The arrangement of a Supporting Charity [Section 501(c) (3) of the IRS code] has its own advantages to offer. The arrangement of such a Charity can allow the founder and his family members to exercise a life long influence over the charitable assets. The main problem with the Supporting Charities is that the IRS has formulated very lengthy and complex rules for the regulation of such a Charity.

If a supporting Charity is formed correctly and also managed well then it gives families the opportunity of putting their earnings in such a structure which will allow them to comply by the tax anti-avoidance rules which are imposed on the Charity by most of the countries. This will result in the avoidance of inheritance tax and considerable amounts of tax-bills. Not just this, the future generation will also benefit from the assets of the Charity.

It is absolutely necessary for a charity to come to a settlement with an existing public charity in order to call itself a Supporting Charity. Generally the two Charities sign a contract which clearly states the extent to which the Suporting Charity will support the Public Charity. The general idea is that it is very easy to enter into such an arrangement with a Public Charity but this is not the case.

Most of the recognised Charities would impose enurous conditions and demand to first receive a certain amount of support from the Charity and only then will they be willing to accept the Supporting Charity.

The Advantage are:

  Contribution to the Charity can generally be done without incurring expenses such as transfer or excise taxes.

  FIn case of US citizens the contribution made to the Charity can be deducted from the US tax.

  All the underlying assets would be managed and looked after by the founder of the Charity.

  The Charity gives the founder the opportunity to carry on his family name as the charity may survive for generations.

  These Charities mitigate capital, estate, and income taxes.

  The children and the grandchildren of the founder get job opportunities.

  Without tax consequences the appreciated assets can be liquidated.

  Assets are protected from creditors.

  Maximum confidentiality and security are provided.

  The structure is non-reportable.

  This structure can be used for elevating public image.

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