$6 billion.
The UN programme replied with a plan, but Musk gave nothing. Instead, Musk gave to his own foundation: 5 million Tesla shares, worth US$5.7b at the time.
The gift tripled the Musk Foundation’s assets and put it among the 20 largest foundations in the country. Tax experts said it could have saved Musk more than US$2b off his tax bill.
More donations from Musk meant more responsibility for his foundation. Tax law requires all foundations to give away 5 per cent of their assets every year, so the Musk Foundation was expected to dole out hundreds of millions of dollars each year.
The foundation did not add paid staff to meet that new benchmark. The only recorded change was a tiny one: Matilda Simon, one of Musk’s family-office employees who also serves as one of the foundation’s three volunteer board members, increased her workload from 0 hours to 0.1 hours, or six minutes a week, according to tax filings.
The foundation’s two other volunteers — Musk and Jared Birchall, who as head of Musk’s family office helps manage his wealth — reported they each worked an hour a week. Simon and Birchall did not respond to a request for comment.
In 2021, the Musk Foundation fell US$41 million short of the minimum required donation, tax filings show. In 2022, it missed the 5 per cent mark by even more: US$193m. That year, Musk’s foundation gave away only about 2.25 per cent of its US$7b in assets, far below the 5 per cent minimum, tax filings show.
With shortfall piled on shortfall, the Musk Foundation was then left US$234m behind by the end of 2022, the fourth-largest gap of any foundation in the country, according to Cause IQ, a firm that analyses charity data.
“It tells you it’s not yet ready for prime time,” said Brian Galle, a professor who studies non-profit law at Georgetown University, referring to the minimal giveaways by the foundation. “It’s not yet a professional organisation.”
The Musk Foundation has not released details of what it gave away in 2023 or whether it made up its shortfall from the year before. If it did not, it could owe a penalty tax equal to 30 per cent of the remaining shortfall from 2022.
Some of the money the Musk Foundation did give away during those years went to groups with no obvious connection to Musk’s businesses.
The foundation, for instance, gave US$112m to the Xprize Foundation, to honour researchers who remove carbon dioxide from the atmosphere and oceans. It gave US$10m to the University of Texas to study human population trends — a matter of concern to Musk, who has said he fears Earth’s population could collapse. That gift was first reported by Bloomberg.
But other grants landed close to Musk’s own interests.
The Musk Foundation, for instance, gave US$5m to a United Nations programme that helps countries identify rural schools that need internet access. In at least two cases, those countries then became Musk’s customers, connecting their schools with his Starlink satellite service.
One of the biggest gifts helped one of SpaceX’s customers: Jared Isaacman, a Pennsylvania billionaire, who chartered a trip to orbit on a SpaceX rocket in 2021. Isaacman said the flight would raise US$200m for St Jude Children’s Research Hospital by raffling one of the four seats on the flight. (Isaacman declined to say at the time how much he paid for the seats he reserved, except that he planned to raise far more for charity than he spent.)
But when Isaacman touched down on Earth, the mission’s Twitter account said it was still short of his US$200m goal.
“Count me in for US$50M,” Musk tweeted back. The Musk Foundation eventually paid US$55m, its largest donation that year.
A few months later, Isaacman announced he would pay SpaceX for three more spaceflights. He declined to answer questions about the flights or Musk’s donation.
Experts on non-profit law said there appeared to be nothing illegal about that gift because it did not involve the Musk Foundation paying Musk or his customer directly.
But Kathleen Enright, the president of the Council on Foundations, said she would have advised Musk to recuse himself from this decision — and let the other members of the foundation’s board decide whether to give. She said that would ensure Musk was not letting the needs of his business control the actions of his foundation, which is supposed to be an independent entity with its own charitable goals.
“It’s not his chequebook,” Enright said. “It’s not a private, family-owned company. It’s a charitable organisation.”
Starting in late 2020, Musk began to shift his business operations from California to Texas, and his charities followed.
The Ad Astra School, which had educated some SpaceX employees’ children, moved to a location near the company’s launch site in South Texas. At first, it seemed to be open to the public, according to an archived version of its website from last year.
But that website disappeared. And the Ad Astra campus was placed behind the security gates of a SpaceX-owned compound. At the campus today, there is no sign of a school, only a security guard in a pickup truck and signs that say “Private Property. No Trespassing”.
Musk has also given US$100m from his foundation to a start-up Texas charity called The Foundation, which says it wants to start schools and eventually a university.
The donation moved money out of the Musk Foundation, helping it get closer to reaching that 5 per cent minimum donation. But it did not move the money out of Musk’s orbit: the new charity is run by Birchall, the head of his family office, and two leaders at Musk’s accounting firm.
Land records show the new charity used a shell company to purchase a 16ha plot of land near Bastrop, Texas. The land is two minutes from a 110-home subdivision that one of Musk’s companies, a tunnelling start-up called The Boring Co, is building for its own workers. Online job postings indicate they are planning to open a new Ad Astra School there this summer. The new charity’s leaders declined to answer questions from the Times.
In South Texas, Musk also used his foundation to rebuild SpaceX’s reputation after the 2021 rocket explosion.
A few days before the blast, Musk had gone to the office of the top elected official in Cameron County, Eddie Trevino jnr, a Democrat, to complain. Musk felt the county, home to Space-X’s Boca Chica launch complex, was taking too long to approve permits and other requests.
Trevino recounted replying that SpaceX needed to do more to help the impoverished community. “I didn’t specifically say, ‘Give us x’,” meaning a specific amount of money, Trevino said. “But I said, ‘Help me raise this community’.”
But after the explosion, the donations Trevino had requested began to flow.
But the money didn’t come from SpaceX. Instead, it came from the Musk Foundation.
The foundation paid at least US$18m to local schools that they used to buy everything from classroom laptops to pop-up planetariums to tools for teaching welding to adults. “Some of those adult learners are now working at SpaceX,” said Nereida “Nellie” Cantu, the top official in the Brownsville school district.
The foundation also paid to fix up Brownsville’s dusty downtown. The result was to provide more upscale restaurants — like Le Reve, Brownsville’s first French bistro — at a time when Musk was trying to entice employees to move there.
Without any staff to handle the South Texas donations, Musk had deputised Igor Kurganov — a friend and former professional poker player who was never listed as an employee of the foundation — as a liaison. Kurganov often drilled local officials on the smallest details, like the colour of the lights on a Christmas display paid for by the foundation: “Cool white strikes me as suboptimal.”
Kurganov, who left the Musk Foundation in 2022, did not respond to requests for comment. Brownsville’s mayor said that so far, Musk’s foundation has given only about US$4.5m of the US$10m he promised for downtown beautification in 2021.
But if Musk’s goal was to improve his company’s public image in Brownsville, the donations appear to have helped.
“He’s given to every organisation that exists here in Brownsville, from our homeless shelters to the city of Brownsville to our school children — almost anything I can ever think of,” Jessica Tetreau, a member of the city commission, said in a video filmed outside Musk’s rocket launch headquarters.
A fresh mural in Brownsville’s downtown depicts the city’s old landmarks — the cathedral, the zoo, the Gulf of Mexico beach — alongside a new one: SpaceX’s rocket complex.
The name of the charity that helped pay for the mural is listed at the bottom left: The Musk Foundation.
This article originally appeared in The New York Times.
Written by: David A. Fahrenthold and Ryan Mac
Photographs by: Meridith Kohut and Philip Cheung
© 2024 THE NEW YORK TIMES
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