Family foundations are becoming more popular as a way for people to pass on their assets tax-free, while also donating to charitable organizations and allowing family members to partake in the process.
“We are finding an awful lot of people, because of the stock market or increases in real estate valuations, that are wealthier beyond what they dreamed of,” said Rudy DePorter, vice president of client services of Northern Trust.
Instead of just cutting a check to a woman’s shelter or cancer society or attending a $1,000-a-plate dinner, people are forming new organizations that can provide a continuous stream of donations to charitable organizations.
According to the Council on Foundations, private foundations have grown from 22,000 in 1980 to 35,000 in 1995. Dorothy “Dot” Ridings, the president of the Council on Foundations, said the most recent number of foundations has grown to almost 48,000 nationwide, and the majority of those are family foundations.
“The growth has been extraordinary,” Ridings said, and attributed the growth to the economy, the increased popularity of foundations and the desire to instill philanthropic values in the foundation sponsors’ children.
A family foundation is legally the same as a private foundation, but it is run by a sponsor’s family.
“There is a growing feeling since people are getting wealthy that they have to step up, because the government isn’t always going to be around to support the arts,” said Mark Powell, an estate planning attorney with Miller, Freeman & Freeman in Irvine. Powell said that in the past month his firm had 12 new families approach the firm to start a foundation, adding to the about 60 family foundations in Orange County, the most notable being The Samueli Foundation, The Beale Family Foundation, the Bren Foundation and The Koll Family Foundation.
“And that number keeps growing,” Powell said.
Individuals set up foundations so their children “do not become trust-fund babies,” Powell said, while giving them an opportunity to continue the family’s philanthropy. n
