Enhance and preserve your family name, while enjoying a lower tax bill.
A Supporting Charitable Foundation is a useful vehicle for succession planning and tax mitigation. But is also affords its founder the possibility to carry on his (family) name and do so in a positive manner. A “once off” gift provides some short-term recognition; a Charity may endure for generations.
Historically many countries have provided incentives to the non-profit sector. Charitable organizations represent an economy equivalent to the worlds eight largest economy.
Public Charities are organizations, that enjoys supports from a broad range of public donors and use these to support charitable causes. Public Charities organize, fund raising activities and support wide range of charitable purposes.
While the philanthropic rewards and tax benefits make public charities an attractive financial planning vehicle, the public nature and level of activity required often act as an impediment for private individuals.
Private Charities on the other hand offer donors more control over their charitable giving. On the other hand, private charities are subject to more restrictions and have fewer tax benefits than public charities.
Supporting Charity Foundations
By structuring a private charity as a supporting charity organization, one can receive almost all the benefits awarded by a public charity.
A supporting charity organization is a hybrid between private and public charities. They carry out their charitable purposes by supporting other public charities and thereby avoid classification as a more restrictive private charity.
The key feature of a supporting charity organization is its strong relationship with the charity it supports. The supporting charity organization is classified as a public charity and is funded by only one family.
The benefits of a Supporting Charity Foundation, includes amongst others:
• Can be used by high profile persons with public image concerns.
• The founder can maintain control over the level of support awarded to the public charity.
• It mitigates estate, capital and income taxes.
• It protects assets from creditors.
• It provides for employment opportunities for children and grand children.
• It allows the founder a mechanism to support worthy charitable causes.
A contract dictating the level of support is required between the supporting charity organization and the public charity. While it is necessary for the supporting organization to make distributions each year, the amounts can be controlled by a board of directors which may include family members.
In addition to offering numerous tax advantages, a Supporting Charity Foundation serve as an excellent tool to support worthy social causes and also preserve and enhance the family name.
