Friday, July 10, 2009

Setting Up Your Charitable Foundation

A private family foundation is a wonderful way to teach and expose your family to charitable giving. At an early age, members of your family can participate in the operations of the foundation and suggest worthy charities or charitable causes. The foundation can carry out the family legacy throughout the generations.

Once you decide that you want to establish a family foundation, you will need to decide how to structure it. A foundation can be set up as a trust or a non-profit corporation. Although there are fundamental differences between a trust and a corporation, both structures can be set up quickly and for similar costs. The corporate structure will involve some filing fees with the Secretary of State, but nothing extraordinary.

The governance of the private family foundation differs depending on whether it is a corporation or a trust. Under the trust approach, the trustee or trustees will make decisions subject to instructions in the trust agreement. The corporation will be run by its officers and a board of directors. The corporate structure may provide more flexibility in future changes to the charitable goals of the family foundation. If the foundation is being established by one person who wants to maintain a set charitable mission even after he/she is gone, the trust may be a better approach.

Regardless of how the family foundation is structured, it is an excellent opportunity to pass along the family legacy.

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