Options for Family Philanthropy
With the wealth creation of the past 25 years, a generation of recently minted millionaires is now contemplating the philanthropic options that are a fortunate byproduct of success.
For many, the prestige of establishing a private family foundation (PFF) to dispense charitable gifts to favored causes is alluring - a dream come true. But is it really? As the old adage goes, be careful what you wish for.
Along with the hope of becoming a philanthropist in the vein of Rockefeller, Gates or Buffett, the creators of PFFs assume considerable burdens, as well, in the form of administrative and investment-management obligations, reporting requirements, minimum gifting of assets as required under the tax code and a loss of privacy. The unfortunate reality is that the expense ratios of private foundations holding assets of less than $10 million often make them woefully inefficient as philanthropic vehicles.