A private foundation is typically used to distribute money to charities and other non-profit organisations. It is often used by people who wish to donate a proportion of their wealth and enjoy the tax benefits of doing so. Private foundations are by nature non-profit and tax exempt.

1. P h i l a n t h r o p y : E s t a b l i s h i n g
A Private Foundation
b y D r E d g a r P a l t z e r

2. 2
ESTABLISHING A
PRIVATE FOUNDATION
PHILANTHROPY:

3. 3
The rules for tax exemption
can vary across jurisdictions,
so you will want to determine
what these rules are before
establishing a foundation. It is
likely you will have to actively
apply for tax exempt status.
A private foundation is typically used to
distribute money to charities and other non-
profit organisations.
It is often used by people who wish
to donate a proportion of their
wealth and enjoy the tax benefits
of doing so. Private foundations
are by nature non-profit and tax
exempt.
Making Grants
Private foundations do not typi-
cally perform their own charitable
endeavours. They are usually esta-
blished to make grants to another
charity or charities, which can be
to fund operating costs or for the
benefit of a specific programme.
Trust or Non-Profit?
Foundations can be established as a
private foundation in civil law jurisdic-
tions or as a charitable trust or non-pro-
fit corporation. Trusts may be easier to
set up and run but they do not provide
as much protection as non-profit
corporations, so the latter is usually the
most popular choice.
Tax Exemption
The rules for tax exemption can vary
across jurisdictions, so you will want to
determine what these rules are before
establishing a foundation. It is likely
you will have to actively apply for tax
exempt status.

4. You can learn more
about the difference
between a trust and a
foundation by visiting
the blog of Dr Edgar
Paltzer.