Mark Zuckerberg and Priscilla Chan famously started one to channel their giving. So did Laura and John Arnold. MacKenzie Scott and Laurene Powell Jobs each operate their own. And younger billionaires, like Lukas Walton, continue to embrace them.
I’m referring, as you may have guessed, to the limited liability corporation, or LLC. In recent years, not-for-profit philanthropy has become increasingly reliant on this traditionally for-profit legal structure, which provides numerous advantages for big donors.
Proponents note, accurately, that LLCs can provide a vehicle that both manages traditional grantmaking as well as activities for which foundations are barred or ill-suited, like political donations or venture investments. That’s driven a new generation of billionaires, mostly from tech, to opt for them. Sometimes these donors use them instead of private foundations, other times in combination. At the same time, detractors point out, also correctly, that LLCs can be black boxes, given their minimal transparency requirements, and have no legal commitment to charity.
Amid this debate, it is sometimes lost that these outfits, often called “philanthropic LLCs” — not a legal category, by the way — operate in varied ways, particularly when it comes to how much they disclose.
Some of the best-known givers working through philanthropic LLCs, like the Arnolds, include both foundations and donor-advised funds within their umbrella of giving vehicles, and publicly disclose grantmaking through the former (which is legally required) and even through the latter (which is not). At the other end of the spectrum are LLC donors who may have extensive websites, like Powell Jobs, but are selective regarding what they share about their grantmaking and other philanthropic operations.
The billionaires using LLCs often consider their philanthropic and political giving as part of a spectrum, worth combining into a single vehicle. That may maximize their impact, but for some operations, it means minimal transparency. Just as politics-adjacent giving has become increasingly opaque amid the ascendency of the 501(c)(4), LLCs have made megadonor grantmaking more murky. Gone are the days when you could reliably gauge how a billionaire is exercising their political power (because they gave directly to candidates, who must disclose all donations) or their philanthropic power (because they granted through foundations).
“I think it’s one of our greatest flaws of our legal structure for philanthropy,” Stanley Katz, a Princeton history professor who studies philanthropy, once told me. “These days, if you choose to organize as something other than a private foundation you have no or very little responsibility to release publicly” information about your grantmaking.
Finally, it’s worth noting that the term “philanthropic LLC” — or other terms these big donors use, like “impact platform” — are often just synonyms for a more staid label: the family office. These structures manage donors’ philanthropy, but can also be used for their investments and potentially any other financial needs. Flexibility is the watchword here. While money put into a foundation cannot be taken out, an LLC has no such restrictions. A change of heart or the markets, or even the death of the founder, could lead to the whole structure being downsized or dissolved.
The aim is to give the wealthy folks involved as many options as possible, and the menu includes the possibility of concealing what they’re doing from public scrutiny. But with billionaires in the driver’s seat of an increasingly top-heavy philanthropic sector, and with their hand on the wheel of our electoral system as outsized political donors, it seems critical to examine what we know and don’t know about how they’re using their fortunes to wield influence — particularly when that power is amplified by generous tax breaks.
To try to get a handle on the landscape, I’ve taken a closer look at the current spectrum of philanthropic LLCs, with a focus on billionaire donors and an eye toward disclosure. Below, I’ve classified the five levels of LLC transparency that I see most often, in descending order of openness.
LLCs with foundations
More than five decades have passed since the last major round of regulatory legislation for philanthropy, the Tax Reform Act of 1969. So perhaps it’s understandable that a growing number of megadonors no longer feel a private foundation, as legally articulated back then, accommodates all they want to do. But that doesn’t mean they necessarily want to give through a black box. The members of this first group, to their credit, operate foundations within their suite of entities, giving at least one segment of their larger ventures both transparency and mandated philanthropic commitment.
It’s good to see that many of the best-known philanthropic LLCs fall into this category, including the Chan Zuckerberg Initiative, the Omidyar Network and Arnold Ventures. Various Walton giving vehicles — like Lukas Walton’s Builders Initiative, and Ben and Lucy Ana Walton’s Zoma Lab — also take this form. No matter what happens to the larger LLC, these foundations will go on.
Some of these givers disclose the specific structures they use. For instance, Arnold Ventures states that it comprises not only the Laura and John Arnold Foundation, but also the couple’s Action Now Initiative and donor-advised fund. (Incidentally, the pair were one of the forces behind the Accelerating Charitable Efforts Act, the now-stalled DAF reform bill. But it focused on speeding distribution of funds, not expanding disclosure.) Meanwhile, other LLCs, like CZI, also include a database of their investments. There’s no telling whether any of these voluntary disclosures are comprehensive, but they offer a welcome peek behind the curtain.
LLCs with grantmaking nonprofits
This is, as far as I can tell, a less common setup. Bill Gates, through his LLC investment and advocacy platform Breakthrough Energy, is the megadonor I’ve come across doing grantmaking this way. Yet if the field’s recent evolution and copycat tendencies tell us anything, he is probably not alone. And more may take this path in the years ahead.
How does it work? Breakthrough Energy includes three nonprofits — two 501(c)(3)s and one 501(c)(4) — that channel money from Gates, and potentially from the platform’s other supporters, to grantees. Disclosure requirements mean we can see all the recipients in tax filings, but the donors’ identities are hidden. That makes this setup not nearly as transparent as a foundation, but we can still glean a lot of useful detail.
LLCs with grant databases (but without foundations)
At a glance, the LLCs in this category might seem as open as any of those listed above, or even the most transparent of established foundations. They’ve made it so that anyone can easily look up their recipients, how much they’re getting, and descriptions of the work.
Navigate to the website of the Ballmer Group, for example, and you’ll find a detailed grants database with filters for program area and geography. MacKenzie Scott’s Yield Giving also has a robust database as of late 2022, one that even allows you to export your searches. Similarly, the public presence of Jack Dorsey’s Start Small LLC may be a simple Google spreadsheet, but the effect is the same. The Bezos Earth Fund, too, lists its grants, though in a format that’s hard to tally quickly. But the bottom line for each is the same: apparent transparency about what’s going out and to whom.
But — and this is a big caveat — all these disclosures must be taken entirely on faith. Because they’re LLCs with no foundations involved, these operations are free to list what they want to publicize and omit what they do not. There’s no legal filing against which their lists can be checked. And there’s no telling if an LLC is also backing groups not publicly disclosed, whether through a DAF, direct donation or some other avenue.
LLCs with messaging
This category marks a steep drop-off in disclosure. Essentially, we know these philanthropic LLCs exist, we know their stated priorities, and we might know about some of their awards. But we have no sense of the whole. It’s unclear how much in total is going out the door and who is getting checks. Nor can we tell, when recipients are named, how much they’re getting.
This is, thankfully, a small category. For me, the stand-out example among megadonors is Laurene Powell Jobs’ Emerson Collective. It is both a highly visible philanthropic operation — known in the field and to some extent beyond it — and yet a largely opaque one.
It’s worth acknowledging that Powell Jobs’ philanthropy is complex. She arguably qualifies for several of these categories. Like Omidyar and the Arnolds, she also has a foundation, Waverley Street Foundation. Like Gates with Breakthrough Energy, she also has a whole stable of nonprofits — XQ Institute, College Track, Chicago Cred, Elemental Excelerator, and others — that engage in grantmaking. Yet it appears that those bodies do not cover all of her LLC’s funding, particularly given that Emerson’s priorities also span topics they don’t seem to encompass, like immigration, health and journalism. So while they offer some insight, it’s not quite a picture of the whole.
The black holes
In fairness to all those mentioned above, the most opaque philanthropy is that which goes completely undisclosed. While all of the institutions mentioned above have legal structures that allow them to avoid some transparency requirements, at least they’re publicly known. By contrast, this category is for invisible donors, those who are flexing their philanthropic power without any public acknowledgement.
Staying completely anonymous has plenty of precedent. Chuck Feeney operated what became Atlantic Philanthropies for years before going public. Nat Simons and Laura Baxter-Simons ran the Sea Change Foundation for over a decade via a Bermuda-based entity. C. Frederick Taylor, a donor linked with Wellspring Philanthropic Fund and Sequoia Climate Foundation, was revealed by a 2014 Bloomberg investigation and remains one of the least-known major donors, though those two institutions are both registered foundations.
The reality is that nonprofit donors have plenty of options to remain completely anonymous if they choose, whether by granting through hard-to-trace LLCs, donor-advised funds, offshore vehicles or some combination. Until and if the regulatory regime around philanthropic disclosure ever changes — and that’s a big if — we need to content ourselves with seeing what may often be just the tip of the iceberg.
And that raises the question: How far should the right to philanthropic anonymity extend? Anonymity has long been seen as an inviolable right for philanthropists. Yet there is no upper limit on that right. There is no level of spending — not hundreds of millions or even billions of dollars — at which the public currently has a right to know. With inequality growing and billionaire influence expanding, we’ll see if that lasts.
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