Private Charitable Foundations

What are Private Charity Foundations?

Private Charity Foundations are legal entities that allow an individual to manage assets that they have designated for charitable purposes. These types of legal entities create a mechanism for establishing a viable way to create a charitable legacy with significant tax benefits.

While your personal charity foundation and a traditional charitable foundation may share many similar characteristics, there are some important distinctions that make a privately-established one more appealing to high-value individuals:

More direct control of where your funds go and what they will do

Significant tax incentives for founders

Less reporting responsibilities and legal requirements for personal charity foundations

Can also be used for estate planning rather than general humanitarian purposes

A Private Charitable Foundation, Private Charity Fund, or simply PCF, is a unique way to approach planned giving when planning your estate. The charities and foundations you construct are legally barred from conducting business activities; however, how their assets are otherwise managed is a matter left to the director of the PCF: you or your advisor. Moreover, your PCF may also be take on a life of its own and inspire your beneficiaries to continue down the path of philanthropy.

Establishing your legacy through a private charity foundation

If your estate goals include charitable giving as part of its wealth distribution strategy, private charity foundations are the best way to ensure your wishes are carried out. The charity foundation you create will be funded by you and directed by either you or your appointed advisor. Then, when the time comes, you’ll be able to distribute your estate’s wealth effectively.

During your charity foundation’s construction, there are many documents of establishment that require various statements and provisions in order to be legally validated. Our estate planners have years of experience in the field of establishment document drafting. We’ll show you the most efficient and effective way to establish your foundation and how to maximize your humanitarian efforts and wealth distribution strategy.

Taking control of your estate

With you at the helm of your charity fund, what ultimately happens with the funds therein is your decision. Whether your end goal is to provide funding for humanitarian causes, scientific research, cultural enrichment, or estate wealth for your beneficiaries, the creation of private charities and foundations will help you reach your goal.

Reducing your tax burden

When preparing for tax season, the inclusion of your charity or foundation’s donation receipts for the wealth you contributed to it for the fiscal year will allow you to receive a Charitable Donation Tax Credit or Deduction. This will ensure the contributions you make will be stored in a tax-advantaged holding instrument while you benefit from a decrease in your taxable wealth.

Providing for future generations

While many charities and foundations funded by individuals tend to donate to nonprofit organizations and front-line, public charities, personal charitable foundations can also be put in place to help your own family for generations with no adverse consequences. For example, your private foundation may be established to pay for the education of your beneficiaries on your passing. So long as your organization does not incur debt or engage in business transactions, your foundation will remain legally sound.