Start a Private Foundation

Step One:Is a Private Foundation Right for You?

Here are some of the benefits you will enjoy with a private foundation (for more, please read “The Top Ten Advantages of Having a Private Foundation”):

Control: With a private foundation, you give when you like and to whom you like. While individual philanthropists often rush to get their tax deductions in at the end of the year, private foundations get the tax deduction up front, when the foundation is funded, and then make charitable gifts over time. The only requirement is that your foundation make “qualifying distributions” each year of at least 5% of the previous year’s average net assets. (Because you use the previous year’s assets as the benchmark, a new foundation doesn’t have to make a single grant in its first year.)

Unlike a donor-advised fund, you retain complete control over your private foundation. Donor-advised funds may limit the type of assets they will accept, restrict investment options, and sometimes put geographic or other restrictions on the types of grants donors can make. With a private foundation, you have final say on which charities to support; how, where and with whom foundation assets are invested; whether to have others share in foundation governance; and if so, who those board members would be.

Flexibility: In addition to supporting U.S. public charities, private foundations can make international grants, set up scholarships (and choose their recipients), make grants directly to individuals for emergency relief and hardship assistance, and provide loans that are repaid to the foundation, enabling funds to circle back to the foundation for future giving. A private foundation can run its own charitable programs, such as establishing a children’s math museum or purchasing business attire to help paroled prisoners re-join the workforce. A private foundation can even provide funds to a for-profit business, as long as it’s for a charitable purpose.

Family Engagement: Private foundations exert a unifying force, similar to a family business, by erecting a formal structure that links several generations working together toward a common philanthropic goal. The foundation unites family members separated by distance, age and interests, transmitting philanthropic values from one generation to the next. The family foundation also serves as a training ground to prepare the next generation for the responsibilities of wealth, teaching not just values, but also skills such as leadership, teamwork, investment management and social awareness.

Step Two:Setting Up a Private Foundation

Our award-winning systems, technology and services have dramatically reduced the expense and effort of starting a private foundation. Before, you needed about $5 million in investible assets to justify foundation costs. We’ve made those economics obsolete. Foundation Source makes it possible for you to have a fully functioning private foundation with as little as $250,000 in starting assets.

In as few as three business days, our team of professionals will have your new private foundation up and running. Foundation Source provides the corporate entity and handles the IRS filing for tax-exempt status. You’ll be able to make grants as soon as you’ve funded the foundation.

Step Three:Everything You Need, Day One

To achieve your goals, you need the right combination of knowledge, talent, technology and tools. We have all the resources you could ever need, under one roof. You choose the level of service that’s right for your foundation, ranging from the basic support all foundations need to highly customized solutions. The only services we don’t provide are asset management, legal counsel and personal tax planning – but we coordinate closely with the trusted advisors you designate.

Step Four:Our Services Grow with You

As your foundation grows and matures, Foundation Source can provide advanced tools to meet your changing needs. From activities such as international grants and scholarship programs to Program-Related Investments and direct charitable activities – we offer a full range of advanced services, custom-tailored to your foundation and its mission.

Step Five:You Become Part of a Private Foundation Community

As a Foundation Source client, you join a community of over 1,100 private foundations, plus advisors, experts and other philanthropists. You’ll be invited to virtual and in-person events where you can share experiences and best practices, meet with experts and sector leaders, and connect with others who share your interests and goals.

By setting up a private foundation, you establish a tradition of giving that can last for generations. We run the back-office, provide powerful online foundation management tools, and put experienced philanthropic advisors at your service. We make it simple to give effectively, leveraging each dollar for greater impact. We also make it pleasurable. You can enjoy the experience of making a difference without worrying about paperwork or tax and legal compliance.

Unsure Whether a Private Foundation is Right for You?

Learn about your charitable giving options.