With the news last week that Dr. Peter Buck bequeathed his 50 percent stake in Subway to the Peter and Carmen Lucia Buck Foundation, I think it’s safe to say that donating your company to a nonprofit is now a trend.

Last year, we saw Patagonia Founder Yvon Chouinard donate 2 percent of the company to the Patagonia Purpose Trust and 98 percent to the Holdfast Collective, a 501-c-4 nonprofit. Also last year, we saw Barry Seid, an ultra-conservative donor, give his $1.6 billion company to the Marble Freedom Trust, a 501-c-4 nonprofit.

This phenomenon is not entirely new — the Otto Bremer Trust, a private foundation, has owned Bremer Bank for decades — but I do sense that this approach is gaining popularity.

One major driver of this trend seems to be avoiding taxes. By donating their companies to nonprofits, these wealthy individuals avoid virtually all taxes on their fortunes. For some, this is the classic “win-win” scenario, where both donors and non-profits get what they want or need. But with the ultra-wealthy already having an oversized influence in our democracy, is this really where we want philanthropy to go?

And that’s not the only important question we should be asking.

Private foundations are required to spend 5% of the value of the corpus annually on grants and other qualifying distributions. When all of your assets are illiquid (shares of a privately held corporation), how do you generate enough cash to meet your payout requirement?

Otto Bremer Trust was concerned about this as the value of the Bank skyrocketed in recent years, but they have been able to make it work thus far. Will they be able to meet payout in the future without selling the bank?

Will the Peter and Carmen Lucia Buck Foundation generate enough cash from franchise fees and royalties to meet a payout requirement that will be approximately $280 million annually based on assets of $5.6 billion? Alternatively, it is rumored that a sale of Subway is in the works, which would solve this problem. The foundation would presumably take the proceeds from the sale and invest broadly to generate returns, as other private foundations do.

By donating their companies to nonprofits, these donors avoid virtually all taxes on their fortunes. I believe that tax policy should incentivize charitable giving. And giving to nonprofits is better than passing the wealth to heirs. But do we really want wealthy individuals to be able to avoid all taxes on the growth of their assets in this way?

Read the full article about donating companies by Aaron Dorfman at the National Committee for Responsive Philanthropy.