Your Legal Questions Answered

Search Questions Previously Answered

What type of grantmaker should I make?

I want to put a large sum of money I am about to receive into a nonprofit for the purpose of distributing the annual income for charitable purposes of my choosing. I want this asset to continue protected and run by a family member after I am no longer able to run it. What is the best vehicle to use to proceed?

The first question is whether you want to use a donor advised fund at a community foundation or other public charity or set up a separate entity, which will be classified as a private foundation if you don’t continuously raise new funds from outside your family to support it.  Donor advised funds usually work well for funds of less than a few million dollars unless you want absolute control or want to be paid for your services.  (For a full comparison, see Ready Reference Page: “Donor Advised Funds Still Compare Well with Private Foundations.”)

If you decide to create a separate entity, we almost always recommend using a nonprofit corporation because the governance rules for a corporation are usually clearer than those for a trust.  The Internal Revenue Service will recognize the exemption of either type entity.
 

Add new comment

The content of this field is kept private and will not be shown publicly.

Plain text

  • No HTML tags allowed.
  • Web page addresses and email addresses turn into links automatically.
  • Lines and paragraphs break automatically.