Billionaire philanthropists are finding traditional methods of philanthropy aren’t sufficient to tackle the problems they have in their sights to solve.

Earlier this week, John and Laura Arnold, billionaires in Houston, Texas, announced they were shifting from a foundation model to a limited liability corporation called Arnold Ventures, a more flexible structure that allows the couple to be involved in advocacy work as well as grant-making.

The new corporation rolls together the Laura and John Arnold Foundation, Action Now Initiative (a political advocacy group), and the Arnolds’ donor-advised fund.

“Increasingly, major donors are interested in problem solving,” says Walter Sweet, who oversees the advisory and management practice at Rockefeller Philanthropy Advisors. “Part of that means they examine their charitable vehicles not only for tax deductibility, but for how it helps them solve problems or gives them flexibility to solve problems.”

An LLC structure, for instance, means a donor can support a cause regardless of the charitable status of the grantee, he says. They can also engage in lobbying and impact investing, that is, investing in a company that’s tackling a social or environmental problem.

“Organizations that have the ability to generate revenue and scale perhaps are the better way to approach whatever the problem may be, whereas a charitable organization may be just dealing with symptoms,” Sweet says.

Check out the full article by Abby Schultz in Barron’s Penta here.

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