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So You Want to Give
There are a number of ways to be philanthropic. What
follows is an introduction to the options for private giving that
are available to individuals and/or businesses. For more information about
any of these options, contact
us at 206-443-8430 or
info@philanthropynw.org.
You can also find more information on these options and
more in our Strategies
for Giving area. This section of our Web site gives
individuals, business and others the start they need to plan
their philanthropy.
Give to charitable organizations
Create a private foundation
Give to a community foundation
Give to a public foundation
Establish a supporting organization
Develop a corporate program
Other ways to give
Give to charitable organizations
Gifts to established charities provide direct support to those organizations.
These can include, but are not limited to, schools, hospitals, arts
and cultural institutions, human service agencies and religious congregations.
A gift to these nonprofit organizations can be of any size. Cash gifts
to charities are deductible at rates of up to 50% of adjusted gross
income; gifts of real property are deductible at rates up to 30%.
Create a private foundation
By creating a private foundation, a donor can retain personal control
and flexibility over his/her giving programs. A private foundations
can be a charitable trust fund or a nonprofit corporation. According
to law, private foundations must pay out funds of at least 5% of their
assets annually; plus pay a 1-to-2% excise tax on the net investment
income. Cash gifts to private foundations are deductible at rates
up to 30% of adjusted gross income; gifts of real property at rates
up to 20% of adjusted gross income.
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Give to a community foundation
Community foundations are public charities supported by donations
from across their region. Gifts to community foundations can be of
any size, from $1.00 to $1 Million. By pooling funds, community foundations
achieve economies of scale for investing, managing and granting philanthropic
dollars. Cash gifts to community foundations are deductible at rates
of up to 50% of adjusted gross income; gifts of real property are
deductible at rates of up to 30% of adjusted gross income. A donor
to a community foundation may designate his/her gift as:
- Unrestricted: which would be used where the foundation's advisors
deem is most needed in meeting the needs of the community.
- Restricted: which provide options for donors to determine how
their contributions will be used. Types of restricted gifts include:
- Designated funds where donors specify the agency or agencies
to receive their support.
- Field-of-interest funds where donors select the broad, charitable
purposes they wish to support (e.g. health, education, the
arts).
- Donor-advised funds where donors have the opportunity to
make periodic recommendations on which agencies they wish
to support, although final decisions rest with the foundation
board.
Give to a public foundation
Public foundations often operate in a similar way as community foundations,
with the major difference being that community foundations operate
in defined geographic areas (e.g. a city, county, region, state) and
work to improve a broad range of issues in these geographic boundaries,
while public foundations recruit donors who wish to address a particular
problems (e.g. social justice, gay and lesbian rights).
Establish a supporting organization
The supporting organization is a legal entity which attaches itself
to another public charity and takes on the public charity status of
the organization it supports. This structure preserves some of the
independence and identification with the donor, without the administration
or limitations of a private foundation. The donor or donor designees
may serve as board members, but the supported organization must have
50% or more of the board's voting power (or veto power) on the supporting
organization.
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Develop a corporate program
A business owner can develop a philanthropic corporate program in
the form of either a corporate foundation or a corporate giving program.
In both instances, the supporting funds come from corporate profits.
For most corporate programs, philanthropic priorities serve the communities
in which their employees live and work.
- Corporate foundations are often started with a single gift,
then funded on an annual basis, as profits allow. Legally, these
foundations operate as private foundations. Officers are generally
the company owners and key executives.
- Corporate giving programs are established as ongoing corporate
entities and funded as part of the parent corporation's operating
budget. Corporate contributions staff manage the corporate giving
budgets, often directed by the company's chief executive officer
and other key executives.
Business and corporations can also offer matching
gift programs for employees, matching their gifts to educational,
cultural and other 501(c)(3) nonprofit organizations. Companies
also offer in-kind donations of goods and services, as well as organizing
workplace volunteer efforts to meet community needs.
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Giving circles
This way of giving can take on many forms. It can be
a large organization with committees put together to perform different
grantmaking functions, or a small group of friends gathering together
informally to pool their funds. In forming a giving circle, a group
of people get together, discuss what type of organizations they would
like to support, and in what way, and then pool their money and
donate it to the organizations they choose.
Want more ideas?
There are many forms of planned giving vehicles, such
as charitable remainder trusts, charitable lead trusts, QTIP trusts,
charitable gift annuities, pooled income funds, and life insurance.
Because of the individual variables of these types of giving, we
recommend that you seek the advice of an attorney, financial advisor,
estate planner or insurance broker. Sources
for this section and all strategies for giving sections:
"Why Establish a Private Foundation," published by the Forum of Regional
Associations of Grantmakers
"So You Want to Give," published by the Forum of Regional Associations of
Grantmakers
"So You Want to Give: Options for Giving," published by the Council of
Michigan Foundations
"First Steps in Starting a Foundation," published by Council on Foundations
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