Does your family need a Foundation?

What is the right structure for your family’s giving?

Over the years, we have been delighted to discover that a lot of the families we work with support charities, volunteer in their communities, and participate a range of other philanthropic activities.

And when we find this out, as Financial Planners, we start to think about whether the best structures are in place to help support this type of giving structure. This often leads us to consider whether, or not, our clients need to have a Foundation.

In making this decision, we need to understand how involved each family member is in the giving currently, and how involved they want to be in the future.

This is important because Foundations may not be financially effective in all circumstances.

Foundations work well when the gifting or philanthropy is reasonably significant and there is a key need for the family to be tangibly involved in the giving, in a structured and organised way.

There is a forced and imposed structure that needs to be maintained when having a Foundation. I liken it to being the trustee of your own self-managed superannuation fund. Similar to a SMSF, having a Foundation increases the legal responsibilities and costs imposed on you.

Because of this, the decision to have a Foundation is not to be done light-heartedly.

While there are increased costs and responsibilities, it certainly has its upsides. There can be tax and financial benefits, but also having a family Foundation is an amazing thing for helping cement an intergenerational culture of giving.

You may recall my It’s Never About Money episode in which we talked about intergenerational storytelling with Mike Boyd, CEO of the Vroom Group, and how it is a really important factor in motivating the next generation and continuing the culture of the family. From one point of view, having a private Foundation can also be a way of helping to continue the story from one generation to the next.

However, that doesn’t necessarily mean you need to create a Foundation to have those same benefits.

One can get those benefits by simply volunteering on a non-financial basis or by donating small gifts. And, you can still involve your family in this type of giving.

For example, one such way is through a great program called Seedling. This is what I consider a match-making service for families and charities, and helps kickstart giving, however small.

So, if you’re thinking about your current giving, and the type of giving that you’d like to continue doing, now is the time to have a chat to James or me about your options.

We can help you figure out the best structure for you and your family.

Find out more about our Philanthropy services.


Joe Stephan  |  Director, Stephan Independent Advisory

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