Google’s Sergey Brin Dumped $366M Tesla Stock to Start an Unusual Nonprofit

The transaction took place around the time Brin's friendship with Elon Musk began to sour over an alleged affair involving Musk and Brin's wife, Nicole Shanahan.

Sergey Brin in a black suit
Google cofounder Sergey Brin is an early investor in Tesla. Arturo Holmes/FilmMagic

Google (GOOGL) cofounder Sergey Brin dumped $366 million worth of Tesla (TSLA) stock in late 2021—when the electric carmaker’s share price hit an all-time high—and used the money to found a new nonprofit called Catalyst4 Inc, according to a regulatory filing with the Internal Revenue Service (IRS). The transaction took place around the time Brin’s friendship with Tesla CEO Elon Musk began to sour over an alleged affair involving Musk and Brin’s wife, Nicole Shanahan.

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The filing, first reported by Bloomberg on April 22, shows Brin sold his Tesla shares between Dec. 14, 2021, and Dec. 18, 2021. Brin and Shanahan separated on Dec. 15 that year and filed for divorce a month later, according to court records. In July 2022, the Wall Street Journal reported Musk was in a brief romantic relationship with Shanahan in late 2021 and, after learning of the affair, Brin asked his financial advisors to dump Tesla shares.

Musk denied the affair and claimed the Journal report was part of the “character assassination attacks” against him because of his support for the Republican Party during the 2022 midterm election.

“Sergey and I are friends and were at a party together last night!” Musk said in a tweet on July 24, 2022. “I’ve only seen Nicole twice in three years, both times with many other people around. Nothing romantic.”

Brin, 49, is an early investor in Musk’s Tesla. He famously gave the company half a million dollars during the 2008 Financial Crisis and saved Tesla from bankruptcy.

Brin embarks on a philanthropy strategy increasingly popular among billionaires

Brin already has a family foundation that’s registered as a 501(c)(3) tax-exempt organization. His new nonprofit Catalyst4 is a 501(c)(4) organization, according to the IRS. This structure allows its owners and donors to take larger tax breaks than with a 501(c)(3) while retaining a higher level of discretion and flexibility over the use of funds. This uncommon philanthropic strategy was recently pioneered by billionaires like Patagonia founder Yvon Chouinard, Bridgewater founder Ray Dalio and members of the Koch family.

Unlike a 501(c)(3) organization, a 501(c)(4) is not required to spend at least 5 percent of its funds annually on charitable causes—although Catalyst4 said in regulatory filings it intends to distribute at least 5 percent per year to social welfare activities. In addition, gifts to a 501(c)(4) are not deductible on income taxes, but they can shield donors from paying capital gains taxes, which often far exceed income taxes for the super-rich.

Brin’s new nonprofit will focus on treating neurological diseases and mitigating the impact of climate change, according to its IRS filings. The organization had a total asset of $469 million at the end of 2021 and is expected to receive $100 million in donations annually in 2022 and 2023.

Google’s Sergey Brin Dumped $366M Tesla Stock to Start an Unusual Nonprofit