For many families, private foundations are losing their luster

While private foundations were considered a very attractive option in the 1990s, a number of them are converting to Donor Advised Funds. Clients cite a variety of factors that lead them to simplify their giving through a charitable fund, including:

• Legal and accounting costs, excise taxes, and minimum payout requirements may have grown dramatically in proportion to the current market value of a private foundation that has been impacted by the market decline. 
• The “control” that was so appealing a few years ago has turned into a tangle of restrictions, mandates, public disclosure requirements, and documentation. 
• Giving as a family becomes increasingly difficult as family members move out of state -- often the founder is left to make grants on his or her own. 
  
  

A smart, local choice 

The individuals who made grant decisions for the private foundation can serve as an advisory committee for the fund. Or family members can recommend grants individually -- even on-line at any time, from anywhere. Grants from a fund can be made nationwide and even internationally, and Minneapolis Foundation staff can help (if desired) to identify strategies to advance the family’s unique charitable objectives.

In most cases, family foundations converting to donor advised funds have terminated their corporate structure, but some families have chosen to “ease into” the transition by using the donor advised fund to manage on a short term basis the redistribution of their annual payout. In these cases, The Minneapolis Foundation can advise on grantmaking options if desired and complete the required due diligence before any grants are awarded. 

Furthermore, a relationship develops so that, at the passing of its founding generation, the private foundation can dissolve with its remaining assets transferred to the fund. The next and succeeding generation can serve as advisors to the family fund without maintaining a corporate infrastructure.

Explore the Options