PRIVATE FOUNDATION
If you have a large amount to donate and you want to retain as much control as possible, a private foundation may be an option worth considering. This is an entity established with a charitable purpose and funded by donations from you and possibly your family that distributes money to charities you choose. The entity can be established as a trust with a trustee managing the donation or a corporation with a board of directors managing the donation. Since you create the entity, you control the operations, who will run the foundation, who will receive the donations, and how much will they receive. In order to qualify as a private foundation and receive the favorable tax benefits, it is crucial that all of the appropriate formalities and rules are followed when operating the private foundation. An income tax deduction may be received for the donations made to the private foundation up to 30% of your adjusted gross income. Additionally, if you donate an asset (e.g., stocks or real estate) that has increased in value, you may be able to avoid paying capital gains tax if those items are sold by the private foundation instead of by you. Lastly, after donating these valuable assets to the private foundation, they are no longer owned by you or under your control, so when you die, they will not be subject to estate tax.