Natasha Singer and Mike Isaac of the New York Times write about Facebook chief executive Marc Zuckerberg’s recent decision to create the Chan Zuckerberg Initiative, a new L.L.C. with the express purpose of coordinating the charitable giving of Mr. Zuckerberg and his wife, Dr. Priscilla Chan. The article begins as follows:
The Chan Zuckerberg Initiative, the organization that the Facebook chief executive Mark Zuckerberg and his wife, Dr. Priscilla Chan, introduced this week, has three important letters at the end of its name: L.L.C.
L.L.C. stands for limited liability company, which is a specific type of business structure. The use of such an entity, revealed on Tuesday when the couple said they intended to give away 99 percent of their shares in Facebook during their lifetimes, shines a spotlight on an atypical but increasingly popular financial vehicle in philanthropy.
Traditionally, philanthropists have set up nonprofits to make charitable donations. Under the federal tax code, charities and foundations are required to spend a minimum of 5 percent of the value of their endowment every year for charitable purposes. There is also a nonprofit tax designation for advocacy groups, like the Sierra Club or the American Civil Liberties Union.
But a limited liability company is a structure that acts partly like a corporation and partly like a business partnership. The structure can provide benefits, and specifically one important advantage to the young billionaires: more control. (Some of them are giving away money earlier in their careers compared with benefactors of past eras — like the Rockefellers and Andrew Carnegie, who largely began their philanthropy closer to the ends of their lives.)
Read the full article here.
See also the following articles on the same topic:
- Suzanne Woolley, Four Reasons the Facebook Fortune is Going into an LLC
- Paul Caron, NY Times Debate: Mark Zuckerberg’s Use of a LLC Rather than a Foundation for his $45 Billion Charitable Giving
- Pui-Wing Tam, Daily Report: Mark Zuckerberg Explains His Use of Limited Liability Company
Posted by Logan Davis, Associate Editor, Wealth Strategies Journal.