The decision by Mark Zuckerberg and his wife, Priscilla Chan, to gradually give away 99 percent of their Facebook fortune is big news not just for the huge sum involved—about $46 billion—but for how the couple chose to achieve their philanthropic goal. Rather than set up a private foundation or charitable trust as Bill and Melinda Gates did, the Chan Zuckerberg Initiative will be structured as a limited liability company.
It's a highly unusual step for a massive philanthropy. "I've never seen someone set up an LLC exclusively for a philanthropic purpose before," says Jane Wales, vice president of philanthropy and society at the Aspen Institute. "Normally they set up a foundation for the tax advantages of doing so." Here are some significant ways that LLC status will shape what Zuckerberg and Chan do with their wealth.
1. There won't be limits on lobbying
It seems clear the Chan Zuckerberg Initiative will put money to work in politics. Facebook, in its official description of its founder's new LLC, noted that "making private investments and participating in policy debates" will be part of the mission. In a public letter Zuckerberg wrote to his newborn daughter, Max, he likewise emphasized an appetite for pushing a policy agenda: "We must participate in policy and advocacy to shape debates." If the charitable venture had been set up as a traditional tax-exempt foundation—what is called a 501(c)(3)— it wouldn't have freedom to lobby lawmakers or engage in other political activities. The Internal Revenue Service prohibits tax-exempt groups from "directly or indirectly participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for elective public office."
Posted by | 12.04.2015 at 8:41 AM