Question 1

How is setting up a private foundation different from donating to a charity?

Accepted Answer

Unlike a registered charity which relies on donations from the public to support its endeavours, a private foundation is set up by an individual or family and makes donations, or grants, to registered charities. Another example of how a private foundation can make an impact is to fund a scholarship through a grant to a university or school. A private foundation often doesn’t conduct its own charitable operations but can make grants either to fund a charitable organization’s general operating expenses or fund a specific program.

Question 2

Do private foundations pay taxes?

Accepted Answer

Private foundations are exempt from tax. The income earned on the foundation’s assets grows tax-free. This allows the foundation to increase its asset base and the amount of good that it can do and increases the longevity of the foundation.

Question 3

What do I need to know to consider creating a private foundation?

Accepted Answer

Getting involved in philanthropy via a private foundation can be an exciting endeavour and a rewarding way to express your deepest values and aspirations, while also benefitting your community. It is also an ideal way to teach children about the role of philanthropy and their responsibility to their community. It all begins with identifying the values and charitable goals you want to express through your giving and translating these into a plan for action.

Question 4

I have heard that philanthropy is linked with creating a family legacy. How does that happen?

Accepted Answer

A family’s shared values, aspirations and charitable interests form the basis of a family’s philanthropy. Developed into effective granting goals and strategy, they will set a course that can transcend generations and serve as a legacy within both the community and the family itself.

Question 5

There are tax benefits to giving to my favourite charity. Are there similar tax benefits with a private foundation?

Accepted Answer

Yes, the tax benefits are the same whether giving to a private foundation, public foundation or an operating charity.