Private Family Foundation: Investments that Keep On Giving

We periodically receive inquiries about private family foundations.  The main question is, “What is a private family foundation?”  Individuals, families, and entities make large tax-deductible contributions to this newly established foundation that they control/own.  One of the exciting benefits of this foundation is that it has the option to last forever.

The funds received by the foundation are invested, and the income generated from these investments is practically tax-free!  The foundation is required to give away a small portion each year to other public charities.  The decision of which charitable organizations will receive such donations is purely discretionary and can be made by the founding family member(s) or appointed foundation members. 

Practically speaking, I do not recommend starting a private family foundation unless you plan to contribute over $200,000.  However, you need not make one large contribution to the foundation -- you could plan to make multiple installments. In fact many people give $50,000 to $100,000 a year and may have not considered forming a foundation. 

For estate tax planning, some clients have mentioned in their will that a portion of their estate goes to a charity.   Foundations allow you to fund that gift now, and you and your favorite charities can enjoy the fruits of your labor – now instead of later upon your demise. 

In summary, it is a way to make a large tax deductible donation to your “own” charity (a new established foundation – typically with your name on it - i.e. “The John N. Doe Foundation”), invest those monies practically tax free, and decide what causes the foundation will support!

Should you have any additional questions regarding establishing a foundation or if you would like Stanislawski & Company, Inc. to take over the accounting, tax and administrative responsibilities of your existing foundation, give me a call.