Although private foundations allow extensive donor control over distributions and board selection, they can pose challenges: they are subject to administrative costs and concerns, annual minimum distribution requirements, and excise taxes.
Gifts to private foundations or family foundations are more limited in their tax deductibility and all information about the foundation is readily available online, including assets, grants, investments, and board members. For many families, the gratification of making grants through a private foundation doesn’t justify the amount of cost or time involved in grantmaking, investing, family dynamics, reporting, and governing.
The Community Foundation can help! We welcome the opportunity to talk to you and your clients – those who are thinking of establishing a private foundation or those who already have – about how we can work together to accomplish their charitable goals. Call the Foundation (518) 446-9638 to learn more.
Some of the options include:
- Fee for Service Program: Several local family foundations, including the Bender Family Foundation and the John D. Picotte Family Foundation, have chosen to partner with the Community Foundation in this way. If your client’s private foundation needs specific services, such as administrative support or grantmaking assistance, the Community Foundation can easily assist them.
Our staff can help trustees as they make decisions regarding grant requests. We can offer insight on current community needs, organizations that are meeting them, and the effectiveness and efficiency of local nonprofit organizations. Our experienced grantmaking staff is happy to investigate potential grantees and can assist in arranging and performing site visits. In addition, Community Foundation staff can handle administrative tasks, such as collecting and screening grant applications, keeping records and preparing reports, and responding to requests for information from potential grantees.
- Converting a Private Foundation into a Donor Advised Fund: In many instances, converting a private foundation into a donor advised fund at the Community Foundation can alleviate administrative burdens and increase philanthropic impact. Your clients can maintain the identity of their private foundation and continue to support the organizations important to them. In addition, a donor advised fund offers several advantages – including significantly higher tax deductions for new assets contributed to the fund, grantmaking support, professional investment management, and the option to give anonymously. Furthermore, by converting to a donor advised fund, several of the burdens and requirements of a private foundation are eliminated, including the annual distribution requirement, tax returns and audits, and excise taxes.
- Make a Distribution from a Private Foundation to a Fund: On occasion, the trustees of a private foundation may have difficulty meeting the annual 5% payout requirement. We can assist by accepting contributions from a private foundation’s annual payout into a donor advised fund or a Community Impact Fund.