CHARITABLE PLANNING

Sunil Garga

Understanding foundations ’ operational needs is essential to giving them helpful guidance .

HEN WE ADVISE CLIENTS WITH PRIVATE FOUNdations , we have to remember that one size does not fit all . The nearly 100,000 private non-operating foundations in the U . S . vary widely , from the amount of their assets to their charitable missions to their management . If you want to give them sound advice and partner with them effectively , you must consider their many different needs .

That means their operational needs in particular . It ’ s critical to know how they are going to adapt , grow and thrive . Foundation Source has worked with private foundations over more than 20 years , and there are three things we ’ ve learned that help us provide our clients with the best support .

1 . Size And Complexity Are Not Correlated

The amount in assets a foundation holds does not determine whether its activities are more advanced . Foundations can be small and sophisticated , large and simple , and anywhere in between . To put it in perspective , 90 % of U . S . foundations have assets of $ 10 million or less . Those in the midsize category have $ 10 million to $ 50 million , and they contribute only about 6 % of the entire foundation field . Finally , those entities

Foundations can be small and sophisticated , large and simple , and anywhere in between . To put it in perspective , 90 % of U . S . foundations have assets of $ 10 million or less . with more than $ 50 million make up less than 3 % of all foundations ( this category includes the Bill & Melinda Gates Foundation and the Lilly Endowment ).

One of our most intriguing clients is in the category of small foundations , yet in many ways this organization is run in a notably unique and elaborate way . While many foundations offer traditional grants , this client uses a wide range of charitable giving tools . For example , in addition to making grants , the foundation conducts direct charitable activities — hands-on service with robust communications to promote its mission , the causes it supports and the accomplishments of its grantees .

Given the amount this foundation client has in assets , one might assume it is mostly self-sufficient and requires minimal assistance . But given the intricacy of its activities , it requires sophisticated legal , tax and compliance support as well as strategic philanthropic guidance .

To gauge a foundation ’ s degree of complexity ( and need for expert support ), consider the following :

• Does it have ambitious goals and aspirations ?

• Does it pursue a variety of charitable endeavors beyond traditional grant-making ?

• Are the relationships among its founders , family members , management and board harmonious ?

JULY / AUGUST 2022 | FINANCIAL ADVISOR MAGAZINE | 25