Personal Foundations

A personal foundation is a great way to accept charitable contributions without having to set up and run a non profit organization. Personal foundations, family foundations, charitable foundations, educational foundations and private foundations are great ways to contribute money to charities, grants to students and more.
 
 
Personal and private foundations are a growing trend in philanthropy. In general, foundations are made in the name of a particular person, family or organization. Foundations can even be set up online for ease of use.
 
Donations to personal foundations are tax-deductible, which is another bonus of charitable giving.

Reasons to Establish a Foundation

Families and individuals can set up foundations to serve a number of purposes. The most common reasons people set up foundations include:
  • as a memorial to a friend or family member
  • charitable impulses
  • tax benefits and to reduce tax obligations
  • to avoid direct solicitation for donations (organizations must go through the foundation instead of through the individual)
  • to create a legacy that can be passed on through a family.
These are just a few reasons for forming a personal or family foundation.

The Set-Up Process

While setting up a personal or private foundation is generally simpler than setting up any other type of organization, there are still steps to go through. The process can usually be finished in approximately six months.
Those setting up a personal foundation or a private foundation must fill out a great deal of paperwork and go through the appropriate legal channels.
 
In most cases, it is advisable to go through an attorney when setting up a foundation. Attorneys who specialize in trusts will know the requirements for your particular state and area and will make sure all bases are covered. Legal rules and regulations, as well as regulations set forth by the Internal Revenue Service (IRS) must be addressed. Accounting firms also have specialists that can offer expertise to those attempting to set up a foundation.
 

Setting Up a Foundation Without Assistance
While those wishing to set up a foundation may be able to do so without professional assistance from a lawyer or accountant, this is not recommended. Not only will it take longer for a non-expert to go through all of the steps required to set up a foundation, most people will miss a key element of the process and could end up costing themselves more money to fix the error.

Foundation Size and Budget

Foundation sizes will vary depending on the amount of volunteer help available, whether or not there will be continuing donations and whether the foundation is intended to be permanent.
 
While many foundations are created that are valued at $100,000 or less, most foundations that desire permanence, do not have a lot of volunteer help and intend to be permanent need to have a value of at least $1 million.
 
If foundations have staff members or will require premises or other needs to function, these things must also be taken into account in the foundation's budget.
 
Resources
 
Council on Foundations (2007). Forming a Family Foundation. Retrieved December 11, 2007, from the Council on Foundations Web site: http://www.cof.org/members/content.cfm?ItemNumber=771
&navItemNumber=3958.
 
Independent Charities of America (n.d.). Personal and Family Foundations. Retrieved December 11, 2007, from the Independent Charities of America Web site: http://www.independentcharities.org/Foundation/info.asp?
Title=Your+Own+Personal+Charitable+Foundation&sBody=FOU.