Charitable giving through foundations has grown by approximately 31 percent since 2000, with roughly 70 percent originating from independent foundations.
SOURCE: The Foundation Center, Foundation Giving and Growth Estimates (2011).
Foundations can contribute to several important goals for the wealthy family: philanthropy, financial education, and clarifying shared family values and vision. Although the tax advantages add to the appeal, they should not be the sole reason for establishing a foundation. When structured properly and managed with the entire family involved, a foundation can provide returns much greater than the money saved in tax deductions.
This white paper defines the family foundation and discusses many of its benefits and potential considerations. It includes a focused look at providing financial education opportunities for all generations of the family, using family meetings to enhance communication and connections, and encouraging discussion on broader family topics such as estate planning, education, careers, and business succession planning.
Foundations can be complex and expensive to create and maintain, but families that want to achieve these broader goals will find it a worthwhile pursuit on many levels.
- To maintain the highest level of control over charitable giving activities and to promote family values and vision throughout multiple generations, many ultra-high-net-worth families are turning to family foundations.
- Further family unity can be achieved in creating and managing a family foundation through effective communication and collaboration among family members.
- The most successful family foundations recognize the unique talents of each family member and seek out ways to tap into individual strengths.