There is a 5% rule for non profits that his LLC gets to avoid: "...What is the 5 percent payout requirement? The purpose behind the minimum payout requirement

There is a 5% rule for non profits that his LLC gets to avoid: "...What is the 5 percent payout requirement? The purpose behind the minimum payout requirement is to prevent foundations from simply receiving gifts, investing the assets and never spending any funds on charitable purposes. The basic rule can be stated simply, but its calculation is complex: Each year every private foundation must make eligible charitable expenditures that equal or exceed approximately 5 percent of the value of its endowment. The word "payout" while convenient is somewhat misleading and is not used in the Tax Code section that creates the rule. The word "payout" suggests grants or contributions paid out to other charities. Although these grants normally make up more than 93 percent of the expenditures of most foundations, many other expenses can also qualify in meeting the minimum payout requirement. In short, the 5 percent payout rule need not be satisfied solely with grants. ..." http://c.ymcdn.com/sites/www.abagrantmakers.org/resource/resmgr/abag_publications/the_five_percent_minimum_pay.pdf http://c.ymcdn.com/sites/www.abagrantmakers.org/resource/res...