According to Sara Beggs from the Association of Small Foundations, “a private foundation has four characteristics:
- It is a charitable organization;
- It is initially funded from one source (usually an individual, a married couple, a family or a business);
- Its ongoing income derives from investments (in the nature of an endowment fund); and
- It makes grants to other charitable organizations rather than operating its own program (except in the case of a private operating foundation).”
Most of the clients I advise who think they are interested in a private foundation are either corporations or wealthy individuals/families seeking to make a difference in the world with their assets. There are ten questions I ask when someone is looking to embark on this endeavor.
- What does wealth mean to you?
- What lessons did you learn about wealth when growing up?
- Do you want to include other family members such as multiple generations and if so, what role(s) will they play?
- What core values would you like to express through your foundation?
- Where is the funding coming from?
- What would you like the foundation to accomplish through your grant making?
- How will you measure success?
- Who will be governing the organization?
- What giving vehicles would you like to consider…Private Foundation, Donor Advised Fund and/or Check Book Giving?
- What would you personally like to accomplish through the foundation?
Many of the questions will likely involve an in-depth conversation with a philanthropic advisor like myself and/or thorough research on the web. Answering these questions to the best of your ability today, will clarify some of the essentials to get you on the right path to fulfilling your philanthropic dreams or accomplishing what Aristotle so eloquently states is not an easy matter.