Private Family Foundations - The Key Issue to Keep in Mind When Considering a Private Foundation

A private family foundation can have many benefits. And yes, the tax savings can be substantial and are probably at the top of your list. Yet there is an even more important issue you must consider before making the decision to start your own. Read on to discover how to make your foundation truly rewarding.

It's a very bad idea to walk into creating your foundation blindly. Instead, spend some careful thought on your long-term goals for the foundation and the commitment that will be required both of you and your entire family. And then, there are all those administrative requirements. Make sure you're really ready by spending time on the most important issue of all.

Choose the right goals

In order to ensure that you're ready to stick with your foundation for the long haul, you have to make sure that you choose the right goals. Those goals must be truly yours -- and they need to have staying power. It's essential to get really clear about what you want from your foundation.

What happens if you don't? The number one problem I've seen with people setting up foundations is that many of them neglect that crucial step and focus strictly on the immediate tax benefits, which can be substantial. Unfortunately, that can easily get in the way of developing a real philanthropic program.

Instead of selecting activities that are truly exciting to them, those people take on programs that they believe are more politically correct. As their enthusiasm wanes, their commitment generally wanes as well.

If you want to avoid having that happen to you and your private family foundation, you should think seriously about what exactly you would really like to accomplish. What are the activities they would like to be able to do as part of your work for the foundation?

Do you enjoy gourmet cooking? Are you interested in exploring other cultures? If so, you should work on finding ways to incorporate those into your foundation by building it around those activities. You could for example set up a foundation that provides international gourmet cooking classes for economically disadvantaged teenagers.

If you pursue activities that are of real interest to you as the founder and your families, your private family foundation becomes a mechanism where you can legally tax leverage and institutionalize your hobbies and passions.

And if you get that part right and you have carefully integrated your foundation in your overall life plan, working with it can become so rewarding that the considerable commitment involved won't be too much of an issue.