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DAFs are wealthy founders’ charitable tax loophole of choice. What are they? The Hustle Sponsored by Donor-advised funds are the tax loophole of choice for tech founders in the past decade Backlash is growing against a recent trend in charitable...
By: Wes Schlagenhauf
August 6, 2018
DAFs are wealthy founders’ charitable tax loophole of choice. What are they?
Essentially, a DAF allows donors to set up a tax-advantaged charity account, without having to disclose details about how they allocate the fund money.
Case in point: When GoPro IPO’d, Nick Woodman gifted a large amount of his $500m in company stock to the “Woodman Foundation,” managed by Silicon Valley Community Foundation (which currently oversees $13.5B in assets -- more than the Ford and Rockefeller Foundations combined).
But, 4 years later, The New York Times notes that the Woodman Foundation has no website and there is no record of grants by the foundation to nonprofits aside from a donation to the “Bonny Doon Art, Wine, and Brew Festival.”
You get what you give
Donating allowed Woodman (and many other founders on the verge of a large cash or stock windfall) to avoid paying capital gains tax on his $500m worth of stock, likely saving him “tens of millions of dollars” per Forbes’ estimate.
And, while Woodman’s tax savings were pegged to GoPro’s shares at their all-time high ($95 in 2014), the value of his fund tumbled to less than $6 a share in 2018.
Now Congress is stepping in
Congress and the IRS has requested reform proposals for charitable organizations like DAFs.
Proposed solutions including requiring DAFs to distribute their funds within a certain number of years, delaying donor tax benefits until funds are paid out, and changing the dividend incentives for fund managers.
As for the mega funds? They just want everyone to “acknowledge their self-policing efforts.”
Whaddya want, a medal?
Peloton isn’t a just bike company, it’s a $4B media behemoth
Makers of $2k subscription spin bike Peloton are raising $550m in funding -- their last, according to CEO John Foley, before an IPO expected next year.
The new financing will more than double the cash in Peloton’s handlebar basket and put the 6-year-old company at a $4B+ valuation.
What differentiates them from other trendy fitness franchises like, say, SoulCycle (valued around $1.2B)?
Rather than relying on swanky gyms and locker rooms filled with Keel’s body lotion, Peloton has cracked the holy grail of subscription media.
Stay in, work out
Peloton doesn’t just sell a high-end, proprietary spin bike. It also sells $39/month subscription workout classes streamed live by trainers at their HQ straight to monitors attached to the bikes.
That gives Peloton up-front capital from new customers to reinvest in their business, plus recurring revenue that they can scale via new workouts and programs like stretching, yoga, and strength training.
And the best part? They can enter new markets around the world, without having to invest in brick-and-mortar gyms.
Just keep spinning
According to Peloton co-founder and CEO John Foley, Peloton is on pace to pull in over $700m in revenue this year — 100% year-to-year revenue growth from last year.
The company could reportedly lose money in the second half as it prioritizes expansion, including a 35k-square-foot production studio in Manhattan, a 25k-square-foot customer support center in Texas, and — of course — a $4k connected treadmill.
Financial troubles mean the NRA may soon ‘be unable to exist’
In recent court filings obtained by Rolling Stone, the National Rifle Association gun lobbying group warns that it is in dire financial straits and could soon “be unable to exist.”
They’re doing just ‘fine’
Well, “fined.” The NRA has been suing New York Gov. Andrew Cuomo and New York state’s financial regulators since May, after they were forced to pay a $7m fine for selling an illegal NRA-branded member liability insurance policy to cover legal costs in self-defense shootings.
The NRA’s lawsuit claims that New York violated its First Amendment rights, and the “aggressive” campaign to “politically blacklist” the organization has taken “tens of millions of dollars” from the gun group.
The group also says they’ve lost insurance coverage and could be forced to shut down their headquarters and media entities (including NRATV, which apparently exists) and stop holding rallies and conventions.
But New York is sticking to their guns
On Friday, New York state filed to have the suit tossed out. Then Saturday, Cuomo publicly accused the NRA of “political bullying,” and Sunday he released an ad calling on other states to outlaw the NRA’s insurance program as well.
Then again, according to a ProPublica investigation, the gun rights advocate also overspent by $46m in 2016. So, we’ll let you draw your own conclusions…
Google is renaming neighborhoods, whether residents like it or not
Spoiler alert: They don’t.
The New York Times reports that a nearly 170-year-old district south of downtown San Francisco locally known as SOMA (South of Market) was rebranded on Google Maps last spring as the “East Cut.”
Turns out people aren’t into it: According to a survey taken of 271 neighbors in the area, 90% of the participants reportedly disliked the name. Unfortunately, what’s done is done.
Since it hit the maps, the name change spread digitally, from hotel sites, to Uber, and into the real world. Real estate listings brought potential tenants to the “East Cut,” and news orgs belted it out across the airwaves.
Own the maps, own the districts
In May, more than 63% of people who accessed a map on a smartphone or tablet used Google’s maps.
That gives a few Google cartographers and their software (which arrives at place names based off of third-party data, public sources, satellites and users) a whole lot of sway.
And there have been issues...
Back in 2002 -- as a side project -- a Detroit city planner created a map based off his own local knowledge. In 2012, Google copied the planner’s map verbatim... even the typos.
For example, a district known for years as Fiskhorn was mistakenly copied as Fishkorn, and some residents and local businesses adopted the name.
Some of Google’s decisions have much heavier consequences, nearly provoking an international incident in 2010 after it fudged the boundary between Costa Rica and Nicaragua.
1,759 miles separate The Hustle team, but Highfive makes us family
Little known fact: The Hustle has two offices.
Our HQ sits smack-dab in the middle of San Francisco’s SOMA neighborhood, but our sales team is in Austin, TX -- and our writers, well, they move with the wind.
Keeping tabs on those silver-tongued Texans and remote wordsmiths would be damn near impossible without our most-used tool -- Highfive.
“Highfive saved our sanity”
Before Highfive, we tried everything. FaceTime. Free video conferencing from the Googs. Can and string.
It was like playing roulette -- sometimes it worked, most of the time it didn’t. And when it’s an advertiser on the other end, a dropped call doesn’t scream, “Let’s make a deal.”
Now, our video conferencing is a well-oiled machine.
With Highfive’s integrated software and hardware, we can meet instantly, anyway we want. Whether we’re on a smartphone, laptop, or the conference room equipped with Highfive hardware, it just works. No app downloads or annoying pin codes needed.
And starting a video chat is as easy as clicking a link or entering your phone number -- they’ll dial you into the meeting.
But don’t take our word, see for yourself: Try it risk-free.
If you’ve been reading the last few weeks, you’ve probably noticed some changes. Mainly the native ads have slid up the email to follow the briefs. It’s a small change, and it’s likely you didn’t notice it.
So, why’d we do it?
Good question. I’ll chalk it up to balance.
By moving the ad closer to our daily briefs we’ve made the content more native -- it just flows. Our advertisers get the opportunity to pitch exciting, useful products and you get the fresh, quippy content you crave without disruption.
That said, I get it. Good ads can go bad fast -- and that’s coming from the guy whose job it is to make ’em. Which is partially why I do everything I can to ensure our advertisers are vetted, honest, and 100% USDA no BS.
But, if you do feel like our advertising is ever too aggressive, cheesy, or downright dishonest, let us know. That ain’t cool.