Advice for Jeff Bezos: Social Welfare Organizations as Grantmakers

NYU Journal of Legislation and Public Policy, Forthcoming

32 Pages Posted: 2 Jul 2018

Date Written: June 19, 2018


This paper responds to Jeff Bezos’ request for philanthropic ideas, but with a suggestion for the structure of his grant making. Gifts of appreciated stock should be made to section 501(c)(3) organizations only to the extent that Bezos will be able to use the charitable deduction that the donation generates before it expires. A social welfare organization should receive all other gifts of appreciated stock.

For taxpayers who cannot use a charitable deduction, or are willing to forgo the deduction for significantly greater flexibility, social welfare organizations are the ideal vehicle for grant making. Gifts of appreciated property to them are exempt from tax on the built-in gain and, for super wealthy taxpayers, this exemption may be hundreds of times more valuable than an income tax deduction. Social welfare organizations also are not subject to the private foundation rules, and may engage in unlimited amounts of lobbying and limited amounts of political activity. Donors to social welfare organizations are not subject to gift tax and, with some planning, can avoid estate tax on the donations.

Foreign social welfare organizations can be used to avoid UBTI and, for donors seeking anonymity, failure to file a Form 990 for three years will convert a foreign social welfare organization into a foreign corporation that, while technically taxable, can avoid all U.S. federal income tax.

Social welfare organizations are much better vehicles for the super-wealthy than section 501(c)(3) organizations because the exemption of capital gains tax on the donation of appreciated property is a far more valuable tax benefit than the charitable deduction. Ending that exemption for donations to section 501(c) organizations would restore the traditional hierarchy to section 501(c) and help address income inequality.

JEL Classification: H20, H24, K34

Suggested Citation

Miller, David S., Advice for Jeff Bezos: Social Welfare Organizations as Grantmakers (June 19, 2018). NYU Journal of Legislation and Public Policy, Forthcoming, Available at SSRN:

David S. Miller (Contact Author)

Proskauer Rose LLP ( email )

Eleven Times Square
New York, NY 10036-8299
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Abstract Views
PlumX Metrics