Challenge:

The foundation has its roots in a humble frontier feed store. Founded in the 1890s, the store eventually grew into a sizable company with a household name. Relatives of the three brothers who grew that company founded their foundation in the 1940s, and it has been in operation ever since.

Today, the board of the foundation, which is comprised of descendants of the brothers, pays homage to its history by keeping track of other descendants through familial records. There are now dozens of descendants and, upon reaching the age of 18, they are all eligible to join the foundation as a non-voting member and attend board meetings. The foundation will match up to three member gifts to charity for as much as $1,500 total in a given year. Members are also able to provide feedback via grant committees for organizations that have applied for funding.

The foundation’s tradition of making giving a (very large) family enterprise is one of its most cherished hallmarks. Even so, all that gift-matching and grant committee activity makes for an enormous amount of paperwork and a sizable administrative burden.

Collaboration:

Foundation Source set up their gift-matching program on Applications, our online grants management system for accepting, organizing, tracking, and replying to charitable requests. (Applications is available as an add-on to the robust platform our clients use to manage their foundations.)

Family members use Applications to apply for their gift match. Foundation Source verifies that the family member made a donation and that the recipient organization is eligible to receive grants from the foundation. We also customized Applications so that when a family member is a part of a grant committee, they can log in, review their committee’s applications, and then leave comments for board members.

Outcome:

Thanks to their experience with Applications, the foundation now benefits from a seamless, paperless process for its gift-matching program. The foundation is free to celebrate its heritage without worry that the growth of its family tree will outstrip its administrative capabilities.

The post How a Private Foundation Is Keeping An (Extended) Family Tradition Going Strong appeared first on Foundation Source.

Challenge:

The board of the Charles R. Wood Foundation carries on the work of its late founder by supporting children, the arts, and healthcare in upstate New York.

While traveling in rural North Carolina, the president of the foundation read an article in the local newspaper about Dolly Parton’s Imagination Library program and its outreach to the region. This national program, which is available to any community, mails a book to children under five years of age each month. The purpose of the program is to boost early childhood literacy and foster a love of reading.

As the Charles R. Wood Foundation wanted to promote childhood literacy in upstate New York’s rural counties, they asked their Private Client Advisor at Foundation Source to get them information on how they could get involved.

Collaboration:

The Private Client Advisor contacted the Dollywood Foundation, which was able to provide the demographic research the foundation required to assess regional need. Dollywood also identified possible literary agencies that might be willing to partner with the Charles R. Wood Foundation. Foundation Source coordinated the effort by discussing the program with the Literacy Volunteers of Clinton County, who agreed to handle the child registration process.

Foundation Source has streamlined the entire application process, saving the foundation significant time and administrative effort. The foundation is very pleased with their new process, but we revisit it each year and continue to refine it based on their evolving needs.

Outcome:

The Foundation now supports the Imagination Library program, enabling 3,500 children in Clinton, Essex, Franklin, and Hamilton counties to participate. The foundation is thrilled that Foundation Source could help connect them with the necessary partners to make this project happen, and they appreciate how easy we’ve made it for them to track its results, procuring semi-annual updates for their review.

The post Connecting a Private Foundation to An Opportunity for Literacy appeared first on Foundation Source.

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The personal charitable deduction for donating appreciated capital assets to a private foundation is typically limited to the donor’s cost basis. However, an exception exists for donations of “qualified appreciated stock,” generally allowing donors of publicly traded stock a fair-market-value deduction. An abbreviated definition of “qualified appreciated stock” is stock of a corporation for which market quotations are readily available on an established securities market. The stock must be held for at least one year, such that its sale would give rise to long-term capital gain. This exception does not apply to any other type of security, even those that are publicly traded, like bonds, publicly traded partnerships, and options. Additionally, the IRS has signaled that they won’t consider restricted stock to be qualified appreciated stock if the foundation can’t sell the donated stock because of holding period requirements.

2. Step Up the Foundation’s Cost Basis in Capital Assets

A private foundation is unable to carry forward capital losses to future years. Rather than allowing losses to disappear forever, a foundation can sell its appreciated capital assets and offset the resulting capital gains with the unused capital losses. Further, the foundation may immediately repurchase the capital asset because the “wash sale” rules apply only to capital losses, not capital gains. This strategy has the effect of providing stepped up basis for appreciated capital assets. Since the private foundation excise tax does not differ between short- and long-term gains, there is no downside to restarting the holding period.

RATHER THAN ALLOWING LOSSES TO DISAPPEAR FOREVER, A FOUNDATION CAN SELL ITS APPRECIATED CAPITAL ASSETS AND OFFSET THE RESULTING CAPITAL GAINS WITH THE UNUSED CAPITAL LOSSES.

3. Maximize the Donor’s Personal Charitable Deductions

Except for contributions of cash and qualified appreciated stock, contributions of appreciated assets to private foundations are generally limited to cost basis. That said, a foundation can make the so-called “conduit” election for any tax year to permit donors the foundation’s donors to treat donations made in an election year as though they had been made to a public charity. If the conditions are met for making a conduit election, donors of appreciated long-term capital assets, such as real property, are allowed a fair market value deduction and may benefit from higher adjusted gross income (AGI) percentage caps. These conditions require a foundation to (1) have satisfied its 5% annual minimum distribution requirement (MDR) for the year in which the conduit election is made (the election year), (2) satisfy next year’s MDR by the end of the election year, and (3) disburse the full value of all property and cash donated to the foundation in the election year within two and a half months after the close of that year. These conditions are often too onerous to be practical. But if a foundation has accumulated excess distributions carryover over its past five tax years, it can apply those carryovers in lieu of actual granting to satisfy the conduit election requirements. Excess carryovers are created when a foundation pays enough grants and qualifying expenses in a tax year to satisfy that year’s and the following year’s MDR. The excess carryovers from a given tax year can satisfy a future year’s MDR for up to five years, after which any unused carryovers expire. The charitable rollover rule allows those aged 701⁄2 and older to make tax-free charitable donations from their IRAs to private foundations making the conduit election, up to $108,000 per year (for 2025), and count it towards meeting their required minimum distribution.

4. Preserve Endowment with Program-Related Investments

Many foundations choose to satisfy their MDRs by making Program-Related Investments instead of or in addition to traditional grants. A Program-Related Investment (“PRI”) is essentially a charitably motivated investment that often takes the form of a zero or low-interest loan, secured or unsecured, to another charitable organization but can also take the form of a loan guarantee or even an equity investment if certain conditions are met. In the year a foundation makes a PRI loan or other qualifying investment, the funds advanced are treated as though they were traditional grants for purposes of satisfying the MDR. Repayment of the loan principal or recovery of the investment in a given tax year will increase the MDR on a dollar-for-dollar basis in the next tax year. Making PRIs permit a foundation to “recycle” its assets by making new PRI loans or other qualifying investments with funds that were repaid or recovered. By contrast, when a foundation makes a grant, the foundation never expects to recover those grant funds. An often overlooked tax benefit of PRIs is the exclusion of the value of all PRI assets when a private foundation calculates its MDR. For instance, suppose that a foundation invests $1 million in blue chip stocks.

The value of that stock will add roughly $50,000 (5% of $1 million) to the foundation’s MDR. By contrast, if the foundation makes a $1 million PRI loan or other qualifying investment instead, the foundation’s ownership of that investment won’t add a dollar to the foundation’s MDR.

MAKING PRIs PERMIT A FOUNDATION TO “RECYCLE” ITS ASSETS BY MAKING NEW PRI LOANS OR OTHER QUALIFYING INVESTMENTS WITH FUNDS THAT WERE REPAID OR RECOVERED.

5. Consider the Potential Liquidity Dilemma Posed by Certain Investments

Non-productive investment assets that do not generate income, such as a vacant lot or building, increase the foundation’s MDR by roughly 5% of the asset’s value, but do not provide the means to satisfy the increased MDR. For example, land worth $2 million will add roughly $100,000 (5% of $2 million) to the foundation’s MDR. If the land produces no rental income to help satisfy the MDR, the foundation may lack sufficient cash or other liquid assets to do so.

6. Eliminate Capital Gain with In-Kind Grants

If a foundation sells a significantly appreciated capital asset, it will recognize a capital gain and be taxed at the usual 1.39% tax rate. Instead of selling the appreciated asset, a foundation can make an in-kind grant of that asset directly to a charity, thereby eliminating the capital gain. The value of the appreciated asset at the time of the grant will be treated as the amount of the grant for purposes of satisfying the foundation’s MDR.

The post Advanced Tax Strategies for Private Foundations appeared first on Foundation Source.

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Evaluating a nonprofit to ensure there’s alignment with your mission really depends on the type of funder you are—or want to be. Are you an innovator? An advocate? A change agent? A capacity builder? For example, let’s say you want to contribute to education. There are several ways to go about this, but you want to be sure the steps you
take tie back to the defined role you want to play in fulfilling your philanthropic objectives. Do you want to advocate for education change on Capitol Hill? Or build schools in Africa? Those are two very different paths, so before you find the right nonprofit, it’s important to define your philanthropic personality.

EVALUATING A NONPROFIT TO ENSURE THERE’S ALIGNMENT WITH YOUR MISSION REALLY DEPENDS ON THE TYPE OF FUNDER YOU ARE—OR WANT TO BE.

2. Does the Organization Have a Clear Mission That Aligns with Your Passions and Values?

Look for specificity. It should be focused, concise and clearly explain the entity’s unique set of skills for strategically solving problems. Ambiguous intent with statements such as “We’re dedicated to making the world a better place” often leads to vague, intellectual work. What is the overriding purpose of the organization? Is it clearly focused on an issue or cause that matters to you? When you do receive a proposal, does the need addressed align with your mission and objectives? It should be a clear fit— from the population they serve to their organizational strengths.

3. Does It Meet a Critical Need?

In other words, does the nonprofit matter? You need to determine that there’s a clear need for its services and whether there’s substantial data available to justify its mission and e orts. It’s important to understand what its target population is and what percentage of that population it serves. Then you can examine whether these numbers have increased or decreased over time.

4. Do You Agree With Its Approach?

How is the nonprofit fulfilling its mission? A group of nonprofits with similar missions, say ending childhood hunger, may approach the same problem from di erent angles and perspectives. Be sure you agree with the organization’s strategy and tactics for addressing the issues you care about. Do they make sense? Are they based on credible research? Are you comfortable with them? For example, if the nonprofit frequently lobbies state and national legislatures yet you dislike politics, it may not be the right fit for your donation.

To compare nonprofits with a similar focus, visit “watchdog” organizations like CharityWatch, Charity Navigator, Give, and GiveWell. These websites apply uniform standards to grade the financial and programmatic quality of nonprofits. They will also help you beware of scams, fraudsters, and fake charities trying to trick unwary, but well-intentioned donors.

5. Is It Making a Positive Impact?

For many people, impact-driven philanthropy is a top priority. Will you achieve a bonafide positive impact by donating? Can the nonprofit prove its success? Does it report tangible evidence that it’s successfully meeting its goals? If results aren’t publicized, consider it a red flag, and instead donate to a nonprofit that tracks data and provides metrics of success. After all, you have to trust the recipient to make your contribution count.

To take it a step further, choose a nonprofit that will partner with you to measure impact. For example, a nonprofit could work with you to provide serial funding with future gifts that are contingent on results. But don’t base success only on output. Instead, look at the outcome. For example, if your goal is to help at-risk school children do better
in class–and you want to gauge how e ective a charity’s after school program is in achieving this—look beyond how many kids participate. That’s the program’s output, but what may really count is its outcome; how significantly the children’s performance in school improves.

ONE OF THE BEST WAYS TO GET TO KNOW YOUR PROSPECTIVE NONPROFIT IS TO PAY THEM A VISIT. MEET THEIR LEADERS AND CONSIDER VOLUNTEERING FOR THEM.

6. Does It Have a Solid Reputation and a Credible Board of Directors?

Check to see if the nonprofit has been in the news—and if that news has been positive. Does it have an upstanding reputation? Any allegations of bad conduct? Even if you suspect that the organization has been unfairly tarred by controversy, whether deserved or not, negative publicity can compromise success.

Additionally, look at the board of directors. Are its members chosen logically and thoughtfully, or are they seemingly chosen at random? Is the board dominated by the founder and a few insiders? Ideally, a mix of influential individuals and rainmakers should comprise the board along with experts relevant to the organization’s mission.

7. Are They Transparent?

Do they make their financial information readily available? If so, be sure their expenses are in line with their budget and look at their 990-PF form to verify its tax-exempt status. It’s also a good idea to do a quick search to see if other reputable donors are funding the organization. If they’re hiding something, it’s in your best interest to move on.

8. Have You Looked Locally?

You don’t have to look far from home to find those who are in need. Nonprofits with local ties, particularly with communities that are marginalized, are often disproportionately impacted. This has been starkly illustrated by COVID-19, racial and social justice concerns and recent natural disasters that are having the greatest impact on communities of color, low-income communities, LGBTQIA+ people and people with disabilities. Also, try seeking out nonprofits taking the long-view approach as opposed to just focusing on the immediate aftermath of attacks, situations and extreme weather-related events.

9. Have You Done a Site Visit?

One of the best ways to get to know your prospective nonprofit is to pay them a visit. Meet their leaders and consider volunteering for them. This is a great way to get to know the people, how they operate and the quality of the work. Site visits also help you build relationships–it’s a great first step to learn more about them even before you ask for a formal proposal or grant request. However, a site visit alone isn’t sufficient— what you learn while there must be considered in the context of the other steps to ensure the right fit.

10 Are You Factoring in Flexibility and Responsiveness When It Comes to Giving?

It’s not always what you give–it’s also how and when you give that matters, so that nonprofits can use the funding in the way that is most important at that moment. For instance, nonprofits everywhere have been impacted by changes in funding due to the acute and unpredictable needs that emerged in 2020, as well as supply chain issues and a reduction in government support. To help them keep the lights on, consider giving to general operational purposes rather than specifying how the funds should be used.

YOU DON’T HAVE TO LOOK FAR FROM HOME TO FIND THOSE WHO ARE IN NEED.

NEXT STEPS

If you’re not finding the information you need, contact the nonprofit. And if you’re contemplating a sizeable gift or ongoing commitment to the organization, this warrants additional due diligence to ensure your giving creates the desired impact.

By researching before donating, you’ll gain valuable insight and experience. With time, you’ll acquire the skills to determine when your donation isn’t just a gift, but an investment in progress.

The post Every Dollar Counts: How To Evaluate a Nonprofit appeared first on Foundation Source.

Children as young as three or four can learn about the value of good works.

Young people this age are just beginning to realize that the world extends beyond “me” and even beyond “Mom and Dad.” This is the age when children develop a sense of empathy and awareness of other people’s feelings, so it’s important to take advantage of this window of opportunity. The exciting discovery of their expanding world can be a magical time—a perfect opportunity to introduce children to the joys of helping others.

MODEL PHILANTHROPIC BEHAVIOR

Young children look to their parents for clues about how to interact with the world, taking careful note of how society responds to the elderly, homeless, disabled, or the seriously ill. Watching Mom and Dad engage in charitable activities reinforces the perception that your family values acts of generosity. The more the notion “this is what our family does” is reinforced, the better. Bring your children along when you provide books to a homeless shelter, shovel an elderly neighbor’s driveway, or donate used toys and clothing.

READ BOOKS ABOUT GIVING

A philanthropic mindset can be developed at story time by reading books about giving. Kids need role models and examples that inspire them. Stories with a theme of “giving back” such as B.G. Hennessy’s book, Because of You (Candlewick Press, 2005), underscore the importance of helping others:

You can also use books to answer young children’s questions about social issues, using the opportunity to clear up any misconceptions about what they’ve seen or heard, such as: “Why did that man ask you for money? Why is that lady sleeping on the park bench?” At Foundation Source, we are happy to share our extensive reading list of age-appropriate books with themes of giving to help raise a child’s social awareness.

DRAW PICTURES

You can encourage young children’s charitable instincts by asking them to create pictures of what they would do to make the world a better place. Begin by asking them questions: “What things are you thankful for? What makes you happy? What makes you sad? What can you do for people who aren’t as lucky as you?”

SHARE FAMILY STORIES

Children love to hear about the family’s history of giving. Share family stories from your own childhood or even further back in your family’s history. Any experience where a family member learned something about giving—how Grandpa helped neighbors down on their luck, or Aunt Lila planted a community garden— can be shared in the form of a story that will help children feel a sense of belonging to something bigger.

Growing Up

For school-age children (7 – 12 years old), family is central.

This is the age when they truly want to do things with their parents and siblings, so take advantage of this opportunity with them. Find areas of giving that genuinely excite them and enable the whole family to participate.

START WITH THEIR INTERESTS

The motivation to give is often sparked by a child’s own experience. Encourage children to talk about what makes them happy or what is important to them personally, and think about ways to share these things with others. For example, one child might choose to donate a favorite shirt or blouse that she has outgrown to disaster relief. Another child might give toys to a hospital where he had his tonsils out. The more children personally identify with their donations, the more you’ll cultivate their charitable impulses.

FAMILY PROJECTS AND VOLUNTEERING

Family volunteering can foster a larger sense of community participation and commitment. Choose an activity that matches your family’s interests—whether you like to participate in athletic activities like bike-a-thons, swim-a-thons or charity races—or prefer to work on community projects such as cleaning up a playground, beach, or park. Participation in a community project allows kids to do good while meeting and working alongside those who benefit from their efforts.

CREATE FAMILY RITUALS

Whether it’s cooking a meal for the homeless on Sundays or sharing a moment from the week where someone made a difference, regular rituals that are shared by the entire family help create a tradition of giving. Carol Weisman, the author of Raising Charitable Children (F.E. Robbins and Sons, 2006), recommends using birthdays, anniversaries, and other special occasions as opportunities to teach children the joys of giving. You can have your child phone an uncle on his birthday and ask what charitable act he’d like her to do in his honor. Or you could set aside a day to celebrate a relative’s special accomplishment or commemorate a tragedy that has touched the family. The idea is to create activities that become part of the family legacy.

INCLUDE CHILDREN IN YOUR DECISIONS ABOUT CHARITABLE DONATIONS

Since children learn best by imitation, set aside a special time to discuss whom you plan to give to and why. To make this activity more meaningful, you can point out organizations that hold special significance to the family—the hospital where Grandma stayed, or the wildlife refuge where the family hikes in the summer. Let children in on topics you are personally concerned about such as the plight of an endangered species or the demolition of a local historical landmark.

ENCOURAGE THEIR OWN CHARITABLE DONATIONS

To reinforce the idea of saving some of their own funds to help others, some families create a “Spend, Save, and Give” box with three compartments that allow children to allocate their allowance accordingly. Some families match their children’s charitable savings, so that they can do even more. Foundation Source clients use our online “Grant Certificates” to enable their children to make grants up to a specified limit to organizations they choose.

Teens

Teens typically start asserting their independence from the family, preferring to spend time with their peers.

But charitable pursuits needn’t go by the wayside at this age. As young people develop a more expanded world view, philanthropy can help them discover their place in it and their power to make a difference.

COMMUNITY SERVICE AND SOCIAL ACTIVISM

You can take advantage of teens’ growing desires to be with peers by encouraging them to join social venture organizations with friends or to make new friends by getting involved in causes they would like to explore. Many high schools require students to fulfill a civic service requirement in order to graduate (and college entrance authorities look positively on such activities). Help teens find volunteer opportunities that satisfy these requirements while enabling them to discover their own interests, like building a skate park or lobbying local officials to clean up a hazardous waste site. The idea is to find activities that build their confidence, so that they can make a difference.

STAR-POWER PHILANTHROPY

Celebrities like John Legend, Beyonce, and Ellen DeGeneres are helping to make social action seem not only important, but exciting. Sports figures are also great philanthropic role models for teens who may be looking to heroes for inspiration. For a generation brought up in a media-saturated, brand-conscious world, don’t discount cause-related marketing efforts such as the TOMS’ “One for One” movement, Warby Parker’s “Buy a Pair, Give a Pair” campaign, or MAC Viva Glam Lipstick. Granted, each has a commercial component but by raising teens’ social awareness, these efforts can be a springboard for their participation on the foundation.

TECHNOLOGY

Technology has become the primary method modern donors use to network and obtain information—and no one understands social networking, mobile technology, and interactive media better than this current generation. Although Foundation Source’s easy-to-use online console enables teens and their parents to collaborate online in managing the foundation’s activity, there are plenty of ways that tech-savvy teens can leverage their skills to make a difference. Get your teens involved in the foundation by inviting them to promote causes by designing websites, taking photos and digital video, networking with friends across the globe, and writing, podcasting, and tweeting.

INSPIRATION

Foundation Source clients in search of inspiration for the next generation have a terrific resource at their fingertips: our in-house Philanthropic Advisors. These experts can offer suggestions for cultivating a teen’s growing social consciousness and involvement. Their guidance is based on their professional experience advising foundations of all sizes and is drawn from more than 1,650 of our own clients.

College and Young Professionals

Young adults are branching out at this stage, often living far from home and immersed in the demands of first jobs or graduate/professional schools.

Time is often the most precious commodity for this age group, and their participation in family philanthropy may su er. However, if you have a foundation, you can offer attractive opportunities that help forge an enduring commitment.

A SEAT AT THE TABLE

Becoming a board member of a family foundation is a lot like acquiring a stake in a family business: It’s an honor, a privilege, and a big responsibility. That’s why it’s important to make joining the foundation board a significant occasion. Some families invite the next generation to join the foundation board when they reach a certain age. Others wait until specific milestones have been achieved, like attending a specified number of board meetings or volunteering a certain number of hours. Whatever criteria you choose, make board membership an important, highly anticipated event, and mark it by issuing a formal invitation.

FOUNDATION APPRENTICESHIP

To prepare the next generation for board duties while deepening their commitment, many families begin with apprenticeship programs, pairing young people with more experienced board members to act as mentors. One-on-one relationships with people they admire and respect can provide a meaningful introduction to the foundation.

The mentors can teach their protégés about the foundation and its work while helping them to explore how their unique contributions can enliven and invigorate the foundation.

FORMAL TRAINING

In addition to creating training opportunities within the foundation, consider giving young people a chance to learn about philanthropy with their peers, independent of the foundation.

Listed below are a number of good training resources devoted to youth philanthropy:

• 21/64 (www.2164.net) is a nonprofit organization that specializes in intergenerational transitions. They bring young philanthropists together to discuss their family legacies and next-generation issues.
• Resource Generation (www.resourcegeneration.org) is a network comprised of young people of wealth that provides education and resources to philanthropists and activists with progressive values.
• The Council on Foundations (www.cof.org) runs next generation retreats for foundation members ages 18 – 35 at its annual family foundation conference.
• Emerging Practitioners in Philanthropy (www.epip.org) provides peer support, mentoring and social events for young foundation professionals, foundation trustees, staff at philanthropy support organizations and graduate students studying philanthropy.

EXPOSURE TO INVESTMENT MANAGEMENT

Letting young adults see how the foundation assets are managed and talking to them about the board’s fiscal goals can be a powerful tool for teaching financial basics. Investment expert Paul Comstock points out that the family foundation is the only estate-planning tool that enables parents to observe their o spring’s proficiency
in managing money firsthand. How well young adults manage foundation finances can be predictive of how well they’ll handle their own funds once they are on their own.

GIVE GRANTING AUTHORITY

Providing a small amount of money in the form of discretionary funds offers the opportunity for young adults to connect grantmaking to their own interests. Having their own funds to contribute not only teaches them how to make grants, but also generates new program ideas for the foundation. Foundation Source makes discretionary granting easy. Young people can make grants online from any locale up to their allotted amount. As soon as they’ve reached their discretionary limits, they’re automatically stopped from granting any more.

Conclusion

We believe that bringing family members together to make the world a better place is what family philanthropy is all about.

By involving the next generation in the foundation, you can give them the desire, confidence, and skills they will need to extend your family’s legacy of good works and generosity well into the future.

In closing, we share a final story that we feel captures the satisfaction of raising the next generation to become engaged, passionate philanthropists.

In a city with a rapidly growing homeless population, one client found a way to directly involve his family in his efforts to lend a helping hand. He took his children shopping for basic supplies, using this opportunity to talk about what items might be needed and appreciated by people who don’t have ready access to showers, laundry facilities, etc. Together, they assembled kits that contained soap, shaving cream, razors, deodorant and other toiletries that most of us take for granted. The family kept these kits in the car and whenever they drove by someone who was living on the street, they would personally present the kit. The father remembers:

At first, I gave out the kits while the children watched wide-eyed from the car. Over time, my kids began to yell, ‘Dad, Dad, stop the car; there’s
a homeless person on the corner!’ They would then jump out and offer the kits themselves. The recipients were thrilled by their genuine concern and attention. I was delighted to see the social awareness this activity provided my children. I have no doubt that they’ll grow up to make a real difference in people’s lives.

The post Raising a Generous Generation appeared first on Foundation Source.

The ability to pay expenses with tax-advantaged dollars is a tremendous advantage if you want to deploy funds more strategically. For example, you may wish to incur expenses to:

• Hire issue experts to conduct research and/or advise you on opportunities in your field of interest.
• Conduct site visits prior to funding decisions and/or during the course of a grant.
• Hospitals and medical research organizations.
• Attend conferences and workshops that help you understand the needs in the field, meet the key players, and learn how to be a more effective philanthropist.
• Join donor networks or industry groups to share and learn from peer foundations with similar philanthropic interests.
• Retain legal counsel to help structure naming opportunities, capital gifts, or complicated, multi-year grants.

Incurring these expenses before you put a single dollar out the door can save you money in the long run, help you make more informed grantmaking decisions, and ensure that you get the results you anticipate.

EXPENSES CAN HELP YOU MAKE MORE INFORMED GRANTMAKING DECISIONS AND ENSURE THAT YOU GET THE RESULTS YOU ANTICIPATE.

Lean (Yet Comprehensive) Administration

All private foundations must comply with federal and state laws and IRS regulations. This necessitates the preparation and filing of federal and state annual returns, due diligence on grant recipients, and recordkeeping that documents the foundation’s compliance with various regulations. And someone needs to take care of the day-to-day operations common to foundations including cutting checks, opening the mail, answering the phones, and anything else that comes up.

To accomplish this work, the boards of smaller foundations often stitch together some combination of a team: an attorney, their accountant, and a non-foundation employee (such a family member, the administrator for a family business or family office staff ). This “patchwork” solution can be cumbersome and even potentially risky if responsibilities fall through the cracks.

Enhanced Engagement

At the very least, foundation members typically meet in person at least once a year to discuss and approve policy changes and other major actions, and to oversee the management of the foundation’s investments. (Foundations established by Foundation Source have the option to hold this annual meeting by telephone and conduct regular foundation business virtually, using Foundation Source’s online technology platform.) A face-to-face meeting, mandatory or not, is often the best way to deepen connections to the foundation and to each other. The foundation can cover the cost of attending in person meetings, as long as a few guidelines are kept in mind:

• Travel accommodations should be “reasonable,” not lavish. For example, rental cars or taxis are usually preferable to private limousine services.
• Meetings should be held somewhere convenient or relevant to the foundation’s business. If you live in Minnesota and grant exclusively in the Midwest, it’s hard to justify a board meeting in Las Vegas.
• Only foundation members’ expenses can be reimbursed for attending foundation business. Spouses and children who are not serving on the foundation and attend must pay their own way.

Clearly, no foundation should freely spend on itself at the expense of funding its grantees, but spending appropriate amounts on administration, governance, research, staffing, and education may make the difference between achieving good and exceptional results. Dollars allocated in the right places exponentially increase the foundation’s ability to impact social issues, making every grant dollar go farther and accomplish more.

SPENDING APPROPRIATE AMOUNTS ON ADMINISTRATION, GOVERNANCE, RESEARCH, STAFFING, AND EDUCATION MAY MAKE THE DIFFERENCE BETWEEN ACHIEVING GOOD AND EXCEPTIONAL RESULTS.

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Don’t Make Decisions in the Dark

Harness the power of Outcomes and see exactly what your grants have achieved. It’s never been easier to get monitoring reports from your grantees.

Outcomes organizes and automates the process of collecting follow-up reports from your grantees, saving your foundation time and effort.

“As our foundation’s grant manager, I can say that the Outcomes module of the platform has been a huge timesaver! We have been able to customize our templates to meet our unique requests to our grantees, and the ‘Flag for Results’ button has further helped to ensure that important follow-ups are not missed.”

AMELIA WHITECULTURES OF RESISTANCE NETWORK

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