1999 Lane Reports

The Private Foundation: Directing Your "Social Capital"

Monday, February 1, 1999
by Marc J. Lane

Our practice's mission is to protect and build our clients' wealth.

We have gone to great lengths to recruit talented and seasoned legal, tax and financial professionals who can contribute in a meaningful way to the lives and fortunes of successful people and their dynamic businesses. And, over the years, we have developed comprehensive investment, risk management and merchant banking capabilities to deliver to our clients a strategic, cohesive approach to managing wealth.

All of which leads us to the ultimate question many of us may one day ask - to what end?

Lifestyle is, of course, part of the answer. We are entitled to the fruits of our labor and, when we work hard and achieve, we are rewarded with the material possessions which can make life more satisfying and sometimes less stressful.

We also strive to make a better life for our families and give our children the education, the security and the creature comforts we can afford to give them.

Many of our clients have achieved all these goals; others are working toward them. Most have earned the respect of their peers and continue to make a real difference in the lives they touch.

For them the accumulation of wealth is an opportunity to "give back," a new and perhaps unexplored way to serve.

Many clients ask us how they might most efficiently give to charity while, at the same time, maintain control over the way in which their charitable dollars are actually spent.

We use a number of techniques, some of them very sophisticated, to help our clients achieve their charitable objectives. Such techniques often include tax-driven strategies and can be coordinated with one's estate plan or business succession plan.

Here we'll mention only one alternative, a choice that's elegant in its simplicity - the "private foundation."

Private foundations are charities funded by one or a few individuals or a family to pursue a unique vision. Some private foundations distribute their assets to publicly supported charities over a number of years; others define and accomplish their own goals in innovative ways.

The hallmark of the private foundation is control. Whether the foundation is organized and operated for religious, charitable, scientific, literary or educational purposes, its donor can fund it whenever he or she wishes, claim tax deductions in high-income years and, in a careful and deliberate fashion, identify charities or pursuits that meet the donor's own philanthropic objectives. That's the beauty of the private foundation: it generally allows the donor to take a tax deduction when he or she needs one, yet spend charitable dollars only as and when charitable goals can best be achieved.

A private foundation can also be just the right vehicle to receive and then sell assets that aren't easily divisible - such as land, works of art or even stock in a closely held business. All the proceeds, free of income tax, can be dedicated to the foundation's charitable purposes.

We have seen extraordinary results when donors within a family or several families join forces and charitable resources to meet their shared charitable ambitions. We've also seen and applaud successful efforts to involve younger family members in investing charitable assets until they're deployed and in carrying on the charitable aims their parents first advanced. (Marc J. Lane & Company, our investment affiliate, is particularly skilled at investing assets with sensitivity to the special rules governing charities.)

Our forte is helping successful people make the right legal and financial decisions. It is our conviction that charitable giving is high on the list of opportunities where such skills can best be put to work for the benefit of each and all of us.

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The Lane Report is a publication of The Law Offices of Marc J. Lane, a Professional Corporation. We attempt to highlight and discuss areas of general interest that may result in planning opportunities. Nothing contained in The Lane Report should be construed as legal advice or a legal opinion. Consultation with a professional is recommended before implementing any of the ideas discussed herein. Copyright, 2003 by The Law Offices of Marc J. Lane, A Professional Corporation. Reproduction, in whole or in part, is forbidden without prior written permission.

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The Mission-Driven Venture: Business Solutions to the World's Most Vexing Social Problems

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