Twitter’s Jack Dorsey gives nearly $400m less to charity than the $1 billion he claimed

Billionaire Twitter founder Jack Dorsey has given nearly $400 million less to his coronavirus relief effort than the ‘billion dollars’ he claimed, federal documents reveal.

Earlier this month Dorsey tweeted that he would be donating $1 billion – which he said was about 28% of his wealth – to a fund he set up to help people hit by the coronavirus crisis.

Rather than creating a traditional charity which would be subject to public scrutiny, Dorsey announced he would be moving the money to Start Small LLC, a company he set up to distribute the funds.

Dorsey tweeted a link to a Google document showing that he would move 19.8 million of his shares in his payments app Square to the company, worth about $998 million that day, and pledged to list online all of the donations the company will make.

But Securities and Exchange Commission (SEC) documents released last Tuesday show that Dorsey has in fact moved 12,080,574 shares, worth about $607.8 million on the day of the move, to the company – $392.2 million less than the $1 billion he claimed.

The shares were worth $708 million Wednesday – $292 million less than the $1 billion he originally said he was giving, and $458 billion less than the figure he currently values his donation at on a Google document showing where the money is going.

Though still a sizable sum and worth about 20% of his wealth, the funds are worth $388.7 million less than the total he suggested he was giving.

The SEC form shows Dorsey made a ‘bona fide gift’ of 12,080,574 shares, just over 20% of his equity in the app, to Start Small LLC.

The 7.75 million extra shares Dorsey claims he donated to Start Small LLC are in fact still owned by the tech billionaire through a trust, the Jack Dorsey Remainder Trust. All his other shares in Square are held by the Jack Dorsey Revocable Trust.

For years the Silicon Valley scion has used mysterious methods to organize his philanthropy.

Just before Square’s IPO, Dorsey incorporated Start Small LLC – the recipient of the shares to fight coronavirus – in October 2015 in Delaware, the state with the most opaque corporate transparency rules.

The agents on company documents are Tom Van Loben Sels, a partner at a Palo Alto tax consulting firm also used by Facebook co-founders Mark Zuckerberg and Chris Hughes; and Audrey Scott, partner at another San Francisco law firm who specializes in estate and charitable planning.

Silicon Valley billionaires including Facebook’s Mark Zuckerberg and Dorsey have been criticized for using for-profit companies rather than charities for their philanthropy, as for-profit companies do not have to publish where their money is being donated, are able to give to political campaigns and can make for-profit investments.

Dorsey has made previous pledges to donate Square stock to charity.

Despite his claims that he created Start Small LLC to manage his charitable donations, a letter to investors ahead of Square’s IPO in November 2015 said that the app would be donating shares not to Dorsey’s charitable LLC, but instead to ‘the Start Small Foundation’.

‘The Start Small Foundation was created by Jack Dorsey, Square’s co-founder and CEO, to meaningfully invest in the people who inspire us: artists, musicians, and local businesses, with a special focus on under-served communities around the world,’ the letter said.

‘When you buy stock from this offering, the proceeds from the sale will go to support the Start Small Foundation.’

As well as his LLC, Dorsey did create a registered charity called the Start Small Foundation in 2014. But IRS documents say the nonprofit ‘did not have any assets during its existence’ and was shut down in 2018.

In a July 2015 response to Square’s application for an IPO, the commission requested further information on Square’s philanthropic arrangements.

‘We refer to the penultimate paragraph of the letter from your chief executive officer, which states that Mr. Dorsey has transferred shares of equity in the company to the Start Small Foundation. Please explain what is meant by the statement, “Square customers will have the ability to buy equity in support of the foundation…,”‘ the SEC letter said. 

Instead of using his registered charity or his LLC for donations of Square stock during its IPO, Dorsey instead set up a third method – a ‘donor advised fund’ with the same name under the Silicon Valley Community Foundation, a $13.5 billion charity favored by other Bay Area titans including Facebook, WhatsApp and GoPro.

The non-profit was rocked by a scandal in 2018 when employees blew the whistle on the charity’s top fundraiser Mari Ellen Loijens for allegedly bullying staff, threatening violence, making sexually and racially insensitive comments and demeaning her colleagues.

Loijens resigned, along with the organization’s chief executive and head of HR after an internal investigation upheld the complaints, according to the investigation report by law firm Boies Schiller Flexner.

A July 2018 report by DC think tank the Institute for Policy Studies said donor advised funds were often being used as a tax shelter for the rich.

‘At a time of staggering inequality, wealthy individuals are using donor-advised funds, or DAFs, to claim substantial tax benefits, while often failing to move funds in a timely manner to independent nonprofits addressing urgent social needs,’ the report said, although it did not identify Dorsey’s fund in its report.

When giving to a donor advised fund, the giver gets an immediate tax break, but there is no time limit for when the money has to be put to charitable use, unlike in a normal registered charity.

Though the charity that runs the donor advised funds must report its giving to the IRS, each donor avoids reporting where their money is going when they contribute to such funds.

Dorsey has also appeared to exaggerate his philanthropy in the past.

In a January 2019 interview with Rolling Stone Magazine, over a year before his $1 billion charity pledge this April, the CEO said he had already given more than half his Square shares to charity.

‘I gave most of my Square equity to this [Start Small] foundation’, he told the magazine.

In fact, Dorsey owned nearly 60.5 million shares of the payments app at the time, having started with 71.1 million when the company went public, SEC documents show.

In 2015, when Square was planning to go public, he pledged to donate 40 million or 10% of the company to the purported charity.

But SEC documents show that by December 2016 Dorsey still owned 67,190,332 shares and only 619,000, or 0.9%, had been transferred to Start Small LLC.

Another filing five months later shows that Start Small’s share had actually fallen. The SEC report, dated May 30 2017, shows Start Small owned just 41,500 shares, or less than 0.07%.

Dorsey’s philanthropy is perhaps less high profile than his lifestyle. 

Despite access to the top fitness experts being a possibility, Dorsey, who works from home on Tuesdays and Thursdays, simply does seven minutes of exercise per day using the Seven app.

‘I don’t have a personal trainer. I don’t go to a gym,’ Dorsey previously admitted. 

But he gets additional exercise in by walking briskly for an hour and 15 minutes every day to work, allowing him to soak up some vitamin D through sun rays.

Dorsey was vegan for two years but switched to the paleo diet after his mother pointed out he was turning orange from too much beta kerotine.

On a daily basis, Dorsey alternates between a 37-degree ice bath and a 220-degree barrel sauna for 15 minutes. 

He follows up his first sauna of the day with a ‘salt shake’ for breakfast – a mix of salt, water and lemon. This is the only thing he consumes until his evening meal. 

He completes three ice baths and three sauna sessions daily, according to Vanity Fair.  

That would mean he spends a total of 45 minutes in a sauna that’s only 10 degrees cooler than when World Sauna Championship competitors collapsed after spending only six minutes in a sauna.

Dorsey previously posted online about dealing with stress through Vipassana meditation and even went to Myanmar in 2018 for a ‘retreat’ where no reading, writing or devices are allowed.