Private Charitable
Foundations
Your Key to
Significance
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"Anyone may
arrange his affairs so that his taxes shall be as low as possible.
He is not bound to choose that pattern which best pays the
treasury. There is not even a patriotic duty to increase one's
taxes. Over and over again the courts have said that there is
nothing sinister in so arranging affairs as to keep taxes as low as
possible. Everyone does it, rich and poor alike and all do right,
for nobody owes any public duty to pay more than the law demands."
Judge
Learned Hand, Helvering v. Gregory, SupremeCourt, 1935 |
Why start a
private charitable foundation?
1.
To make the world a better place. What would you change
in the world, if you could?
2.
Have control but not ownership. Make the decisions but
not have the liabilities of ownership. Become a steward instead of
an owner.
3.
Flexibility: this is the most flexible financial tool
available.
4.
To make a personal statement, leave a legacy, share your
vision and your values with children and grandchildren.
5.
Empower your dream: create a new career focused on your
passion to make a difference in an area of your choice.
6.
Save on taxes. Be permanently free from capital gains,
income taxes, estate or gift taxes by legally avoiding their
creation, and redirect former tax dollars to charity. Also avoids
probate. Anyone can move from taxpayer to steward and giver.
The private
charitable family foundation is a non-profit entity, a 501(c)(3)
exempt organization, organized for charitable, religious,
educational, cultural, literary, scientific or other such purposes.
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"Own
nothing and control everything."
John D. Rockefeller |
What is the
history of foundations? Hundreds of years ago the great needs of
society, the poor, the weak, the deformed, those in asylums, and
orphans, on one hand, and religious teachings of love, kindness,
charity and benevolence toward others, inspired those with the
ability to give assistance to do so. Thus charitable bequests,
foundations, trusts and other institutions began to form for the
benefit of those less fortunate. The concept of stewardship
evolved, of holding assets for others' future benefit, being
accountable and trustworthy in the interests of protecting those who
had difficulty providing for themselves, upholding a higher law than
self-focus, opening one's heart to those in need. Philanthropy has
the ability to transform individuals, families, communities and
nations by providing hope, support and practical answers paid for by
entrusted funds.
By the late
1800's a few extremely wealthy families, not liking to pay taxes,
chose instead to establish their own family foundations with
specific charitable focus points. Since then trillions of dollars
have provided huge benefits to people and causes. This same
financial tool, previously perceived as available only to the elite,
really is there for anyone today...anyone, no matter their financial
level. Working families can enjoy the same benefits and security as
have always existed for the informed few. We make it possible for
partners and families to establish and manage their own private
foundations, many of which begin with a $100 deposit into the bank
account.
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"The legal
right of a taxpayer to decrease the amount of what otherwise
would be
his taxes, or altogether avoid them,
by means which the law permits, cannot be doubted."
Helvering v. Gregory, Supreme Court, 1935 |
Private charitable
foundations have made many significant contributions to the
world. The Monterey Bay Aquarium was started by a foundation.
Guatemala stopped the cutting of its rainforests and supported the
vision of one man (with a foundation) to excavate old Mayan and
Incan cities and create a new tourist industry. A village in Africa
was raised from subsistence to thriving self-sufficiency because of
a foundation. A foundation in Florida outfitted all police cruisers
with defibrillation units and lives have been saved. A couple with
a vision to dramatically improve US agriculture soils developed a
worm farm which now ships living dirt to farmers to revitalize their
land. Children in California are being empowered with communication
skills, to improve their relationships with teachers and parents and
peers, because of a caring couple with a foundation. Seniors are
building genetic core strength and improving their health with
personal trainers, at no cost. At risk children are given hope for
their futures by having flight training at local airports after
school. A "green" foundation is building environmentally sound
homes for low income families. Dogs and cats who are companion
animals to seniors are being transported and neutered for free
because of a foundation. In Kansas, an abandoned barn became the
location for a flagship after-school program. Another foundation
assists the elderly who are short of cash for groceries, utility
bills and necessary prescriptions.
The list is almost endless. You
can add your vision and success to it.
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"The secret
to success is to own nothing, but control everything."
Nelson Rockefeller |
The IRS says that
last year $300 billion was given to charities by private
foundations. With fewer than 100,000 private foundations, 1 family
in 1000 used this financial tool to contribute an average of $3000
to charitable purposes and the other 999 families paid taxes and/or
made small or zero contributions. Which group would you prefer to
be in?
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"Tax avoidance:
avoid the creation of a tax liability in the first place.
Actions here are within the law.
Tax evasion: taking measures to evade taxes that are due; this
is not legal."
Wikipedia Encyclopedia
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Every year,
approximately $3.1 billion is available in grant monies, from public
and private and corporate sources.....and is not given away. Why?
One reason is that no one applies to the givers properly with a
supportable purpose combined with a legal structure. Identify your
passion and focus, write it down, then birth its status as a
501(c)(3) private foundation entity, and those monies can be
available to your foundation to help you fulfill your vision. This
concept is perfect for those who cannot sufficiently self-fund their
foundation's purpose and activities.
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"You are what you
contribute."
Liza Minelli, quoting her mother, Judy Garland |
Private Charitable Family Foundations' FAQs
Q: How does a
private charitable foundation lower my personal tax liability?
A: You as Founder can contribute up to 30% of your "adjusted gross
income" which lowers the amount your tax is figured on and also
lowers the %. This can be in cash or in personally owned assets.
For example, a W-2 income of $100,000 can create a $28,000 tax
liability; donating $30,000 to your foundation reduces that
liability to $19,600, and saves you $8,400. For operating
foundations 50% can be donated; in the same example as above, a
$50,000 donation saves you even more. Results are dramatic for all
tax brackets.
Q: Does my
foundation have a required annual payout instead of paying taxes?
A: Yes. "Qualified Distributions" equal 5% of the average value of
invested assets. (This 5% includes a 1-2% excise tax.)
Distributions are paid out for administration and expenses, and to
charitable activities of your choice.
Q: What taxes is
my foundation exempt from?
A: Federal income tax, capital gains tax, estate and gift taxes.
It also is exempt from sales tax on purchases it makes, and property
taxes in some counties.
Q: You mean that
it pays no capital gains on real estate or investments? Ever?
A: Correct.
Q: How does my
foundation get funded?
A: Your foundation receives donations of income, investments,
assets, collectibles, real estate, etc., from you or any Trustee or
any outside source. And you can hold fund-raisers. Grants also are
available for charitable purposes. Your foundation does not have to
be self-funded.
Q: Can anyone do
this?
A: Yes. There is no minimum funding level. All you need is a
charitable purpose(s).
Q: How
complicated is it to manage?
A: It is very simple. There are 8 rules to follow, what to do and
what not to do. These are explained in the Workshop that is
provided to you.
Q: Why is there
a Workshop?
A: Trustees, and the Founder who normally is also a Trustee, need
to know the few basic rules so that they run the foundation
responsibly.
Q: Where are
Workshops held?
A: In Southern California and other areas around the country.
Q: Who has
control and makes the decisions for the foundation?
A: You and the Board of Trustees which you appoint.
Q: How do
additional Trustees get added to the Board?
A: The existing Board appoints them, with their acceptance,
agreement and commitment to the foundation's mission.
Q: What about
probate? Is it a concern for a foundation?
A: Never. When a Trustee retires or dies, the foundation continues
on exactly the same with the remaining Trustees on the Board in
control. It can go on forever.
Q: Can I involve
my children or grandchildren?
A: Yes! You can create a Junior Board of Trustees, appoint the
ones you choose, and they will be in training but do not vote. It
is a perfect way to pass your values and your vision to them.
Q: Can this
serve as an estate plan?
A: Yes. It is very positive. It gets the family together for a
common and charitable purpose, makes discussions regarding death
less depressing, and protects assets.
Q:
What is meant by my foundation being
an "exit strategy"?
A: Provided action is taken in a timely manner, future potential
tax problems are never created and potential tax liabilities
disappear.
Q: Are there two
tax systems?
A: Yes. A foundation is a "tax system for the informed" in place
of "THE tax system for the uninformed".
Q: Have people
used this tool to create a new career?
A: Yes! You can create your perfect workday, become a good steward
and make a difference.
Q: Can I receive
a salary or other benefits?
A: Yes, provided that you are actively carrying out the charitable
purpose(s) of your foundation. It can provide you your health
insurance, transportation and other necessities so that you can
function in your capacity on the Board of Trustees. You can create
a secure and prosperous retirement plan.
Q: How do I know
this is real?
A: Most of us have heard of private foundations but assumed that
this financial tool was available only to the super wealthy, so we
mentally discarded it for ourselves. Right? It is a tax exempt
charity in total compliance with IRS Section 501(c)(3) Exempt
Organizations. You can go to
www.irs.gov/eo
and click on "Private Foundations". There is no one place in which
to find all the information. It is sprinkled all through the IRS
exempt organizations' literature, which makes learning about it more
difficult. We have collected all that information so that you don't
have to.
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"Everyone can give
because everyone can serve. "
Martin Luther King Jr.
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Your Foundation
Comes with Many Benefits
In the Workshop,
you will:
Experience
the most effective and cost-efficient education program
available for the establishment of a Private Foundation.
Understand
ownership vs. stewardship.
Learn
to function with changing circumstances using a family
foundation.
Receive
practical suggestions, guidance and knowledge necessary to
operate a foundation.
Learn
how to self-direct and self-manage tax dollars, because you
control how your tax dollars can make a difference
instead of just disappearing.
Receive
a practical overview of the "do's" and "don'ts" of a family
foundation (IRC 4941-4945).
Have
the opportunity to consider both grant-making and
grant-receiving.
Create
and begin to live your family's mission.
Participate
with your entire family or friends; no blood relationship is
required.
Experience
with your family and/or friends the true meaning of: "Doing
Well" by "Doing Good".
Become
conversant with the range of options available only to private
foundations.
Receive
the tools needed to be successful in your charitable goals.
Become
a member of a fast-growing grant-making community.
Gain
access to legal, tax and financial providers that are leaders in
their fields.
Receive
a complete set of all compliance documents necessary to obtain
tax exempt status, ready for submission to the IRS (upon full
payment for your Foundation).
Benefit
from a lifetime entitlement to audit EPAJS' Family Foundation
Workshop free of charge (beginning with your third Workshop
there may be a small charge for incidentals).
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"Could it be that
our greatest fear is not that we might be inadequate,
but that we are powerful beyond measure?"
Marianne Williamson
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We empower
individuals and families to act on their vision and passion,
to make
a difference. A private foundation provides
the perfect opportunity
to move from success and achievement and sufficiency,
to meaning and
significance.
Live your dream and leave a legacy
Click here to be contacted about Family Charitable Foundations
In
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ready for the truth?
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