FEC Gives LinkedIn Co-Founder Green Light to Fund Causes, Candidates Through Irrevocable Trust

WASHINGTON — The Federal Election Commission on Thursday gave its blessing to LinkedIn co-founder Allen Blue’s proposal to create an irrevocable trust that will, in part, make contributions to state and federal political committees.

Attorneys for Blue, who today devotes most of his time to philanthropic causes, submitted their request for an advisory opinion from the agency in October.

Irrevocable trusts are generally created to minimize estate taxes and protect the grantor’s assets from creditors.

Once created, they cannot be modified, amended or terminated without the permission of the grantor’s beneficiary or by the order of a court, though the rules vary from state to state.

The grantor, in this case Blue, having effectively transferred all ownership of assets into the trust, legally removes all of their rights of ownership to the assets and the trust. A trustee oversees all future disbursements.

According to Worth Pedia, the Seattle, Washington, native currently has an estimated net worth of about $200 million.

In their letter to the FEC, Blue’s attorneys Ezra W. Reese and Emma Anspach explain that the purpose of the trust would be to support progressive causes.

“The majority of the trust’s disbursements would be for the general support of nonprofit organizations that are not registered as political committees under the act,” they wrote in October.

“The requestor intends that the trust would also contribute to federal candidates for public office, to federal and state political party committees, and to other federally registered committees. However, those contributions will never become a majority of the trust’s grants in any calendar year, and that restriction would be included in the trust’s founding documents,” they said.

The letter goes on to say trust would not earmark any of the funds it distributes to nonprofit organizations to be contributed to candidates or political committees or otherwise direct its distributions to nonprofits to be used for federal political purposes.

“The trust would be prohibited from engaging in independent expenditures or electioneering communications, and that restriction would be included in the trust’s founding documents. If the trust were to make contributions to federal candidates or committees in the requestor’s lifetime, the trust would share its aggregate contribution limits with the requestor.”

Reese and Anspach go on to explain the trust will make political contributions to designated recipients based on objective criteria set forth in the trust — such as a particular party committee or the Democratic nominee in a particular district or state.

Blue, the lawyers said, “also plans for the trust instrument to allow the trustee discretion to distribute funds for political purposes, by setting standards to guide the trustee.

“The standards would require the trustees to support only candidates and committees that further Mr. Blue’s support for progressive candidates and/or for his support of action to protect the environment, ensure the equality of all persons under the law, and protect the least-well-off among us,” the lawyers said.

Upon review, the FEC determined that irrevocable trusts can in fact make contributions to federal candidates, political party committees, and other federally registered committees under the Federal Election Campaign Act and commission regulations.

It says this is because the trust would be a “person” under the act and is not a prohibited source.

The commissioners also concluded that contributions from the trust should be attributed to the trust alone when they are made at the broad discretion of its trustees, whereas other contributions made to “designated recipients” pursuant to “objective criteria set forth in the trust instrument” should be attributed to both the trust and Blue.

In either case, the contributions should not be attributed to the trustees, the agency said.

Prior to his involvement with LinkedIn, Blue was a director of product design at SocialNet.com, a social networking service covering dating, recreational and professional activities.

Previously, Blue worked as a contract web designer and developer for a variety of clients including PayPal, Stanford University and Microsoft’s Virtual Worlds project.

Dan can be reached at [email protected] and at https://twitter.com/DanMcCue