Giving Compass' Take:

• Martin Levine argues that LLCs and donor advised funds remove transparency and accountability from philanthropy. 

• Should major donors be foreced to be transparent about their philanthropic efforts? What are the benefits of public accountability? 

• Read about the need for regulation of donor-advised funds.

The good news is that over the past three years, the Chan Zuckerberg Initiative (CZI) has given over $300 million in grants to support efforts it believes will improve the nation’s schools. This level of funding makes it, according to Chalkbeat, the third-largest private education funder in the nation, trailing only the Gates and Walton Foundations. But in this case, we have the extra twist of non-transparency because of the Initiative’s unusual LLC status.

CZI, which NPQ has followed since its inception, is the mechanism Facebook founder Mark Zuckerberg and his wife created to manage their commitment to use 90 percent of their wealth toward efforts to improve the world. They chose to structure the Initiative as a limited liability corporation (LLC) and not as a philanthropic foundation to provide flexibility in where and how these funds are directed. In addition to flexibility, as we are now learning, this decision brings the ability to limit transparency, or how much information is made available about its operations and how its wealth is used. These limits make CZI less accountable for the impact of how it invests its wealth.

NPQ also recently wrote about the use of DAFs to mask accountability: “In the end…it cannot expect the public to continue to take it on faith that these bodies are managed to the highest ethical standards without more assurances than exist now.” What we now know about CZI tells us this is also true for LLCs. As they grow, so will the urgency of this concern.

Read the full article about transparency in philanthropy by Martin Levine at Nonprofit Quarterly.