If you are thinking of starting social services like charity and all, then setting up a private foundation is the best decision in your life because it involves satisfaction, liquidity, wealthy, profitable, reputable name, independent. Still Many people who interact and get satisfaction by giving some social service and that’s why they can’t do another work for their career field.
In simple words, Private foundation is the reputed organizations in which an individual, family or friends are able to invest money from the bottom of heart and also collect requirement services in the form of cash, vehicles, gifts, other financial services, education services from the public for needed people. It’s not that it is necessary to establish your own private foundation for your satisfaction, interest, profit, enjoyment, you can also be the part of another charitable organization or foundation by investing funds in the form of many varieties and also get your personal interest, satisfaction, profits.
If you want to set up your own private foundation, then you will have to follow some legal procedure and suffer legal obstacles and clear them.
What are the legal forms needed to apply?
There are two legal forms needed to start a private foundation. Without these two, you cannot proceed to the next step.
Employee Identification Number (EIN)
- It is a social code or number which can lead to the business.
- You can apply for free.
- This code is used by government agencies to identify what type of foundation you have, what service you provide, etc.
- EIN code or number impact on foundation.
Procedure to get EIN number
- You need to download an application form (IRS) to get your EIN number.
- After download and fill the form, automatically you get your EIN number through email.
- IRS businesses collect all the information on call regarding your foundation.
- After completing the EIN application form, you will get an EIN number.
- To get IRS, you need to fill the application form 1023 based on Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code.
- This form contains questions generally asked by analysts based on corporation, board of directors, startup activities, financial and commercial information, services provided.
- Always prepared some documents to apply this form such as scanning documents of incorporation, copy of law rules.
- Make an IRS website to get the latest update and requirements.
Basic steps to start a Private Foundation
If your interest is in giving social service and you are doing many types of donations in your life, this is a good platform where you get an opportunity to develop your interest with others by doing various donations for various purposes like medical purpose, education purpose, sports purpose, food purpose, other activities etc.
To start a private foundation is not easy process rather it contains some procedure which we have to complete at any cost if you really want to stand your own foundation for needed people such as purpose of foundation, move for tax exempt status, license, documents related to state and federal govt., structure and motive of foundation. It is like a small business that requires a purpose, startup capital, investment, advisors, business planning, etc.
Purpose of foundation
First, you have to decide the purpose of setting up a foundation such as what type of charity will provide such as educational, religious, scientific, cash, food, clothes. The purpose is also to get a brand image and sponsorship in the foundation world.
Your purpose depends on your interest.
Structure of organization
You need to decide a structure of an organization related to funds required from founders, directors, and from other investors like individuals, family, friends or relatives.
Hire an attorney
You need to hire an attorney to conduct your business.
Verify Foundation name
You need to verify your foundation name with another corporation because sometimes what we think of a name for our foundation or firm is matched with another foundation or firm so to ignore this mistake, you have to research online on this.
Articles of Incorporation
A Private Foundation must be incorporated, drawn up with articles of incorporation, which contains legal documents and with this, you can apply for templates for your foundation. This procedure requires fees.
Differenciate between Public and Private Foundation
There is no major difference between Public and Private Foundation because we all know that public contains government service and private contains its own service like investment, startup capital, financial planning, etc.
Funds: In Public Foundation, can collect funds from public funds because the government invests its own money in this foundation and raises from also less than 50% of private and public corporations, and other foundations. No need to invest by an individual, couples, family.
Goal: This foundation has only one goal to provide only social service and get positive social or environmental impact, organize projects for funding, attend social events for growing their ideas, brands sponsorship, image, popularity towards foundation.
Tax deduction: Tax deduction depends who is the funds privider such as an individual, family, public or private corporation, foundation and mainly depends on their contribution for the fund.
Funds: In Private Foundation, can collect funds from private corporations, individuals, families, etc. but not from governments because it is a non-governmental, non-profit organization.
Service: This foundation has charitable purpose to the needed people in the form of cash, food , clothes by the donors.
Goal: Their motive is to become the best pfoundation on the globe and provide free services from the contribution of the founders and donors.
Tax deduction: Tax deduction depends on contribution by the founders, donors.
Who is the fund manager of a private foundation?
Trustees, Board of directors, managed by funds and corporations and have full right to make decisions, regarding investments in charity, grants or donations.