How the L.A. Clippers Deal Can Have a Lasting Positive Impact, Thanks to Philanthropy

Out of the brouhaha over Donald Sterling’s remarks and the pending sale of the Los Angeles Clippers to former Microsoft CEO Steve Ballmer comes a happy ending: the possible creation of a $200 million charitable foundation.

As reported in the Chronicle of Philanthropy and other sources, 10% of the sale price of $2 billion could be directed to the formation of a new foundation headed by Mr. Ballmer and Shelly Sterling, wife of Donald and co-owner of the team with her husband.  The LA Times reports that the foundation would receive up to 10% of the net revenues from the team.  According to CNN, the idea for a philanthropic angle to the deal came from Shelly Sterling’s attorney, Pierce O’Donnell.

Notwithstanding that the Clippers team already has a charitable foundation of its own, using philanthropy to help in a business succession is wise, as previously written in this blog.  Considering the significant capital gain due on the sale of the team, charitable strategies can be very valuable to the Sterlings.

Not yet clear is how this new foundation, if formed, would get around the IRS’s unrelated business income rules that apply to private foundations and would presumably apply if the foundation owns a 10% stake in the team.

While there is still the possibility that the sale won’t go through, kudos to Mr. O’Donnell, Mrs. Sterling, and Mr. Ballmer for turning an ugly situation into an opportunity to have a positive impact on the lives of others.

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