If you and members of your family are making numerous gifts to charities every year, you might want to consider pooling your resources in order to maximize the impact your giving has. If you are collectively giving away $25,000 or more each year, there are a number of different giving structures (approved by the IRS) that can turn the routine of making donations annually into a lifetime experience of philanthropy! Setting up a Family Foundation:
Depending upon how much you money want to establish your family foundation with (ask your accountant or tax attorney for all costs involved) you can fuel your fund with gifts from either a single-family member of a number of family members. Understanding just how much will be given to charities and which ones—will be determined by family members who serve as officers or board members and actually control where the dollars go.
The Family Foundation will create a powerful group of givers making thoughtful decisions about giving.
You can do this on your own through a bank or brokerage house however, if the minimum principal balance is less than $50,000, you might want to consider what is knows as a Donor Advised Fund.
Donor Advised Fund:
Most communities have Community Foundations (previously knows as Community Chests) that are focused on the financial support of programs that improve the quality of life in communities, and oftentimes—across multiple counties. For many years, individuals made gifts to Community Foundations entrusting the decisions of who would receive support to Community Foundation board members.
More and more donors are assuming the control and input that a Family Foundation has without the expense or administrative tasks that a Family Foundation involves, and that’s where the Donor Advise Fund becomes a positive alternative.
Administered through the Community Foundation, the Donor Advised Fund involves the inputs of the family or individual or corporate donor regarding the magnitude of gifts and the gift designation, but the CF manages the investment, reporting and dispersing of funds.
Whether you choose a Family Foundation of a Donor Advised Fund you can be certain you are establishing a legacy of giving for your family and making a values statement through the choices you collectively make!
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