Alternatives to Private Foundations

Weighing the benefits of private and public charity

Running a successful, mission-driven foundation requires steadfast vision, strong leadership and hard work. It also takes time. While the investment of time begins with the startup, it will continue for years to come. Of course, it takes money as well. Theoretically, any amount is possible. However, many underestimate the amount needed to operate efficiently, both in terms of the charitable asset and ongoing operating costs. Many private foundations are established without thorough assessment of all the costs involved and the alternatives available. Often prompted by year-end tax planning or the influence of peers, a quick decision can result in a costly and long-term responsibility.

Surprised by demands

In facts, after the first year or two of operations, some private foundation founders express mild regret, saying they didn't anticipate the magnitude of demands on their time, energy and resources. They wish that someone had helped them consider the costs, the benefits and the options before they signed up for the responsibilities of a private foundation.

For philanthropists considering options, as well as private foundation trustees interested in simpler solutions, practical alternatives are available through Humboldt Area Foundation.

Assets of a private foundation may be used to establish a donor advised fund, unrestricted fund, field of interest fund, scholarship fund or designated fund. Depending on the type of fund that is established, the private foundation's board of directors often stays involved in setting grant-making priorities, advising on grant awards and assessing grant success.

Private foundation and donor advised fund

Many philanthropists choose to maintain their private foundations while establishing a donor advised fund at Humboldt Area Foundation. In doing so, they can earmark just a portion of their assets to suit a special interest. Compare approached with a tool that defines the distinctions between donor advised funds and private foundations.

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