Goldman books $450M charity charge from SpaceX windfall

Goldman Sachs booked about $450 million in charitable contributions in the third quarter. The bank paid for the donations with part of the money its wealthy clients made from SpaceX's record initial public offering. Goldman said the expense cut diluted earnings per share by about $1. The bank reported the charge Tuesday, Oct. 13, alongside results that still came in strong.

Bloomberg reported that the bank used its share of the clients' one-time gains to "pull forward $450 million of charitable giving". The money went to Goldman Sachs Gives, the firm's donor-advised fund. The earnings release recorded the donations under other expenses and said contributions to the fund were "significantly higher" than a year earlier.bloomberg+1

Strong quarter despite the charge

Goldman reported net revenues of $18.68 billion and net earnings of $5.29 billion for the quarter ended Sept. 30. Diluted EPS was $17.01, compared with $12.25 a year earlier. On the earnings call, Chairman and CEO David Solomon said EPS would have been about $18 without the accelerated contribution. He said return on equity would have been roughly 20% instead of the reported 18.7%.goldmansachs+1

Operating expenses rose 20% from a year earlier to $11.31 billion. The bank said the increase came mostly from transaction-based costs, higher pay tied to better results and the bigger charitable contributions. Revenue was helped by record advisory revenue and a 72% jump in equities revenue, according to a summary of the call.marketbeat+1

The SpaceX connection

More than five years ago, Goldman helped wealthy clients invest in Elon Musk's SpaceX. The rocket maker went public earlier this year at a valuation of $1.77 trillion. Clients who sold shares after the listing made large gains, and Goldman earned several hundred million dollars from the arrangement, according to reporting summarized by TokenPost. PANews, citing Bloomberg, said the bank's share was hundreds of millions of dollars.tokenpost+1

In September, Solomon signaled that Goldman might use the windfall to speed up its charitable giving because doing so would be more tax-efficient. Bank management again described the move as a tax-efficiency measure: making future charitable commitments now, while the one-time income is on the books.panews+2

Taken together, the disclosures show that the SpaceX listing paid off for Goldman's private wealth clients, and that the bank chose to turn its share into charitable donations rather than keep it as profit for the quarter.