A Private Foundation is a not-for-profit entity that can be controlled by a family (or individual or business). Because it is organized as exclusively for charitable, educational, religious, scientific or literary purposes, it allows a family to receive immediate tax deductions for charitable contributions that are used in the future.
More importantly for most families, philanthropy and shared values can be fostered in successive generations or other family members by their participation in the foundation. Family members may participate as officers or directors, and may even be paid as long as certain IRS rules are followed. The private family foundation may carry the family name, and provides extensive flexibility in the control over assets held by the foundation and benefits provided.
Importantly, third-party “back office” providers are typically used to provide the required administrative and compliance services required. These providers are very efficient and allow the donor or donor’s family to concentrate on philanthropy, not administration.
Because private family foundations are entities created under state law and recognized by the Internal Revenue Service as not-for-profit, they provide a legacy which will continue far past the lives of the family members establishing the trust, and may continue in perpetuity.
In addition to establishing Private Family Foundations, philanthropic interests can be met through the use of Charitable Trusts, Donor Advised Funds, and other Charitable Giving Techniques.
