Starting a foundation involves considering if it's going to be public or private, how long the foundation will be around, administrative time for managing the foundation and setting up bylaws. Build a foundation like a trust fund, family or lump-sum distribution from corporation with tips from a financial planner in free personal-finance video.
My name is Julie Asti and I am a Certified Financial Planner with Asti Financial Management and today I am going to talk about how to start a foundation. If you want to start a foundation there are really two initial things that you want to consider. First if you want it to be a private foundation or a public foundation. A private foundation is one that is usually funded from one source. It can be a trust fund, a family, a lump sum of money from just one corporation. It can come from various sources but it is usually just one pot of money or one lump sum that would be considered a private foundation. A public foundation is different. It's diverse and it is actually funded from many different sources and there are certain IRS rules to be considered at public foundation that you should do research on but that is going to be the first step and that is if you want it to be private or public. The second step that you are probably going to want to do is you are going to consider the foundation in terms of the length. For example are you going to receive a lump sum of money and the foundation's goal is going to be to disperse that money to different charitable organizations, when the money is gone the foundation is ended or is the foundation going to be an entity in which you are going to give the money to charitable organizations but also retain some of the money so that it can grow and earn on itself so that the foundation will have longevity so you need to really want to consider the time and the horizon that you are looking at that you want the foundation to have. Another consideration is going to be the administrative time that it is going to take you in managing that foundation. Are you going to be hiring out help? Are you going to be doing it all yourself? There is also going to be tax consequences for the foundation. Are you going to be doing those returns and preparing those documents and keeping the details on your own or are you going to be hiring a firm who is going to be handling that for you because there are going to be ongoing administrative taxes and responsibilities that are related to running a foundation. One of the last things you are going to want to do is to create bylaws which are going to be the legal operating documents for that foundation and once you get to that step the last tip comes into play which is really getting some good solid legal help. A foundation can be a very simple organization but you definitely should make sure that it is set up, it is structured correctly, it is structured legally the right way, you have protected yourself, you have allowed for the ongoing expenses the tax expenses of the entity and you are doing everything in line with IRS requirements so you really need a true qualified expert, a legal attorney to help you set up the foundation. Sometimes the legal person can be on staff and can provide ongoing support. Other times if the organization, the foundation is going to be fairly straightforward or maybe have a set life span it is something that you would be able to get legal help for in the beginning, get the documentation and the structure set up and then go through and run the foundation on your own for the time that it has the funds. Those would be some tips about things to consider and things to think about when you want to start a foundation. My name is Julie Asti. I am with Asti Financial Management and you can learn more about my services or my company at www.astifinancial.com.