Mission Is Not a Tax Code Classification

Form should follow function and when it comes to choosing an organizational structure, mission matters more than tradition and tax codes.

Mark Zuckerberg and Priscilla Chan’s decision upon the birth of their daughter to devote their vast fortune to good works can be seen as another indication of the blurring of organizational types. The Chan Zuckerberg Initiative will channel their billions through a limited liability corporation, rather than a traditional foundation as Bill and Melinda Gates did.

Some have criticized this decision. From what I learned setting up Signature i as an LLC, this form of incorporation is designed to limit personal or corporate liability and offers only marginal tax advantages.  What an LLC does offer is operating flexibility.  The Chan Zuckerberg Initiative will be freer to take their money wherever their mission leads them and spend money in ways that are  more innovative than the rules governing 501 (c) 3 organizations and foundations.  

It is way too early to pass judgement on the Chan and Zuckerberg motives or their decision. But their choice is a clear signal that strong missions can live in lots of different organizational forms. For some years, I have forecast the blurring of organizational types—nonprofit and for-profit and all the flavors within those two categories.  We have nonprofits operating as social enterprises.  We have for-profits pursuing socially-responsible missions that are turning that old adage “no money, no mission” into “get money, do mission”.

The one common factor that all organizations striving to serve the common good need is trust among their stakeholders. Building that trust requires dialogue, transparency and accountability. This is true whether your organization is a 501(c) 3, (c)) 6, LLC or some other corporate form. Whether your organization is a venerable institution with a granite headquarters with thousands of employees or a virtual organization with a network of staff, consultants and freelancers. What you do matters more than how you are organized. 

The environment is growing agnostic on corporate structures and tax codes. The mission is what matters; the proof that you have the right organizational structure will be in the outcomes you achieve. Someday people will describe their organizations first by what they do and only tell you what form or type they are after you persist in asking about their business model.