Structuring Your Foundation

First Republic Bank

Many of our clients want to know how they can approach charitable giving in a more efficient and effective way while keeping donors and family members engaged in the process. Here are several suggestions to consider when structuring your foundation.

Be mindful of future generations.  Many people form a family foundation and give the money to the first generation of children.  That generation continues to fund the foundation and controls how and where the money is distributed, and it may not involve the second generation in the process.  

When involving multiple generations, realize that political and world views can vary and that those opinions may impact agreements about which organizations they decide to give money to.  Financial advisors or certain family members can help bridge that gap, but it is an important piece to acknowledge.     

Think about how you are trying to influence the world.  Through integrated project planning, you can take a more holistic approach in your giving.  Examine how you are investing your money and supporting your plan for the future.  You might find that there are other organizations, such as the arts or a political group, that could tie into your charitable mission. 

Be realistic about your family dynamics.  A number of foundations were structured by families to be the vehicle that bonds future generations together and allows them to interact in a positive way.  However, if your family finds itself in dissent, you might consider structuring your foundation in a deliberate way so that bringing everyone to the same page is not the main focus.  Separate pools of funds are a great solution, in that certain pools are managed by children and their families individually, while other pools are managed jointly so that they are forced to interact on some level. 

Be creative in your activities. Program related investments allow private foundations to count the investments as charitable distributions when they have a specific charitable purpose. Foundations such as the Gates and MacArthur foundations have made successful program related investments, making money for the foundation that can then be put right back into charitable activities. 

There are other options besides private foundations. Perhaps you want to do some funding directly or have a donor-advised fund.  Donor-advised funds are public charities you give money to where you have the right to advise how they use and distribute the money. This type of fund can be of particular interest if your family has a geographic link to a particular region where it is no longer located, but you still wish to be involved in that community. Using a local community foundation that knows the area and can advise you on the needs of the community can be helpful.  This is also helpful with international giving that can be complicated for private foundations. You can give your money to an internationally based foundation, and they can help you manage the international grants.

The views of the authors of these articles do not necessarily represent the views of First Republic Bank. First Republic Private Wealth Management encompasses First Republic Investment Management ("FRIM"), the Luminous Capital division of First Republic Investment Management, First Republic Trust Company ("FRTC"), First Republic Trust Company of Delaware LLC and First Republic Securities Company, LLC ("FRSC"), Member FINRA/SIPC. FRIM, FRSC and FRTC of Delaware LLC are subsidiaries of First Republic Bank. FRTC is a separate division of First Republic Bank.

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