Advantage of a Private Charitable Foundation

There are a number of benefits for clients who wish to setup a private charitable foundation, such as:

1. Control
   Donors can make tax-deductible donations and still remain in control of the investment and management of the funds as trustees/board members. Furthermore, the foundation can continue to serve the clients charitable purposes after death.


2. Family Legacy
   A foundation provides a vehicle to bring family members together for a common cause or purpose. It provides a unique opportunity for family members to serve on a board or as trustee and to gain experience in administering and operating a foundation for charitable causes. Finally, it is a vehicle to introduce family members to the community, thereby providing a gateway to meet with community leaders and other individuals.


3. Salaries
   Family members serving as board members or trustees can receive salaries, although there are strict guidelines for doing so and if not necessary it is desirable to avoid them altogether.


4. Income Tax Deduction
   The donor is able to take an income tax deduction immediately. Highly appreciated assets that are donated to the foundation can avoid capital gains tax and allow the donor to take an income tax deduction of 20% of adjusted gross income (with a 5 year carry forward for any unused income tax deduction). Cash contributions generally receive a 30% income tax deduction (with a 5 year carry forward).


5. Gift Tax Benefits
   Gifts to the private charitable foundation do not affect the client’s annual gift tax exclusion or lifetime gift tax exemption.


6. Estate Tex Benefits
   Assets transferred to a private charitable foundation are not subject to estate tax.