Managing Foundations and Charitable Trusts

Establishing a private foundation is not only of benefit to tax and estate planning, but is a powerful way to help your community and build a permanent legacy. Managing Foundations and Charitable Trusts is an essential guide to setting up a private foundation, whether you are looking to establish one or provide financial advice to those who are. Already nearly five percent of high-net-worth individuals have private foundations, and interest in setting up charitable organizations is on the rise. This new edition looks at the latest issues such as: Avoiding and detecting fraud The growth of donor advised funds Charitable planning in the face of tax rate uncertainty What to do when private foundations get too small This straightforward and authoritative guide explains the reasons for establishing a foundation, the steps for setting one up, and tips for avoiding common pitfalls. Author Roger Silk and his firm are well known in the adviser community for providing professional management to foundations, and he covers the ins and outs of private foundations from the perspective of both philanthropists and the advisers who work with them.

Roger D. Silk, CEO of Sterling Foundation Management, is widely recognized as a leading expert in the field of private foundations and charitable trusts. As a founder and board member of several nonprofit organizations, former bond trader at the World Bank, and Stanford-trained PhD economist, Dr. Silk possesses a unique blend of experience, practical knowledge, and theoretical insight that has enabled him to help build Sterling Foundation Management into the market leader that it is today.

James W. Lintott is Chairman of Sterling Foundation Management and a board member of Dean and Deluca and several private investment companies. He has over two decades of experience working with wealthy individuals and families. In addition, Mr. Lintott serves on the boards of a number of nationally recognized charities, including the Freer/Sackler Galleries of the Smithsonian Institution, the U.S.-Japan Foundation, and Best Buddies International.

Preface	p. xiii
Acknowledgments	p. xvii
The Basics of Charitable Giving	p. 1
Direct Gifts	p. 2
Supporting Organizations	p. 6
Donor-Advised Funds	p. 8
Private Foundations	p. 12
Conclusion	p. 18
Tax Incentives and Limitations	p. 21
Four Powerful Tax Incentives	p. 21
Details on Tax Deduction Limits	p. 25
Finding the Best Giving Strategy	p. 27
The $1.6 Trillion Loss	p. 28
Estate Taxes	p. 29
Conclusion	p. 30
Charitable Planning and Taxes	p. 33
Giving Approach	p. 34
Tax Planning Complexity	p. 37
Guidelines for Analytical Expenditure: Or Is Analysis Worth It?	p. 39
What to Do When Tax Rates Are Uncertain	p. 40
Timing of Gain Realization	p. 41
Charitable Remainder Trusts and Deferral	p. 42
Conclusion	p. 42
Planning with Charitable Lead Trusts and Charitable Remainder Trusts	p. 43
Charitable Lead Trusts	p. 43
Charitable Remainder Trusts	p. 47
Flexibility and Irrevocability	p. 52
Foundations and Children	p. 53
Affluenza	p. 54
Bringing Families Closer	p. 56
Transmitting Values	p. 56
Providing Valuable Skills	p. 56
Conclusion	p. 59
Benefits of Giving While You're Still Alive	p. 61
Personal Satisfaction	p. 61
Create a Legacy	p. 62
The Problem with Waiting	p. 63
From the Grave: Control-But Not Too Much	p. 64
What about Too Little Direction?	p. 66
Who Gets Control?	p. 68
Conclusion	p. 69
Effective Foundations: The Business of Philanthropy	p. 71
The Mission Revisited	p. 71
Getting Started	p. 74
Know Your Charities	p. 75
Governing for Effectiveness	p. 77
Approaches to Grant Making	p. 81
You Get What You Negotiate	p. 82
Stand on the Shoulders of Others	p. 83
Outside Experts Can Make the Difference	p. 84
Types of Support: Periodic versus Endowment General versus Program	p. 84
Is Measurement Worthwhile?	p. 86
Establishing Measures	p. 90
Provide Feedback	p. 91
Give Wisdom in Addition to Wealth	p. 91
Give Strategically	p. 93
Exercise of Leverage	p. 95
Make Foreign Donations Deductible	p. 96
Use Public Relations Effectively	p. 97
Create Financial Leverage through Tax-Exempt Financing	p. 98
Let Your Foundation Do the Dirty Work	p. 98
Conclusion	p. 99
The Road to Hell: Beware of Unintended Consequences	p. 101
Food Aid	p. 103
Private Charity and Unintended Consequences	p. 105
Fungible Money and Inadvertent Funding of Terrorism	p. 107
How to Give Restricted Grants	p. 109
Poverty-Again	p. 110
Developing an Appropriate Foundation Investment Policy	p. 113
What to Include in an Investment Policy	p. 113
Conclusion	p. 121
Developing and Implementing a Foundation Asset Allocation Policy	p. 123
Differences between Corporation and Foundation Investment Plans	p. 123
The Seven Deadly Sins of Foundation Asset Allocation Policy	p. 125
Developing a Good Asset Allocation Policy	p. 129
Should an Asset Allocation Policy Change over Time?	p. 135
Capturing the Rebalancing Bonus	p. 136
Active Management versus Indexing	p. 137
Who Is Responsible for the Asset Allocation Policy?	p. 138
Conclusion	p. 139
Main Themes in Legal Compliance	p. 141
Some Compliance Errors May Seem Funny, but They're Not	p. 142
A Fail-Safe System	p. 143
Required Activities	p. 144
Prohibited Activities	p. 147
Conclusion	p. 151
Fraud, Inflation, and Market Risk	p. 153
Stanford Case	p. 157
Enron	p. 160
Baptist Foundation of Arizona Case	p. 162
The Bre-X Fraud	p. 163
Allied Capital	p. 166
Fraudulent or Not? You Decide	p. 167
What Is XYZ?	p. 169
How Will Social Security End?	p. 170
Promised Benefits	p. 170
Real Terms	p. 171
Inflation: A Brief History	p. 174
Inflation Indexing	p. 176
Foundations and Endowments Are Highly Exposed to Inflation	p. 180
Avoiding Fraud	p. 180
Other Planned Giving Vehicles	p. 183
Charitable Gift Annuity	p. 183
Gift Annuities versus Regular Annuities	p. 184
Partial Exclusion of Annuity Payments from Income Tax	p. 185
Bargain Sale	p. 186
Charitable Gift Annuity versus CRT	p. 189
Remainder Gifts with Retained Life Estate	p. 190
Pooled Income Funds	p. 192
Donor-Advised Funds	p. 195
History	p. 196
Guidelines-Highlights	p. 196
Fees and Costs	p. 199
Building Assets with Charitable Planning	p. 201
Professionally Managed, Turnkey Private Foundations	p. 205
Foundation Manager's Role	p. 206
Conclusion	p. 207
How to Select a Foundation Manager	p. 209
Choosing a Full-Service Manager	p. 209
Conclusion	p. 212
What Can You Donate to Charity?	p. 213
Publicly Traded Securities	p. 213
Nonpublicly Traded Business Interests	p. 215
Tangible Personal Property	p. 216
Intangible Personal Property	p. 218
Qualified Retirement Plans	p. 221
Real Estate	p. 223
Conclusion	p. 225
When the Shoe No Longer Fits	p. 227
Private Foundations	p. 227
Charitable Remainder Trusts	p. 231
Getting Rid of Other Charitable Vehicles	p. 243
Conclusion	p. 245
Selected Resources	p. 247
About the Authors	p. 249
Index	p. 251
Table of Contents provided by Ingram. All Rights Reserved.

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Managing Foundations and Charitable Trusts Essential Knowledge, Tools, and Techniques for Donors and Advisors

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