Many of our clients wish to establish a multi-generation philanthropic legacy. One of the best ways to accomplish this is through the establishment of a private foundation.

A private foundation is a special, not-for-profit entity that is controlled by an individual, family or business. It is organized exclusively for charitable, educational, religious, scientific and literary purposes under Section 501(c)(3) of the Internal Revenue Code. In order to qualify as a private foundation, and for the contributions to be deemed tax deductible, the entity must be recognized by the IRS as a qualifying tax-exempt organization.

BCAP makes it possible to establish a foundation with as little as $100,000, yet provides services that are robust enough for foundations up to $250 million and more. Additionally, BCAP can work with existing private foundations.

Our focus is to make sure all the details are handled, so donors can focus on what matters most, their charitable giving.

The behind the scenes work is designed to keep things running smoothly and in accord with IRS regulations.

Frequently Asked Questions

1. How does a private foundation differ from a donor advised fund?
They differ both in control and flexibility. Contributors to a donor advised fund make irrevocable contributions to a nonprofit organization that administers the fund and makes decisions regarding fund investments. Contributors may recommend eligible charities as recipients for grants, but the fund's governing body is free to accept or reject the recommendations. With a private foundation, there is greater flexibility and control. Private foundations can typically accept and hold a much wider variety of assets, such as 144 restricted stock and hedge funds, and the founder retains control over how the assets are invested. In addition, the founder retains control over the charitable donations and other foundation disbursements. Foundations are also able to hire staff, reimburse expenses, and set up structured giving programs, such as scholarships.

2. Who can a private foundation give money to?
Private foundations typically carry out their philanthropy by making grants to public charities. Our clients can access an online database of over 750,000 IRS-approved charities that foundations can use to research potential grants. It is possible for foundations to set up scholarship programs, and give hardship and emergency assistance grants directly to individuals. Private foundations are precluded from making grants to political campaigns or organizations that exist to influence legislation and voting.

3. How do private foundations find out about charities they are interested in giving money to?
The online database available to our clients has over 750,000 IRS-approved charities that foundations can use to research potential grants. Available information includes finances, activities, copies of past 990s and more.

4. Can family members be involved in the foundation?
By appointing children and other family members as officers and directors, the foundation can serve to unite the family in philanthropy and pass values on to younger generations.

5. Can family members be paid by the foundation?
Paying family members requires strict adherence to IRS rules. To avoid the potential for legal problems and penalties, individuals should consult with an attorney.

6. Can foundations continue to work with existing legal and tax advisors?
BCAP does not provide legal or tax advice. We will work with the individual's current advisors as needed, or provide the names of specialists in this area.

7. Can existing foundations use BCAP’s services?
BCAP can accommodate existing foundations, whether trust or corporate form (regardless of state of incorporation).