Billionaire Brin Sold Tesla Near Its Peak For New Giving Vehicle
Sergey Brin’s latest nonprofit, Catalyst4, offers the Google co-founder tax breaks, as well as increased levels of flexibility, secrecy and political influence.
(Bloomberg) -- Google co-founder Sergey Brin is setting up a new half-billion-dollar nonprofit focused on health and climate change, and filings show the majority of funding so far comes from Tesla Inc. shares.
Catalyst4, the new organization, is a 501(c)(4), which allows Brin to exploit a powerful new philanthropic strategy giving billionaire donors tax breaks alongside unique levels of flexibility, secrecy and political influence.
The Tesla shares were sold by Catalyst4 for $366 million over four days starting Dec. 14, 2021, the filings show. That was around the time of an apparent rift between Brin and the carmaker’s co-founder Elon Musk.
The Wall Street Journal reported in July that Brin, 49, had asked advisers to dump his shares after his wife, Nicole Shanahan, allegedly had an affair with Musk. Musk has since denied the affair, and Brin filed for divorce from Shanahan in January 2022.
Brin, Catalyst4 board members and representatives of his family office didn’t respond to requests for comment.
The two main goals of Catalyst4 are “supporting breakthroughs in the treatment of [central nervous system] neurological diseases/disorders, and in efforts to mitigate and reverse the effects of climate change,” according to a filing with the Internal Revenue Service, which approved its application for tax-exempt status in November.
The 10th-richest person in the world, with a net worth of about $93 billion according to the Bloomberg Billionaires Index, Brin already has his own foundation, which had amassed $4.9 billion by the end of 2021. But by routing donations through a 501(c)(4), he can sidestep foundation rules that bar deploying charitable dollars for business ownership and political activity.
In a filing in May 2022, when Congress was debating an economic and climate bill that would become law as the Inflation Reduction Act, Catalyst4 said it “recently made a grant to another 501(c)(4) organization to support clean-energy legislation.”
Catalyst4 also spent $30,000 on lobbying in the first quarter of 2023, an April 19 filing shows, to push for “monitoring diseases through municipal wastewater systems to inform public health responses.” The organization hired lobbying firm FGS Global on behalf of WastewaterSCAN, an initiative to sample sewer systems for diseases that lists Brin’s foundation as a partner on its website. (Another partner is Bloomberg Philanthropies, founded by Michael Bloomberg, the majority owner of Bloomberg News parent Bloomberg LP.)
Catalyst4’s efforts on “drug discovery and research” will include venture capital investments, according to the May 2022 filing, “focusing on companies that invent, develop and/or commercialize products that address high unmet medical needs” related to the central nervous system. A 2021 tax filing shows 74.25% ownership of Column Group-Neuro, a fund that raised $100 million in May 2021, according to a Securities and Exchange Commission filing. Column Group's founder, Peter Svennilson, didn’t respond to a request for comment.
While 501(c)(4)s have been a part of the tax code for decades, often exploited by “dark money” political funds, prominent billionaires are beginning to use them for broader purposes. Brin joins Patagonia founder Yvon Chouinard, hedge fund founder Ray Dalio and members of the Koch family in embracing the strategy.
Unlike foundations and other 501(c)(3)s, gifts to 501(c)(4)s aren’t deductible on income taxes. But the vehicles can shield donors from paying capital gains taxes, and avoid the estate and gift levy — both of which tend to be more valuable to members of the top 0.1% than a one-time deduction.
Another perk of 501(c)(4)s is secrecy. The links between Catalyst4 and Brin are not readily apparent in filings, which don’t mention his name. However, board members listed as the organization’s president and treasurer are senior executives at Brin’s family office, Bayshore Global Management, which shares a mailing address with Catalyst4.
Other board members are a tax specialist and Ekemini Riley, a managing director at another Brin-backed research group, Aligning Science Across Parkinson’s, or ASAP. Brin has reportedly donated more than $1 billion toward Parkinson’s disease and has tapped Riley as a leader in the efforts.
Catalyst4’s total assets were $469 million at the end of 2021, and the IRS application said it expected another $100 million in donations in 2022 and again in 2023. While selling Tesla stock, Catalyst4 held onto shares in Google holding company Alphabet Inc., filings show, valued at $78 million at the end of 2021.
Foundations generally must spend 5% of their assets each year on charitable donations, but 501(c)(4)s don’t have that same requirement. However, Catalyst4’s filing says it intends to distribute at least 5% per year “to other organizations actively conducting social welfare or charitable activities.”
--With assistance from Laura Davison and Noah Buhayar.
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