After experiencing success in the business world, many families decide to establish a family foundation to give back to the community or to a specific organization that is near and dear to their hearts. In addition to favorable tax benefits, family foundations can engage younger family members in philanthropy and establish a legacy of giving in your family for generations to come.
As with many large undertakings, getting started can be the hardest part. Creating such an entity is a highly detailed process. Ensuring that one is abiding by IRS regulations, in addition to those imposed at the state and local levels, can be a daunting task. Creating a foundation may seem overwhelming at first, but a highly-motivated family will not anguish over the hurdles, but rather take pleasure in all the benefits.
Here are five strategies for building a successful family foundation to help you create your family’s legacy of philanthropy:
Many details are needed to apply for tax exemption with the Internal Revenue Service, and the process requires expert tax, financial, and legal knowledge. The initial process includes providing a budget that will supply an estimate of what the first several years of your operations may look like. Additionally, the organization’s mission must be defined and explained. The right advisors will go beyond simple forms and checklists to provide insightful guidance that will help you succeed.
When developing your team, include individuals from a variety of backgrounds or disciplines. This will allow for greater diversity of input into your organization. Your family should gather a full complement of individuals with unique talents and expertise who will step into leadership roles and assist in key areas, such as finance, advocacy, and development.
Additionally, register with a foundation database or create a website to recruit prospective grantee organizations whose programs reflect your giving priorities. Many family foundations preselect the organizations which they fund. Others create requests for proposals which they post online.
Finally, have fun! Your family is establishing a wonderful tool to help others and give back to the very community that has allowed you to prosper. Make the most out of the experience and reap the rewards of your generosity and planning. With a detailed plan, the right advisors, and a lot of dedication and enthusiasm, your family can establish a successful foundation that will provide a legacy of giving for years to come.
If you have any questions regarding your family foundation or beginning one, fill in the form below and a member of our team will be in touch.