The Private Foundation Alternative

Creating a private foundation can be an exhilarating experience. It is an affirmation of your philanthropic spirit and commitment to support worthy charitable activities. However, you may soon discover that the process of managing your private foundation’s affairs is not as simple as it seems.

A fund with Lakeshore Community Foundation is an efficient and cost-effective alternative to a private foundation. We offer solutions to address concerns about private foundation management and philanthropic impact. We can work with you and your professional advisor to help you understand what you will retain, gain and eliminate through a fund with Lakeshore Community Foundation and determine which option is best for you. If you already manage a private foundation and are considering converting it to a fund with Lakeshore Community Foundation, visit Converting a Private Foundation.

What you will RETAIN, GAIN, and ELIMINATE.

What You Will

RETAIN:

What You Will

GAIN:

What You Will

ELIMINATE:

 
Identity.
With a named fund at Lakeshore Community Foundation, you retain your identity and stature in the community. For example, the Jones Family Foundation typically becomes the Jones Family Foundation Fund.
 
Favored Tax Status.
For any assets you contribute to your fund with Lakeshore Community Foundation, you receive tax deductions significantly higher than under the private foundation status. For example, 50% of adjusted gross income v. 30% for cash donations.
 
Distribution Requirements.
A private foundation is required by IRS regulations to distribute at least 5% of its assets each year. A fund with Lakeshore Community Foundation currently has no such annual requirement. Therefore, you have the flexibility to adjust grants to changing economic environments.
 
Charitable Intent.
The same mission and focus of your current foundation can be incorporated into the objectives of your fund with Lakeshore Community Foundation.
 
Expertise and Support.
Our staff is charged with ensuring that grants from your fund with Lakeshore Community Foundation carry out your wishes effectively. You can consult with our staff at any time on charitable giving ideas. Additionally, our staff ensures that your fund complies with all IRS granting guidelines and requirements.
 
Excise Tax.
A private foundation is required to pay 1-2% excise tax on investment income. A fund at Lakeshore Community Foundation has no such tax.
 
Granting.
You and/or your board of directors determine the granting direction for your fund with Lakeshore Community Foundation, and our staff implements it.
 
Professional Investment Management.
Through a fund with Lakeshore Community Foundation, you gain professional investment management of your assets. Due to the Foundation’s economies of scale, you may gain access to a more diversified portfolio and lower investment related fees.
 
Tax Returns & Audits.
With a private foundation, you are required to file annual 990-PF tax forms. Depending upon the size of your private foundation, you may need annual audits and may incur occasional legal expenses. These administrative costs and functions are not required of a fund with Lakeshore Community Foundation.
 
Family or Personal Legacy.
Since a fund with Lakeshore Community Foundation is maintained in perpetuity, it enables families to teach their children, grandchildren, and subsequent generations the importance and wisdom of making a positive impact in your community forever.
 
Anonymity.
As a public charity, Lakeshore Community Foundation is not required by the IRS to disclose donor information. A private foundation, on the other hand, is required to publicly disclose contributions, assets, grants, and foundation expenditures. Therefore, if you wish to keep your information anonymous, you can accomplish anonymity through a fund with us.
 
Administrative Burden.
You no longer have to manage the administrative aspects of your charitable giving since we oversee the investment management and administration of your fund with Lakeshore Community Foundation.

 

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