Private foundations tend to start casually. Mom and Dad decide to start one because it is an easier and more organized way for them to make charitable contributions each year to a small constellation of nonprofits in their community. The terms “kitchen table” and “checkbook” giving refer to this simple, informal model of philanthropy.
Fast-forward a couple of decades, and Mom and Dad have achieved more financial success than they ever expected. In planning their will, they have ascertained that after they take care of their children and grandchildren, there will be a substantial amount left from the estate to donate to the foundation. In fact, Mom and Dad anticipate that upon their death, the foundation’s assets will increase from $3 million (their current value) to approximately $40 million. They realize, however, that this eventual windfall will come with some planning challenges: What should a family foundation do when, almost overnight, its assets jump dramatically? How should the family and board members plan for such an event and carry Mom and Dad’s foundation into the future?