How the Wealthy Start Charitable Foundations

How the Wealthy Start Charitable Foundations

How the Wealthy Start Charitable Foundations

Many of the world’s wealthiest individuals share many common traits and life experiences. They also share a common interest in using their wealth for good. Some of the world’s greatest how to start a charitable foundation was founded by some of the wealthiest people, including Bill and Melinda Gates, among others. If you already enjoy giving much of your wealth to good causes then perhaps you should consider starting your own charitable foundation.

Starting a charitable foundation definition is something that really anyone can do, but high net worth individuals obviously have the resources already in hand in order to get started. So how do the wealthy go about this process?

Define Your Purpose

The first thing you need to do is determine the purpose of your private foundation. In other words, what do you hope to achieve with the foundation? Next, you will need to determine the guidelines you plan to follow for making grants to organizations, charities, and causes. Your definition is very important because not only will it help guide you and your foundation’s activities, but it will also help you receive tax-exempt status from the IRS.

Which Type of Foundation?

The next big decision is to choose between running your foundation as a non-profit corporation or starting a charitable trust. While a charitable trust can be easier to create and manage, it doesn’t always offer the trustees the same legal protection as a nonprofit corporation.

On the other hand, nonprofit corporations are operated under more stringent requirements, but they do offer more personal liability protection and increased flexibility, which is why they are actually more common. In either case, you will have to apply for an employer identification number, or EIN, from the IRS, whether you hire employees or not, because it will serve as the tax ID number for your foundation.

Filing the Paperwork

After receiving your EIN you’re still not done with the IRS. The next step is to file all your organizing documents with the tax agency. That includes Form 1023 – Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code – as well as file all the necessary supporting documents that go with it.

Essentially, this form will describe your foundation and its purpose, and how it will be organized, managed and operated. When you complete all of this information and the IRS approves your tax-exempt status you might still need to file some additional paperwork in order to receive tax-exempt status from the state in which your foundation is located.

Rewarding Experience

After you’ve organized and established your foundation, the real work begins. You will have to run it much like you would any other corporation and you will have to track all your expenses and income. However, for most people that start their own private foundation, they find it to be worth the trouble. Not only is it rewarding to help others, but they also create a nice tax break for themselves at the same time.

 

We hope you found this article about “How the Wealthy Start Charitable Foundations” helpful.  If you have questions or need expert tax or family office advice that’s refreshingly objective (we never sell investments), please contact us or visit our Family office page  or our website at www.GROCO.com.  Unfortunately, we no longer give advice to other tax professionals gratis.

To receive our free newsletter, contact us here.

Subscribe to our YouTube Channel for more updates.

Alan Olsen, CPA

Alan Olsen, is the Host of the American Dreams Show and the Managing Partner of GROCO.com.  GROCO is a premier family office and tax advisory firm located in the San Francisco Bay area serving clients all over the world.

Alan L. Olsen, CPA, Wikipedia Bio

 

 

GROCO.com is a proud sponsor of The American Dreams Show.

 

American-Dreams-Show-Accounting-firm-in-ca-cpa-tax-advisors-groco-alan-olsen

The American Dreams show was the brainchild of Alan Olsen, CPA, MBA. It was originally created to fill a specific need; often inexperienced entrepreneurs lacked basic information about raising capital and how to successfully start a business.

Alan sincerely wanted to respond to the many requests from aspiring entrepreneurs asking for the information and introductions they needed. But he had to find a way to help in which his venture capital clients and friends would not mind.

The American Dreams show became the solution, first as a radio show and now with YouTube videos as well. Always respectful of interview guest’s time, he’s able to give access to individuals information and inspiration previously inaccessible to the first-time entrepreneurs who need it most.

They can listen to venture capitalists and successful business people explain first-hand, how they got to where they are, how to start a company, how to overcome challenges, how they see the future evolving, opportunities, work-life balance and so much more..

American Dreams discusses many topics from some of the world’s most successful individuals about their secrets to life’s success. Topics from guest have included:

Creating purpose in life / Building a foundation for their life / Solving problems / Finding fulfillment through philanthropy and service / Becoming self-reliant / Enhancing effective leadership / Balancing family and work…

Untitled_Artwork copy 4

MyPaths.com (Also sponsored by GROCO) provides free access to content and world-class entrepreneurs, influencers and thought leaders’ personal success stories. To help you find your path in life to true, sustainable success & happiness.  It’s mission statement:

In an increasingly complex and difficult world, we hope to help you find your personal path in life and build a strong foundation by learning how others found success and happiness. True and sustainable success and happiness are different for each one of us but possible, often despite significant challenges.

Our mission at MyPaths.com is to provide resources and firsthand accounts of how others found their paths in life, so you can do the same.

Posted in
Here's a 15-item checklist of low-hanging tax tips for financial advisors; Tax Planning Tips that Can Save You a Bundle

Tax Planning Tips that Can Save You a Bundle

Let’s talk about some tax planning tips that can save you a bundle. Most high net worth individuals didn’t get wealth by sitting around and hoping to get rich. They have to earn it. That’s one of the biggest differences between just getting by and actually getting rich. And one of the things high net…

Millionaire Taxes- The Debate is On

Millionaire Taxes- The Debate is On

Millionaire Taxes- The Debate is On.  How many people are millionaires in the United States? According to recent statistics the number of people in the country with a net income of $1 million or more reached 9.63 million in 2013. That might sound like a lot, but compared to the total U.S. population that number…

The Time To Start Saving On Your Taxes Is Now

The Time To Start Saving On Your Taxes Is Now

It’s tax time. What? April is still months away, isn’t it? While it’s true that that we still haven’t watched the big crystal ball drop in Times Square or even put up the Christmas tree, it is still time to think about your taxes. That’s because anyone who really wants to be prepared for taxes,…

irs

IRS Announces New Efforts to Help Offshore Taxpayers Be in Compliance

IRS Announces New Efforts to Help Offshore Taxpayers Be in Compliance For years the IRS has been trying to track down U.S. citizens’ offshore assets in order to ensure that taxpayers are paying every penny they owe. However, these efforts have often affected many people who had no intention of ever skipping out on their…