Historically, charitable planning has involved strategies like a charitable remainder trust or perhaps the establishment of a private foundation. Although these are appropriate options for some and can provide both tax and philanthropic benefits, these strategies can come with certain limitations and are not the only options available.

As a business owner, you may recall various famous billionaires, including Mark Zuckerberg and Pricilla Chan, Larry Page, and Warren Buffett, utilizing limited liability companies (LLCs) as a unique vehicle for charitable planning. But charitable LLCs are not exclusive to the ultra-wealthy. In fact, many business owners are discovering the benefits of choosing this strategy in place of a traditional private foundation or charitable trust. These benefits include, but are not limited to:

• Additional tax deductions.
• A charitable tax deduction, while still having limited access to funds.
• Utilizing the LLC in addition to or instead of qualified plans.
• Having control over management of the LLC assets at all times.

In addition, benefits such as control, repayment and privacy, taxes and flexibility, and charitable entrepreneurship have been outlined in more detail below for your consideration.

Control

A charitable LLC allows philanthropists more control, flexibility and privacy over how they invest and frees it from typical charitable restrictions. For example, a charitable LLC can choose to engage in lobbying, policy advocacy and political contributions, while private foundations are prohibited from these activities. With an LLC, owners can contribute to any organization they want, and in many instances, they will realize tax benefits through the LLC if the organization receiving funds is a qualified charity.

Repayment And Privacy

Charitable LLCs do not have to publicly disclose information, and if the LLC is dissolved, its capital can be returned to the LLC's members. In contrast, charitable foundations are required to disclose certain information to the public, including the name and address of any contributor, and if a foundation is ever dissolved, its assets must be submitted to another charitable organization.

Taxes And Flexibility 

Charitable foundations also require donors to contribute minimum amounts each year, and as mentioned above, this must be disclosed to the public. Furthermore, if the minimum contribution amounts are too high, the tax burden that the donor faces may offset the benefits. With a charitable LLC, donors can utilize the tax benefits they choose over time, providing a level of flexibility that isn't available with other strategies.

Charitable Entrepreneurship 

A for-profit organization is typically considered successful based on how much money it makes yearly and depending on how it benefits society or the community in other nonmonetary ways. If the organization loses money, it can offset the founders’ tax liabilities, just like other business losses.

Charitable LLCs allow donors to avoid many of the requirements and restrictions imposed on private foundations. For forward-thinking business owners who are donating larger sums of money, the introduction of a charitable LLC could be a valuable tool. Be sure to research various options before making a decision, and consider partnering with a professional advisor who has expertise in assisting business owners with charitable contributions.

This article was originally published on Forbes.com on October 29, 2019.