It has long been said that the highest level of humanity is to give to charity.
In recent years, we have been asked through marketing campaigns to “Give ‘Til it Hurts”, “Give ‘Til it Feels Good”, and contribute through “Outrageous Generosity”, all firmly rooted in our fundamental desire to help others.
Perhaps you have been inspired to follow the examples of our distinguished philanthropists – Carnegie, Rockefeller, Gates and Buffett – who will forever be regarded as highly for their philanthropy as their success in the business world. Who wouldn’t want to emulate their great examples?
Committing to give is the best action you can take to start supporting your community. Now what’s next?
Difficulties in Starting a Private Foundation
Starting a private foundation can be harder than it looks.
Beginning at square one requires exhaustive time and resources, not to mention the magic ingredient of expertise.
Many have found that even though they have managed to get their private foundation off the ground, maintenance costs are prohibitive. Resources can be quickly and significantly diluted by overhead and red tape.
In fact, if running a private foundation were instead an offer to invest, it would be easy to conclude that the expense ratio would not make it worthwhile.
Benefits of Opening a Family Foundation through a Community Foundation
So is there a more effective way to turn your commitment into reality? The answer is yes!
Opening a family foundation through a community foundation gives you all the benefits of a private foundation, including the ability to determine exactly how your individual program is structured. And if you wish to take advantage of the full-service grant-making research resources, there is no charge and no need to hire an outside staff or consultant.
Opening a family foundation requires less cost when compared to the startup and ongoing expenses for a private foundation.
For example, donors can open a family foundation through The San Diego Foundation for as little as $25,000. Whereas a private foundation can easily run that much per year. Also, donors can deduct their foundation gift up to 50% of their adjusted gross income compared to 30% of a private foundation gift.
Other benefits involve privacy and peace of mind.
Unlike an IRS private foundation, a family foundation does not need to disclose certain financial information, including tax returns. Beyond that, strict and complex legal requirements of a private foundation disappear – no worries about compensation rules, expenses, grant expenditure responsibility, tax filings, or any possibility of inadvertent self-dealing.
When you add up all the benefits, it’s no surprise that many of our funds at The San Diego Foundation were originally private foundations before families decided to simplify their lives by moving to a community foundation.
Turning Commitment into Action
Are you ready for “Outrageous Generosity” and the feeling it brings? Our expert staff can work with you and your advisors to start your own family foundation.
About Leslie Klein, CFP®
Leslie works closely with San Diego’s professional advisors and their clients to customize charitable solutions – combining donors’ visions with The Foundation’s expertise in philanthropy and financial management. She brings more than 30 years of experience in the fiduciary and investment management marketplace. Most recently, Leslie served for 12 years as Vice President/Wealth Management Advisor at First American Trust. Leslie graduated from Miami University, Oxford, Ohio.