Tags: zuckerberg | komen | charity

Zuckerberg Charity Model Builds on an LLC

By    |   Monday, 14 December 2015 08:20 AM

The old model of the wealthy just giving money away outright to charities during their lifetimes, or as part of their estate planning, may just be a thing of the past.

Just as dynamic and changing the business world is, so must the world of philanthropy change with the times. To say “this is the way it is done” or “this is the way we do it” is not acceptable in business and it should not be accepted in philanthropy.

These very smart and accomplished people understand that the same manner they made their fortunes is the same manner in which they should give it away — if they so choose.

The Zuckerberg model of philanthropy creates an LLC. An LLC is a business structure that combines the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation. It gets its name from Mark and Chan Zuckerberg.

This method of philanthropy is different than the structuring through a traditional foundation that the wealthy find attractive because of the immediate tax benefits they receive, although the direct control over a foundation is more restrictive.

Limited liability companies as a vehicle for philanthropy is not new and some wealthy philanthropists have used it to give them more control over how their money is used.

Traditional nonprofit organizations and foundations, although tax-exempt, face restrictions that for-profit endeavors and political organizations don't.

The Zuckerbergs are not waiting to be philanthropic in their later years they are putting their money to work now and want to be actively engaged and for that they should be applauded.

They are passionate about the causes they believe in, and they see their giving as “investments” that will give them the ability through smart placement to make profits that will in turn be reinvested in philanthropic causes. Brilliant!

I could not agree more with what Mark Zuckerberg said with regard to his reasoning for modeling his giving when he said, "By using an LLC instead of a traditional foundation, we receive no tax benefit from transferring our shares to the Chan Zuckerberg Initiative, but we gain flexibility to execute our mission more effectively."

He went on to emphasize that the focus of his investment and work with the new initiative will initially look at "personalized learning, curing disease, connecting people and building strong communities."

In his Facebook post announcement Mark said, "This enables us to pursue our mission by funding nonprofit organizations, making private investments and participating in policy debates — in each case with the goal of generating a positive impact in areas of great need."

I find that the more the wealthy are engaged actively in the causes and charities they believe in and invested in the more successful their efforts will be. In turn, the organizations they honor will benefit greatly from the active participation of the best and the brightest business people.

I am of the opinion that when charities are challenged and new ideas are introduced and new methods are employed the charity does better in its bottom-line and in its mission.

Nancy G. Brinker is founder of the Susan G. Komen organization.

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The old model of the wealthy just giving money away outright to charities during their lifetimes, or as part of their estate planning, may just be a thing of the past.
zuckerberg, komen, charity
Monday, 14 December 2015 08:20 AM
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