Philanthropic Giving through Private Family Foundations

An Introduction

As individuals build wealth, they look for ways to hold and manage it for their family and heirs. They also begin to think of sharing their values and giving to those less fortunate than they. A private family foundation can be an effective means of bringing all these goals together through a single organization. In addition, family foundation helps to unify a family through the generations, gives family members a shared sense of purpose, and creates an enduring family legacy.

Private foundations can offer families of wealth various estate planning and financial benefits, and are generally integrated into overall planning for the estate. However, you don't need an enormous estate to set up a family foundation. About two-thirds of family foundations have assets of $1 million or less, and around 85% have assets of $5 million or less.

Requirements for the initial endowment will depend on considerations such as whether you expect to hire administrative staff (including family members) or handle administrative tasks on a volunteer basis; whether family members will continue to contribute to the foundation over time, or simply allow the endowment to grow from investment; and the scope of the family's philanthropic goals. Legal expenses can be significant in the first year (upwards of $10,00), with frequent board meetings; but these factors should decline over time.

Among the different vehicles available for charitable giving, a family foundation is the one with the greatest involvement of the donor's family over time. Family members are responsible for deciding the organizing principles and values to guide charitable giving, selecting individual organizations to receive funds, and deciding how the foundation will be run. Many families have found that a family foundation helps them define their values across generations and focus on the best uses of their wealth.

For more information on family foundations and other vehicles for charitable giving, please see our articles Four Vehicles for Charitable Giving and Charitable Giving and Taxes.

 For more information, please contact Jonathan E. Brochstein at Weston Wealth Strategies—(203) 319-9876 or contact Jonathan via email.

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