Individuals and businesses who are thinking about creating a private foundation - and those managing an existing private foundation - should consider all of the options available to them to ensure that the assets and time being committed to such an undertaking are being effectively and efficiently deployed. The Community Foundation can be a knowledgeable partner or alternative in many situations faced by private foundations.

The creation of a private foundation is only one option available for those seeking to create a formal avenue for supporting charity. Many find establishing a private foundation as the best solution for them. However, most individuals and businesses may be better served by creating a fund or supporting organization with the Community Foundation.

Many individuals and businesses find establishing a fund or supporting organization with the Community Foundation is a more cost-effective alternative. Donors to the Community Foundation may remain anonymous and can deduct their gifts into these funds with the preferred tax treatment as gifts to a public charity. These funds can grow completely tax-free and are not subject to the mandatory 5% distribution rule or other private foundation excise taxes. In addition, you can avoid or reduce administrative costs and hassles, as our professional staff is available to handle all of the details for you – from helping identify grant opportunities to maximizing the tax benefits of your gifts into the fund.

The Community Foundation offers many different fund types to address the issues faced by your clients. Many find that establishing a donor advised fund or a supporting organization with the Community Foundation is an attractive solution.

Services and opportunities for existing private foundations

Every year, more and more private foundations turn to the Community Foundation for services to help them with various situations they encounter. Some areas in which the Community Foundation can be of assistance include:

• The termination or transition of the private foundation. We can help you establish a fund or supporting organization into which your private foundation can be merged so as to avoid future administrative costs, excise taxes and other burdens associated with the operation of the private foundation.
• Annual grant distribution requirements. Some private foundations create funds at the Community Foundation to hold the required annual distribution they need to make because, for example, a project at another nonprofit that was to receive the distribution is not ready to receive the private foundation grant in time for the private foundation to meet its payout requirement. These funds can then be distributed to the other nonprofit when it is ready to proceed, without reducing the support available to our community due to payment of unnecessary excise taxes.
• Grant opportunities. The Community Foundation is grateful for the many grants private foundations have made to our programs and initiatives to better our region. Some of these programs and initiatives have been developed with the input of private foundations looking for an efficient and credible partner to make these opportunities a reality. We always welcome inquiries from private foundations about possible partnerships and grant programs.

Please contact us at (313) 961-6675 to learn more about how the Community Foundation can serve you as an alternative to a private foundation or how we can work with your private foundation to make southeast Michigan a better place in which to work and live!