Dozens of wealth managers, financial planners, accountants, attorneys, foundation professionals and philanthropy advisors came together on April 19 in a beautiful conference room at Bernstein with sweeping views of Central Park to launch a new chapter of Advisors in Philanthropy (AiP) in New York City. AIP’s mission is to inspire and educate advisors, helping them make philanthropic planning an integral part of their practice.
Don Kent, Principal and Financial Advisor at Bernstein Private Wealth Management, generously hosted the opening reception followed by an engaging program entitled “The Chan Zuckerberg Initiative: Game Changer of Philanthropy Disruptor.” Pam Averick, board member of AiP, welcomed the guests and announced that AiP’s NYC chapter was up and running. Don Kent kicked off the program and introduced the moderator, Jacky Valouch, Vice President & Charitable Planning Consultant at Fidelity Charitable. The panel featured David Dubrow, Director of Family Wealth Planning, Perelson Weiner LLP; Thomas J. Pauloski J.D., National Managing Director-Wealth Planning and Analysis Group, Bernstein Private Wealth Management; and Walter Sweet, Vice President, Rockefeller Philanthropy Advisors. The panel examined the pros, cons, and ramifications of the formation of The Chan Zuckerberg Initiative, a limited liability company whose mission is to “advance human potential and promote equality in areas such as health, education, scientific research and energy.”
David Dubrow provided context for the magnitude of the $45 billion committed to the LLC, which is in addition to $1.1 billion that Chan-Zuckerberg has donated to their donor advised fund at the Silicon Valley Community Foundation. The significance of this is apparent when compared to the $358 billion total contributed to charity from other foundations and traditional vehicles in 2015. He explained that the LLC (limited liability company) is a structure that acts partly like a corporation and partly like a business partnership and overs several advantages over the typical private foundation or CLAT by providing the most flexibility, control, and privacy. The LLC does not have a 5% distribution requirement like the private foundation nor are there public filings. In addition, the LLC postpones the time for actually making distributions to charity which is an important consideration since he is still very young and new to philanthropy. An LLC may be more suited the “solving the issues” strategy favored by Zuckerberg and younger philanthropists. However, an LLC is not a charitable entity and therefore putting cash or stocks into an LLC does not result in any charitable tax deduction.
Tom Pavloski saw the use of the LLC as consistent with the primary concerns in estate planning: providing for self, family, charity, and working to reduce the amount taken by the government. He commented that creating the LLC with the stated intent of supporting charities was akin to a chess game where you make a move but don’t take your finger off the piece — publically announcing your intent to give, but waiting for the most advantageous time and funding opportunities. He said that sometimes it makes sense to delay charitable deductions for when you have a delayed compensation payout or are facing tax consequences that need to be offset.
Walter Sweet from Rockefeller said that deploying assets for social impact and social enterprises (as opposed to grant-making) isn’t new; it’s a strategy that had been employed by the Rockefeller Family years ago. He mentioned that these younger wealth creators want to do more than just write checks, but also use their contacts, connections, tools, and marketing ability to help charitable organizations become successful and sustainable. Walter also discussed how younger funders may want a broader range of options for creating social change such as funding advocacy and lobbying (not permitted with a private foundation), and supporting socially responsive business ventures.
A lively Q&A session followed the panel discussion. “Advisors and not-for-profit professionals are trying to understand how this initiative may influence other philanthropists going forward,” noted Ellen Israelson, AiP board member and VP of Jewish Communal Fund. “AiP plays a significant role in bringing together philanthropy experts to provide information and analysis on current trends.”
AiP will hold its next program, Table the Truth featuring financial and legacy advisor and author Todd Fithian, on June 21. Details and registration available at http://www.advisorsinphilanthropy.org.