. . . to benefit from establishing a Family Charitable Foundation?
Part of our financial planning for 2008 includes a significant increase in Charitable Giving. My wife thinks it may make sense to establish a family trust or foundation. We would be the Directors and sole contributors to it. It would earn money (we hope), and we would disburse out of it to the charities we like to give to. Accumulation over time would enable us to occasionally make significant contributions where we see fit.
I’m on the fence. I don’t know very much about them. Parts appeal to me, but I’m not sure what all the costs and complications are, if it’s worth doing, or if we should just stroke checks directly to charities out of our checking account.
I like the idea of a Foundation that could outlive us and be carried on by our kids, grandkids, etc. It’s a neat way to inculcate values we’d like to pass on, and there’s an admitted ego boost (I can’t get immortality the Woody Allen way, so this’ll have to do).
But . . . I don’t know how much of a headache it would be to establish and maintain, or what filing and reporting requirements are imposed to maintain tax-exempt status. I have more questions than information, and part of my problem is that I don’t really know what questions I should be asking.
We plan to consult a tax attorney, and I’ve printed a stack of government pamphlets and guidelines and the like. But first I’ll throw it out to the Dopersphere - when does it make sense to give through a foundation versus stroking checks directly? Do I have to be rich, or is merely “secure” sufficient to justify it? Is the coolness factor of having a Foundation with (presumably) our name on it worth the cost and effort?
IANAL, but personally, I’d just donate directly rather than bother with the fuss of setting up a Foundation. I’m sure there’s all sorts of rules and regs you have to abide by.
As for what happens after you’re gone, you can stipulate how much your charity gets in your will.
There’s a fair amount of work involved in creating, maintaining, and filing the returns for a private grant-making foundation. I’m not sure how much tax benefit you’ll get out of it vs. just giving the money from yourselves. You might want to talk to an accountant about this.
missbunny it may be a lot of work to do it on your own, but many companies have standardized accounts and services to allow you to do it through them.
I’ve worked for one of these companies. It’s very easy to set-up an account with a company to handle your fund. It’s a pretty simple application process, either paper or on-line. There is usually some sort of minimum donation. Once you donate the money to your fund, it is tax deductible for that year. You can then choose at a later time to gift the money out. It’s very nice if you know you want to give X amount of money (many companies will also take mutual funds or securities), but don’t know to where you want to give the money. I know that Fidelity, Schwab and Vanguard all offer this service, and I’m sure others do as well.
This is what we decided to do. Fidelity made it all very simple - nice documentation on requirements and procedures, easy on-line application, bada-bing, done!
I know you already opened your fund, Genghis Bob, however, you might also want to check into your local community foundation. Their fees may be much more reasonable that going with a broker, their return on investment may be stronger over the long haul, plus you may have many other benefits at your disposal (such as the experience of a Program Officer).
Please email me if you’d like. I’m very familiar with community foundations in general.