In December, Mark Zuckerberg created a small media frenzy with the announcement that he and his wife (Dr. Priscilla Chan) would give away 99 percent of their Facebook billions. What received less attention was their intended use of a limited liability corporation as a vehicle for this giving. The Zuckerbergs explained that the use of the LLC would give them greater flexibility to support charitably-minded entrepreneurs, whether these entrepreneurs led nonprofit or for-profit entities.
An LLC can be an innovative tool for philanthropists, just like donor advised funds, private foundations, and lead trusts — all of which we discuss with our clients.
But let’s be clear about this: Giving funds to an LLC that you control is not “giving it away” by any definition. In the end, the Zuckerbergs may or may not make gifts from their LLC that qualify as charitable deductions. And they may very well make investments in startups that have a charitable mission or community focus. History will determine whether the Zuckerbergs have honored their pledge in either the technical requirements of charitable giving or in the spirit of being charitable. But transferring funds to an LLC is not charitable.