The vehicle, long deemed a dumping ground for nonprofits like low-income housing developers, Rotary International and even the AARP, drew controversy in the past decade as a “dark money” political giving tool. Now it’s attracting billionaires who realize it offers far more.

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The most important quality of the so-called 501©(4) organization boils down to one word: control.

Control over their business. Control over political influence. Control over disclosure. Control over taxes. And, of course, control over the crucial soft power of charitable giving.

All in one place.

Gone are the days of steel baron Andrew Carnegie, who followed the tried-and-true path of minting a vast fortune, selling the business and then devoting time and energy to giving the money away. The key advantage of 501©(4)s (hereafter: C4s) — made clear earlier this year by Patagonia founder Yvon Chouinard — is the ability to tap the illiquid wealth of entrepreneurs and owners of private family businesses, without demanding that they step away.

Proponents of C4s argue they have the potential to break a philanthropic logjam among the world’s richest people. More than 100 US billionaires worth a collective $1 trillion have signed the Giving Pledge since 2010, promising to donate at least half their wealth to charity. Yet only a few have gifted enough to actually shrink their fortunes, frequently balking at the many rules and public disclosure requirements that come with traditional forms of charity.

Critics of C4 philanthropy include US Senator Sheldon Whitehouse, a Rhode Island Democrat who calls it an “increasingly powerful tool for mischief by the mega-rich.” Much of the backlash stems from giving billionaires a tax-advantaged way to exert secret influence over elected officials at the highest levels. C4s can spend unlimited amounts on political lobbying — and large sums on election campaigns.

Billionaires around the world are drawing scrutiny for the influence they hold. In some countries, it’s more explicit — the close ties between Russia’s business elite and Vladimir Putin were put in the spotlight after the invasion of Ukraine. In India, it’s well known that Gautam Adani, whose meteoric surge in wealth briefly made him the world’s second-richest person this year, has close ties to Prime Minister Narendra Modi.

Read the full article here by Ben Steverman, Advisor Perspectives.