Want to establish
an endowment chair at your dear alma mater? Donate your art collection to a museum?
Underwrite a hospital wing or research facility?
If you're in the position to make
a multimillion dollar gift to charitable causes and would like to
leave a legacy of philanthropy to inspire your heirs, a private
foundation gives you maximum flexibility over how the money is invested
and where it ultimately goes.
But if your philanthropy isn't in
the seven-figure range and you would still like
to leave your mark, and perhaps your family name,
on a worthy cause, you may find a donor-advised
fund, or DAF; a supporting organization, or SO;
or the new upstart donor-managed investment, or
DMI, fund much easier to set up and more tax-efficient.
vehicle for donor-advised giving has its strengths and limitations, as well as
a minimum investment threshold that may help you quickly narrow your options.
But all of them have one thing in common: They help the 1.2 million charities
in the United States, 85 percent of which have annual budgets of less than $100,000.
"Very few charities have
a development office or sophisticated fundraising operation,"
says Andrew Hastings, vice president of the National
Philanthropic Trust, or NPT, which serves as matchmaker between
donors and the charities that need them. "Organizations like
NPT serve as a great conduit by which to gather these assets, put
them in an account, invest them and allow the donors to make their
take a closer look at the not-for-profit world of charitable giving and how you
can retain some control over your giving, even after you're gone.
The oak-paneled foundation boardroom replete with a phalanx of lawyers
comes in two varieties: public and private. The distinction: Public
foundations receive at least 30 percent of their funding from the
public, private foundations do not.
Private foundations come in
two flavors: operating and nonoperating. The distinction: Operating
foundations such as the Ford or Getty foundations operate as charities
themselves, typically running museums, educational programs and
the like, while nonoperating foundations are typically self-perpetuating
sources of charitable grants.
According to Hastings,
there are currently about 63,000 private foundations in this country, which owing
to their high cost to establish and administer ("It's like opening up a bank,"
he says), represent less than 1 percent of this country's philanthropists.
Although foundations tend to get the publicity,
they account for just 12 percent of the projected $250 billion that
Americans will give this year to charities, individuals are by far
the largest donors (76 percent), with the rest coming from will
bequests (8 percent) and corporate giving (4 percent).