Seed a legacy while supporting the causes most important to you.
There are many ways to give, but for some affluent individuals or families, a private foundation can provide flexibility and a unique set of estate planning benefits. It can also be a good vehicle for bringing family members together to establish and fulfill a lasting family legacy of philanthropy.
What is a private foundation?
A private foundation is an independent entity that does not qualify as a public charity. This is because private foundations receive funds from limited sources—typically a single individual, family or corporation—as opposed to the public. Because of this, they are subject to greater oversight and stricter operational constraints than public charities or donor-advised funds.
Despite these limitations, private foundations provide several significant benefits:
- Greater operational control. They can be operated as either a trust or a corporation. Once a foundation is set up and funded by tax-deductible donations, you decide how it operates, choosing its mission, board members or trustees. You determine how assets will be invested and what organizations to support.
- Family involvement. Foundations can be a vehicle to bring family members together to achieve charitable objectives. You can offer children and/or grandchildren a role in the foundation and work together on causes all of you care about.
- A family legacy. They are often established to exist in perpetuity. Your mission, vision and charitable legacy can be passed to generations of family members and continue far beyond your lifetime.
- Tax benefits. Tax deductions may be more restrictive than for the same donations made directly or to a charitable trust or donor-advised fund, but the added control and family benefits may outweigh any tax savings.
Where to start?
A private foundation will require legal, tax, investment and financial advice.
To begin, initiate discussions with family members, friends and advisors. Seek out advice from other families you may know who operate foundations. You might also look for educational opportunities or advisory sources to gain insight about operational best practices and to help you better define your mission statement to reflect your passions and what you want to accomplish.
Determine whether you want your organization to be a trust or nonprofit corporation, and who you want as trustees, board members, trust or investment advisors, or members on a grant committee.
Talk to your Regions Wealth Advisor about:
- Connecting to a local team of philanthropic specialists.
- Whether a family foundation would be right for your philanthropic needs.
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