Often, one of your greatest opportunities to maximize the personal benefits of giving occurs when you are making other major business, personal, and financial decision. Beyond the standard forms of giving, there are other opportunities for charitable giving that your may want to consider in some of these special situations.
Transferring a Private Foundation
As charitable donors, you may wish to create vehicles that allows them to maintain long-term involvement with charitable assets. A private foundation can be an attractive vehicle in the right circumstances. However, the disadvantages of private foundations, including costs, administration, and lesser tax benefits, cause many people to seek a better alternative.
The Scranton Area Foundation can help donors secure maximum tax deductions, involve family members, and focus their grantmaking. While some donors may find a private foundation suited to their needs, the alternative of establishing a fund within The Scranton Area Foundation is often attractive.
Existing private foundations can also be easily transferred to a named endowment fund within the Foundation.
Forming a Supporting Organization
Gifts to a supporting organization of The Scranton Area Foundation are fully deductible at the current fair market value, including publicly traded or closely held stock.
Supporting organization status (detailed in Internal Revenue Code Section 509(a)(3) and the related regulations) gives an organization many of the advantages of private foundation status. A supporting organization is a separate entity from The Scranton Area Foundation has its own board of trustees, makes its own decisions, and has its own Section 501(c)(3) tax-exempt status from the Internal Revenue Service.
The favorable tax status granted to supporting organizations result from the relationship between each supporting organization and The Scranton Area Foundation, a public charity. Supporting organizations are normally considered when donors are contemplating a multi-million dollar gift and when they want a significant amount of control over the donated asset.
Corporations are often inundated with requests for contributions. This can result in an unfocused program of corporate giving and in a significant administrative expense. Some corporations may be unable to budget a consistent flow of charitable dollars. In addition, a corporation may wish to focus on a particular community problem, but find that the cost of the administrative time and efforts needed to do so is constraining.
By setting up a fund in The Scranton Area Foundation, corporations can simplify and focus the giving process. Staff is freed from the administrative details of charitable giving and may choose their level of involvement in grantmaking. The Scranton Area Foundation staff provides technical assistance and grant-making services at a low cost and handles all administrative paperwork, check writing, and investment oversight. Ideally, the corporation may be able to expand its corporate giving programs without increasing staff.
A corporate donor advised fund can provide a dependable stream of income to meet the company’s charitable obligations, even during years when cash flow is tight. In good times, the company can add to the fund providing flexibility to even out the highs and lows inherent in most businesses’ financial fortunes.
The Foundation offers in-depth knowledge of the greater Lackawanna area, particularly in terms of the major issues affecting the nonprofit sector. The Foundation staff is familiar with many of the activities of the community’s nonprofit organizations and consists of individuals with diverse academic backgrounds and experiences.
A corporation can establish a fund and ask the Foundation to distribute either principal, income, or a combination of both at varied times throughout the year. The corporation may make suggestions to the Foundation concerning specific grantees; it may ask the Foundation to follow specific guidelines in making grants from its fund; or it may give the Foundation full discretion over disbursements.