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Governing a Family Foundation
A family foundation can be structured in one of two ways:
1. As a corporation, with articles of incorporation, by-laws and a board of directors
2. As a trust, with a trust agreement and trustees
Family foundations are regulated by two bodies: the IRS and the state attorney general's office. The IRS is primarily involved in
four areas: required distributions, prohibited acts, excise taxes and limits on contributions.
A family foundation can be governed by family members, non-family members or a
combination of both, depending upon the needs and circumstances of the foundation. It's important that those who govern the activities of the foundation have integrity, energy, passion and
common sense.
A mission statement can be very useful for foundations, providing a platform for what the family most cares about. It can also provide a framework for future generations,
but it's important that documents be set up so that terminology is broad enough to enable it to survive changing times and needs, as well as changing causes and passions of future generations.
A family foundation can be a valuable tool to teach the next generation about philanthropy. And it can be a vehicle for family members to work toward shared goals. However, it's
important to recognize that family members may have different interests, and that not all may be believers. In that case, it might be wise to divide up the funds and separate the goals, or
have a more inclusive mission statement, rather than risk tearing the family apart. There are no "rules" as to how this might be done, so you're free to be creative in doing what
works best for your family.
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