April Luncheon
"Charitable Giving: Demystifying Private Foundations"
When it comes to formal charitable giving vehicles, private foundations offer the most flexibility and creativity for philanthropic endeavors. As they also are the most intricately structured, this presentation will help advisors understand their key benefits as well as some of their more complex issues including:
- How they’re different from donor-advised funds – and how the two may be used in tandem
- How to avoid unintentional yet common IRS compliance violations such as “self-dealing”
- How to fairly compensate board members
- How a life insurance policy can help a foundation yield even more powerful philanthropic and wealth management benefits by extending funding beyond a donor’s lifetime
INDIVIDUAL TOPIC SUMMARIES
Private Foundations and Donor-Advised Funds
Helping your clients choose the right charitable vehicle
- Both private foundations and donor-advised funds are effective charitable giving vehicles, yet they offer different levels of control, authority, and philanthropic versatility.
- Discuss the structure and merits of each vehicle with respect to tax treatment as well as grantmaking, legacy, organizational and investment considerations. It also provides guidelines as to when each vehicle (or both) is the best option for donors.
Private Foundation Compliance
Good Intentions Can Lead to Unintended Consequences
- For private foundations, trouble often falls under the category of “self-dealing,” which can arise in the context of most business and financial transactions between a foundation and its disqualified persons or “insiders.”
- This scenario-based portion will review the many ways that insiders unknowingly self-deal or in which foundations inadvertently stumble, and the penalties and corrective action requirements associated with such activities.
- By being challenged to identify ambiguous instances of self-dealing and other unintentional but common compliance violations, participants will walk away with a grasp of the subject matter and an enhanced appreciation for the subtleties of private foundation oversight.
The Art of Board Compensation
Helping your private foundation clients achieve fair compensation without IRS consternation
- When individuals devote time to foundation matters—whether as officers, directors, trustees, executive directors, employees, or professional service providers—they may expect to be fairly compensated for their time and effort. Unfortunately, because of a few bad actors, the issue of compensating insiders for their work on the foundation has become something of a lightning rod for controversy.
- This portion will explain why compensation must be “reasonable and necessary,” and how failure to do so can expose both the foundation and compensated individual to stiff penalties and public derision.
- Participants will walk away with an unparalleled grasp of the subject matter and an enhanced appreciation for the subtleties of private foundation oversight.
Insuring a Private Foundation’s Financial Future
A life insurance policy can extend funding beyond the donor’s lifetime
- A private foundation, which can exist in perpetuity, extends a legacy of charitable work beyond the donor’s lifetime. And when a foundation is buttressed with a life insurance policy, it yields even more powerful philanthropic and wealth management benefits. Funding for charitable work can continue without tapping other assets that the donor might wish to convey to heirs, including the family home, business, and investment portfolio.
- This portion will highlight strategies and unique, foundation-specific compliance guidelines for incorporating a life insurance policy into a private foundation. It will also address the benefits of doing so for founders, heirs, and foundation board members, as well as the duties of care and loyalty that a director/trustee owes a foundation.
Justin Murphy
Senior Managing Director, Midcentral Region
Justin Murphy is Senior Managing Director, Midcentral Region, for Foundation Source, the nation’s largest provider of comprehensive support services for private foundations. He works directly with donors as well as with private wealth managers, financial advisors and attorneys, regarding the benefits of a private foundation. He has a strong background in professional services and business development.
Before joining Foundation Source, Justin worked in San Francisco as a Sales Consultant with LexisNexis, a global provider of workflow solutions for the professional services sector, partnering with AmLaw 200 firms and corporate clients. Prior to that, Justin was a sales consultant with Thomson Reuters West, an international publisher of industry intelligence for businesses and professionals.
Justin also practiced as an attorney in the state of Pennsylvania at the Harrisburg, PA firm Marshall Dennehey; the Philadelphia, PA firm Swartz Campbell; and the Public Defender’s Office of Lancaster County. He also served as counsel for the Supreme Court of Pennsylvania.
Mr. Murphy has a Juris Doctor from the Pennsylvania State University Dickinson School of Law, and a Bachelor of Arts from West Virginia University.
About Foundation Source (www.foundationsource.com)
Foundation Source is the nation’s largest provider of management solutions for private foundations. We empower people and companies to create a better world with their philanthropy through a configurable suite of administrative, compliance, and advisory services complemented by purpose-built foundation management technology and private foundation experts.
We work in concert with financial advisors, legal and accounting professionals, consultants and family offices, as well as directly with individuals, families and corporations to bring philanthropic visions to life. As we celebrate our 20th year of service, Foundation Source supports nearly 2,000 family, corporate and professionally staffed foundations of all sizes and has enabled more than $7 billion in charitable grants.
