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Family Foundation Format Descriptions
Structured to Suit Your Needs
A family foundation account may be established in any of the following forms
or structures:
The experienced staff at The American
Foundation of Utah can work with your
tax and financial advisors to help you determine which type of family
foundation is best for you.
Format
Descriptions
Component
Family Foundation
(A component charitable foundation account at the American Foundation of Utah)
This is highly preferred for all foundations regardless of size. A family
foundation is a charitable account created to provide ongoing financial
support to donor recommended charities. Assets donated to a family foundation
account are managed for growth and income, and a portion of the annual income
or growth is distributed to family selected charities. This is the simplest
and easiest family foundation format to operate. Cash or assets are
transferred directly to the American Foundation of Utah for the particular family foundation
account of the donor establishing the fund. This foundation is established
with a minimum deposit of $5,000.
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solid foundation will
flourish in posterity.
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The American Foundation of Utah is a
qualified 501(c)(3) public charity. All of its family foundation component
accounts qualify for the same public charity tax status. Donors qualify for
the highest tax deductions - up to 50% of AGI for contributions of cash and 30% of AGI for donations of appreciated properties. Excess
deductions can be carried forward for five years. The assets are managed for
income and growth. The donor or the donor's designee makes
recommendations for grants of all or part of the annual income and growth to
qualified public charities.
Unless specifically noted otherwise,
all donations accompanying an application will establish this preferred and
standard component family foundation account with the American Foundation
of Utah.
Support
Organization
A support organization is a foundation formed to support a particular charity
or cause. A support organization is an entirely separate entity with its own
501(c)(3) tax status.
The American Foundation of Utah has
pioneered the use of support organizations as family foundations. A family
foundation in this format, affiliated with the American Foundation of Utah
can provide special benefits.
This type of foundation is a public
charity, so donors receive the highest tax deductions - up to 50% of AGI for contributions of cash, and 30% of AGI for donations of appreciated property. Excess
deductions can be carried forward for five years. The support organization
format is well suited for very large foundations where the donor wants
continued hands-on administrative involvement. It can be set up as a trust or
a corporation, depending on its size and nature. The American Foundation of
Utah will help you determine which format is best for your situation.
The donor or selected family members can be
appointed as trustees or board members. Special procedures are implemented in
the governing documents and by-laws to ensure continued adherence to the
donor's charitable mission and objectives. This type of foundation may raise
money as an independent entity, apply for grants, and have its own offices,
officers, employees, and programs.
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Private Foundations
By in large, this approach has fallen
out of favor with most tax and foundation planners because of the reduced
tax benefits and burdensome regulations. However, The American Foundation
of Utah can "adopt," convert, and/or
administer existing private foundations, bringing them into its extended
Family of Foundations' operations. And, there are some circumstances that
warrant the creation of private foundations that work in tandem, or in
concert, with our family foundations at The American Foundation of Utah.
This foundation type is a totally
separate and distinct entity. In addition to having increased
responsibilities and liabilities, there are many tax and administrative
disadvantages. There are also other restrictions and limitations that
prevent the donor from achieving many tax and financial objectives that can
otherwise be achieved with a family foundation under our public charity
format. Deductions for gifts of cash are limited to 30% of Adjusted Gross
Income, 20% for donations of appreciated property.
The American Foundation of Utah is well
suited to assist you in the administration of a private foundation. A
private foundation can be best utilized in conjunction with one of our
public charity foundation formats. The synergistic benefit of being part of
The American Family of Foundations is much better than acting alone.
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