Professor Dana Brakman Reiser's Disruptive Philanthropy: Chan-Zuckerberg, the Limited Liability Company, and the Millionaire Next Door provides "the definitive explanation" for the "seemingly bizarre choice" by some philanthropists to pursue their charitable goals using a for-profit vehicle (like an LLC) rather than a traditional charitable entity (like a private foundation). This review essay explains that as long as there is a federal estate tax, that decision is likely to represent only a one-generation delay in the use of traditional charitable entities for those philanthropists whose estates are subject to the federal estate tax.

For at least two distinct reasons, the growth of the phenomenon is still potentially harmful and worthy of extended study of the type Reiser has begun. First, under current law the federal estate tax only applies to a tiny minority of estates -- less than one in a thousand -- and may still be repealed entirely. For estates not subject to the tax, the Philanthropy LLC could become a multi-generational dynastic choice, with all the perils the Reiser identifies. Second, even when the Philanthropy LLC lasts only a single generation, it has the potential to confuse stakeholders about its creators' philanthropic commitments. The agency theory of the nonprofit firm suggests that the vitality of the charitable sector depends on the ability of stakeholders (including but not limited to donors) to identify those firms subject to the regulation of nonprofit organizations. To the degree to which the rise of the Philanthropy LLC makes that identification harder, its existence or growth could potentially damage the whole nonprofit sector.