Many families establish private foundations because they want to make a lasting difference, involve family members in philanthropy, and create a charitable legacy.
But families change.
Children and grandchildren may move away. Board meetings become harder to schedule. Tax filings, investment oversight, recordkeeping and compliance requirements continue, even when fewer family members want to manage them.
At some point, a family may begin asking: Is our private foundation still the best way to accomplish what we want through our giving?
For some, transitioning to a donor-advised fund at the Community Foundation of Howard County may be worth exploring.
Here are five places to start.
1. Take an honest look at what’s working.
Is the private foundation still accomplishing what your family intended? Are family members actively involved? Has managing the foundation begun to take more time, energy, and resources than the giving itself?
That doesn’t mean the private foundation hasn’t been successful. It may simply mean your family’s needs have changed.
2. Talk with your professional advisors.
Transitioning a private foundation involves important legal, tax and financial considerations. Your attorney, CPA and financial advisor can help determine whether it makes sense for your particular circumstances.
CFHC can be part of that conversation as well. As philanthropy advisors, we can explain how a donor-advised fund works, the many donor services we provide, and explore ways to preserve the charitable purpose and identity your family has built. Consider our experienced staff at CFHC as part of your professional advisor team.
3. Think about who should be involved.
A donor-advised fund can provide flexibility for family philanthropy. Family members can serve as fund advisors and recommend grants, and successor advisors can be named to involve future generations.
4. Develop a transition plan.
If your family decides to move forward, your professional advisors and CFHC can work together on the process. A private foundation’s remaining charitable assets may generally be transferred to establish or add to a donor-advised fund, with the appropriate legal, tax and administrative steps completed along the way.
5. Get back to the giving.
For many families, this is the biggest benefit.
With CFHC handling fund administration, investment oversight, recordkeeping and other responsibilities, families can spend more of their time deciding what matters to them and supporting the organizations and causes they care about.
Every family’s circumstances are different, and a donor-advised fund isn’t automatically the right answer. But if managing a private foundation has begun to overshadow the purpose behind it, it may be worth having the conversation.
CFHC is happy to talk with you and your advisors about the possibilities.
That’s a conversation we’re always happy to have.
Melissa Curtin
President & CEO
Dan Flynn
Director, Development & External Relations
Community Foundation of Howard County