Considering Your Own Charitable Foundation?


Private or community—the choice is yours when it comes to setting up a charitable foundation.

Those two types of foundations have different tax-savings features. And they have different expense loads and distribution requirements.

Both are established by a family or individual (there are separate foundations for companies). There is no minimum contribution with either. But there is a difference in the tax break. A cash gift to a community foundation can offset as much as 60 percent of your adjusted gross income (AGI), while capital gains property (stocks, typically) merit a 30 percent deduction. With a private foundation, the cash deduction is limited to 30 percent of AGI and the capital gain portion is 20 percent.

Regarding distributions, there is no annual payout required of a community foundation. A private foundation typically has to pay out 5 percent of its assets annually.

Don’t do this on your own—call in lawyers and tax experts for guidance on how best to put your charitable efforts into play.

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