There are many ways to fulfill your charitable goals throughout your lifetime, but not many of them will continue to drive that philanthropic spirit through future generations. The desire to create a legacy of giving is what leads many families to consider establishing a private foundation.
Private foundations are nonprofit tax-exempt entities established to distribute grants to charities that are important to the foundation’s board members. Special rules, tax benefits and restrictions apply to private foundations and should be considered before deciding if one is right for you.
Private foundations have some unique advantages that you will not find in comparable charitable giving vehicles, such as a donor-advised fund (DAF). These include:
While a private foundation can give you greater control over your donations and carry out your philanthropic legacy, it does have limitations when compared to a DAF or other gifting strategies. Before deciding to establish a private foundation, be sure to consider:
The decision to establish a private foundation should only come after careful evaluation of your philanthropic goals and a full understanding of the responsibilities and challenges associated with operating your own private foundation. Grassi’s Private Client Services and Nonprofit professionals are available to help you weigh the benefits and risks and determine which gifting strategies will have the greatest impact on your chosen charities and family’s future.
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