There are many ways individuals, families, and businesses engage in philanthropy. Many enjoy the control and flexibility that private foundations provide. Private foundations allow donors to decide how funds will be invested and ultimately put into service to support cherished causes. Donors can choose to control their private foundations themselves, include their families, or choose other individuals to govern the private foundation.

Private foundations typically make grants to public charities. Though, sometimes private foundations undertake their own charitable activities. A single individual, family, or corporation provides all of a private foundation’s funding. Private foundations do not typically undertake fundraising activities, which allow them to sidestep many of the hurdles other charities must overcome to obtain their tax exemption. 

Donors establish private foundations for charitable purposes and these entities are tax exempt. To maintain their tax-exempt status, they must comply with IRS rules to make sure that grants benefit the public. For example, each year the private foundation must distribute at least 5% of its prior year’s average net asset value. There are several important decisions that need to be made before committing to establish a private foundation. We can assist you and help to evaluate your options, including: 

  • Determining whether a private foundation is the appropriate vehicle to help you achieve your philanthropic goals 

  • Examining the potential tax implications

  • Evaluating which assets to contribute

  • Determining how to best structure your foundation for proper governance