Higher net worth individuals and families are increasingly looking to family private foundations to both advance their charitable goals, and to avoid estate taxes.
A private foundation is a freestanding legal entity which can be 100% controlled by the donor. The donor, and anyone he chooses to advise him, fully decide how the money is invested.
Private foundations may own almost any type of asset, including real estate, jewelry, closely held stock, stock options, art, insurance policies, and other variables. Founders can donate highly appreciated stock to the foundation to avoid capital gains taxes so that the full market value of the stock grows tax free, ultimately benefitting the charities to be funded by the foundation.
A private foundation may be established quickly, with an investment of $250,000.00 or less. In fact, 67% of all private foundations have less than $1 million in assets. Establishing the private foundation may take as little as three days, with set up cost being often very affordable.
The following types of charitable gifts are available to private foundations:
- Funding 501(c)(3) public charities
- Funding tax-exempt organizations that are not 501(c)(3) entities
- Making grants directly to individuals and families facing hardship, emergencies, or medical distress
- Supporting charitable organizations based outside of the U.S.
- Making loans, loan guarantees, and equity investments
- Providing funding to for-profit businesses that support the foundation’s charitable mission
- Setting up and running Scholarship and award programs
- Running their own charitable programs.
Robert Chartener, Financial Planning, http://www.financial-planning.com/blogs/wealth-ideas/this-may-be-the-best-bet-for-charity-minded-clients-2694760-1.html?utm_medium=email&ET=financialplanning:e5499154:4512791a:&utm_source=newsletter&utm_campaign=Nov%209%202015-am_retirement_scan&st=email , November 9, 2015.