Foundations & Charities
Tax-exempt organizations investing for a mission, often in perpetuity.
What is Foundations & Charities?
Public charities and private foundations are generally 501(c)(3) organizations. Private foundations must distribute about 5% of their assets annually for charitable purposes and pay a small excise tax on net investment income. Their long horizon supports growth, but the distribution requirement demands liquidity.
Foundations & Charities: a worked example
A family foundation with $20M of assets must make roughly $1M of grants a year.
More terms in Clients, Strategy & Tax
Sole Proprietorship
A business owned by one person with no legal separation from the owner.
General Partnership
Co-owners share management and unlimited liability; income passes through.
Limited Liability Company (LLC)
Limited liability for owners with pass-through taxation by default.
C Corporation
A separate taxpayer - profits taxed at the corporate level, then again as dividends.
S Corporation
A corporation that passes income through to shareholders, avoiding double tax.
Trust & Estate Accounts
Accounts run by a fiduciary - a trustee or an executor - under a governing document.
Client Profile & Data Gathering
The financial and nonfinancial facts every recommendation must rest on.
Investment Objectives
Preservation of capital, income, growth, growth and income, speculation.