An LLC? It Gives Facebook Founder More Freedom To Meet Philanthropic Goals Creating a for-profit company to manage his $45 billion pledge means Mark Zuckerberg is giving himself flexibility in deciding the best way of tackling the social issues he cares about.
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An LLC? It Gives Facebook Founder More Freedom To Meet Philanthropic Goals

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An LLC? It Gives Facebook Founder More Freedom To Meet Philanthropic Goals

An LLC? It Gives Facebook Founder More Freedom To Meet Philanthropic Goals

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LINDA WERTHEIMER, HOST:

Some people pass around cigars to celebrate the birth of a new baby. This week, Mark Zuckerberg and his wife, Priscilla Chan, did something a bit more impressive. But their $45 billion philanthropic pledge actually will not be parked inside a nonprofit foundation. Instead, the couple is creating a for-profit company to give away the money. NPR's Chris Arnold reports.

CHRIS ARNOLD, BYLINE: Zuckerberg and Chan hinted at the types of causes they might support in a video that they posted on Facebook.

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MARK ZUCKERBERG: You know, what does it take to make it so people don't get sick anymore? Could we build more inclusive and welcoming communities?

ARNOLD: They have donated to health care and education in the past. But this time, it appears that they'll be giving away billions of dollars through a for-profit company - an LLC.

PAUL BREST: He's giving himself a huge amount of freedom. He and his wife are a very young couple. And they're giving themselves the freedom to decide what will be the most effective way of dealing with the social issues they care about.

ARNOLD: Paul Brest is a professor at Stanford and the former president of the William and Flora Hewlett Foundation. He says one big difference between a nonprofit and a private company? Politics.

BREST: A foundation itself is not allowed to do what the Internal Revenue Code defines as lobbying. If you're trying to achieve a social end through advocacy, you're going to find yourself very constrained, whereas if you're just paying it out of your own pocket - if you're a company or an LLC - there are really no constraints at all, at least imposed by the tax code.

ARNOLD: In a public letter to his newborn daughter, Zuckerberg said about his philanthropic goals, quote, "We must participate in policy and advocacy to shape debates." Mollie Cullinane runs a law firm that specializes in philanthropic giving. She thinks that creating an LLC instead of a nonprofit looks like a move by Chan and Zuckerberg -

MOLLIE CULLINANE: To get more deeply involved in advocacy and promotion of certain causes that other charities and foundations can't speak out about as loudly.

ARNOLD: Zuckerberg himself doesn't fit into an easy political definition. He and Chan support clean energy and solving climate change, and have taken a more liberal stance on immigration reform. At the same time, Zuckerberg's donated money to both Democrats and Republicans, including Marco Rubio. But beyond politics, there are other ways that an LLC or a private company will give the couple philanthropic flexibility. Paul Brest.

BREST: There's a whole new area opening up, so-called impact investing, where you invest in a for-profit organization that has a social mission.

ARNOLD: So the couple might invest in clean energy companies, for example, and could make money off of those investments. Foundations can do some of that, but -

BREST: You are freer from any restrictions if you simply do it through a private company.

ARNOLD: Both Brest and Cullinane say they're excited to see what kinds of innovative ways that the couple puts their money to work. Chris Arnold, NPR News.

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