INTERESTED IN SETTING UP A FOUNDATION?
The resources below will help you get started. Research, ask questions and research some more.
WHAT IS A FOUNDATION
According to GrantSpace:
A foundation is a non-governmental entity that is established as a nonprofit corporation or a charitable trust, with a principal purpose of making grants to unrelated organizations, institutions, or individuals for scientific, educational, cultural, religious, or other charitable purposes. This broad definition encompasses two foundation types: private foundations and grantmaking public charities.
WHY SET UP A FOUNDATION
The Foundation Source has some thoughts on the benefits of setting up a foundation as seen below from their website.
1. Get an Immediate Tax Deduction, but Give Later: You get the tax deduction when the foundation is funded, then make your charitable gifts over time.
2. Leave a Lasting Legacy: Foundations set up in perpetuity can burnish your name far beyond your lifetime. Because gifts are made from an endowment that generates investment revenue, the total gifts made by the foundation can far surpass the actual funding.
3. Be Taken More Seriously as a Philanthropist: A foundation imparts a gravitas that causes people to take your philanthropy more seriously, due to the structured, organized approach you employ for your giving.
4. Sidestep Unsolicited Requests: When you focus your foundation on specific giving areas, your mission statement can be used to politely turn down off-target funding requests.
5. Deepen and Focus Your Philanthropy: Whereas individual donors often spread their giving among as many causes as possible, the formalized structure of a foundation often encourages donors to narrow their focus to specific causes.
6. Build a Better Family: As family members take on philanthropic research, present their findings to the board, participate in the decision-making process, and track results, they hone skills that will serve them for years to come.
7. Tax-Deductible Grants to Individuals in Need: A private foundation allows you to provide emergency assistance directly to individuals using dollars for which you’ve already received a tax deduction.
8. Run Charitable Programs Without Setting Up a Separate Nonprofit: Direct charitable activities are IRS-approved programs that permit foundations to directly fund and carry out their own projects.
9. Pay Charitable Expenses: All legitimate and reasonable expenses incurred in carrying out the foundation’s charitable mission can be paid by the foundation and will count toward the annual minimum distribution requirement.
10. Provide Loans Instead of Grants: When used to support a charitable purpose, private foundations can employ loans, loan guarantees, and even equity investments, which are paid back (potentially with interest), so you can recycle your philanthropic capital for other charitable causes.
THE NUTS & BOLTS
The IRS has a great explanation of how to get it going by the book. The IRS is one of your partners in this so once you decide to set up a foundation, be sure to follow their guidelines. Here is the link for their article on the “Life Cycle of a Private Foundation”.
ORGANIZATIONS TO USE AS RESOURCES
- Foundation Center: The center has a wealth of information, training and extended resources.
- Small Business Administration Grants: Depending on what your foundation will do, the Small Business Administration does provide grant options.
- In your community, research for programs that are available that will meet your foundation’s needs.