Charitable giving has always been part of the generous nature of American citizens. Helping someone less fortunate than you is laudable. It benefits both the giver and the recipient. For those wealthy enough to do so, setting up a private foundation can provide the structure to make a real difference through philanthropy. Such foundations are popular and have a long history here.
Often founded by a family, an individual, or even a group of people, a private foundation can be organized in several ways. Either a nonprofit corporation or a charitable trust will satisfy structuring requirements. The governing board can consist of you, other family members, or friends.
Family Philanthropic Goals
Sometimes family foundations are set up to accomplish certain common goals, as a focus for working together, or to teach the younger generation about the value and worthiness of giving to others.
Families can share their philanthropic goals by establishing donor advised funds through a community foundation. There are differences between private foundations and donor advised funds, but the goal of helping others is the same motivation.
As a charitable organization, a private foundation is exempt from federal income tax. It will need to be responsible for paying a one to two percent excise tax on net investment income. For donors, gifts to foundations can provide you with tax advantages, too, such as income, gift, and estate tax deductions.
The three types of private foundations include
• Private endowed foundation
• Pass-through foundation
• Private operating foundation.
Unsworth LaPlante, PLLC in Vermont can help you establish a foundation or with other Estate Planning matters.