Dana Brakman Reiser of Brooklyn Law School on Charitable Sector Reform

Well, and so this is where I think your book shifts into a really powerful story of the policy settlement starting to come unwound or being bypassed by these different strands.

So the rise of LLCs like the Chan Zuckerberg Initiative or the Emerson Collective, the rise of donor advised funds.

an increasing use of those, and then also more and more corporations giving not through corporate foundations, which are kind of subject to many of these same regulations, but just out of their own coffers as part of their business operations.

Right.

And I think one of the really powerful contributions of your book, as you were saying earlier, is the extent to which, while these are quite different organizations, approaches and techniques used by different types of entities, individuals, institutions, there are some common threads to them that you describe under the rubric of for-profit philanthropy.

So say a bit more.

When you think of for-profit philanthropy, before we get into these specific, you know, vehicles for it.

What are the things that for-profit philanthropy is doing that kind of run against the principles embedded in this grand bargain of 1969?

Sure.

So the idea of for-profit philanthropy is when you see elite, or our idea is when we see elite donors, right, as you said, could be individuals, could be organizations, but elite donors who are, uh, adopting the practices, affiliating with the players, and taking on the kind of norms of the for-profit sector, and using those players and practices and norms to influence how they do philanthropy.

And all the examples that you mentioned are illustrative of that move.

They're not the only ones, but They're very important developments that we thought would help us tell this story.

And what they're all doing is they're all opting out of foundation regulation.

So if you use a limited liability company to operate your philanthropic activity, you are not going to be subject to the private foundation rules because a limited liability company is not going to be tax exempt when used in this way.

And so it doesn't have to worry about being classified as a private foundation and being subject to the rules.

Similarly, a donor advised fund through a kind of complex regulatory policy settlement, maybe of its own, um, is also not treated as a private foundation, although it operates very much like a miniature private foundation for the donors.

Um, and for very wealthy donors, if we're talking about, you know, billion dollar donor advised funds, which existed, it seems to be almost exactly like a private foundation, um, but not subject to those rules.

When corporations either hive off or choose not to use a corporate foundation for some of their charitable giving, they do the same thing.

And what they're avoiding is limitations on self-dealing, right? So you can get a lot more perhaps sweetheart deals, but perhaps co-creation, right? Where you can involve the donors and the donors-related businesses in what the foundation is doing to create a synergy that might create more value, more social value towards your goals.

You avoid those limitations on political activity, right? So when you use an LLC, you can have the LLC make political contributions like any other individual.

You're still subject to campaign law, right? That's campaign finance law.

That's not something you can get out of based on this choice.

But the strong bar that we were talking about is eliminated.

You also... avoid the payout requirements.

And donor advised funds have been much discussed for this reason, based on this reason.