How to Set Up Your Own Foundation

how to set up your own charitable foundation
This article does not recommend any specific financial advice but is just one person's personal invest strategy. Consult your own financial planner/tax specialist for specific advice.

Growing up in Orange County, I’d often hear about a rich acquaintance who had a family charity. It all sounded so alluring. I wondered if someday I would have enough money to start a foundation. Could I actually be the one deciding who to give money to? I’ve always liked giving to charities so it sounded like a dream to me.

A few years ago,  I first heard about Donor Advised Funds (DAF). DAF’s makes having your own charitable foundation easy; without the headache of paperwork, writing checks and record keeping. You can either give anonymously or in honor of someone else or in the name of your Foundation. And the DAF can be passed to your heirs, so they can give money away too.

How We Funded Our DAF
In 2016, I got an extra payout at work due to a job change and the fact that I rarely took vacation time. I spent so much time saving for retirement that vacations were not a priority. That vacation time accrued over the years and I received an unusually large check.

Good News ….Right?

Well, yes and no. In that year, it pushed my taxes so much higher than I had anticipated and were were going to owe some money come April 15th. In past years, we had donated money to a local homeless charity and to our church but we weren’t wanting to donate such a large chunk all at one time.

So I set up a Donor Advised Fund to put money aside for a couple years going forward when our income would normalize again. Along with donating some of the extra vacation payout cash, I donated some appreciated stock we didn’t want anymore. I could have sold the stock first and then donated the proceeds. By donating the stock directly, I saved us the fees and hassle of selling it. And we didn’t have to pay taxes on the appreciated value of the stock either.

But I Don’t have the $25,000 to Get Started
Don’t let that keep you from having a charitable foundation. Vanguard Charitable requires $25000 in cash and/or securities. But Fidelity offers a DAF with lower opening amount ($5000 last time I checked) and lower minimum grant amounts.

Vanguard Charity DAF
We chose Vanguard Charity because the majority of our investments are with Vanguard. I’m a simple investor, choosing Index Funds for most of our Portfolio. Vanguard charges very low fees, well below the industry standard and moving appreciated assets directly to our charity fund is seamless. The only downsides of Vanguard Charity is  that each payout must be a minimum of $500 and additional deposits to the fund must be $5000.

What happens to the Money in Your DAF Foundation?
Your DAF is like a checking account, except you can’t get the money back for yourself. Once it’s in, it belongs to the charity fund forever. Or until you request a grant to be sent to a non-profit. A grant is just telling your DAF’s administrators where you want a check sent. It’s up to you to request grants to specific charities you support. I go online and request a check and amount to be sent to the charity I’d like to give too. The money I haven’t granted yet, is still in the account. I can have it stashed there in cash or in a mutual fund. It it grows, I don’t pay an additional tax on the growth and I have more to give.

What About Taxes?
The amount you contribute to your DAF is taken as a charitable donation tax deduction in the year you put it in your Foundation. We plan to continue adding appreciated mutual funds in order to avoid paying taxes on the gains. We then take the money we would have given directly to charity and buy more mutual funds. This raises my cost basis. If you aren’t a money person, this is not that important to understand. It means I’ll just have less taxes to pay. And I don’t have to make immediate decisions as to where to donate. That gives me time to investigate where we want to give.

Why I love having a Charitable Foundation
I get to give more. I don’t get on a bunch of mailing lists. Tax time is easy because I don’t have a bunch of small receipts to keep track off. I don’t have to decide right away where I want my money to go. I save on capital gains taxes.

See how other Bloggers Give

Check Out the Scoop on your Favorite Charities
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100 Women Who Care, Orange County CA

I just found out about this group and it sounds amazing!  100 Women Who Care Orange County. I can't wait to check it out.
  • We meet for one hour, four times a year, and each member brings a check for $100.
    • Every member can nominate local charities, non-profits, or worthy causes.  Those names are put into a hat.
    • Three charities are drawn at random.
    • A 100 Women Who Care member makes a 5-minute presentation about each cause.
    • We all vote on which cause to support.
    • The top vote-getting charity then receives all the checks, made out to them on the spot!
    On each of four nights during the year, these 100 Women Who Care give directly to a local charity, non-profit, or worthy cause, right here in the Orange County community. It’s fast, simple, and amazingly effective. 

Women's Philanthropy Breakfast , Irvine CA

I'll be headed to the United Ways, Women's Philanthropy Breakfast on Wednesday, May 10, 2017 in Irvine, CA. 
It's an early one (eeek 7:30am), but I'm looking forward to hearing the Keynote Speaker: Leigh Anne Tuohy. She is best-selling author & inspirational subject of The Blind Side.
"The breakfast event goal is to empower women in Orange County to use their financial power to lift up the lives of local women and children. " I love this!

Taste of Orange Coast | Newport Beach, CA

We recently attended the first ever “Taste of Orange Coast; An Evening of Whisky & Wine”  held on January 28, 2017 at the Island Hotel, Newport Beach, California. The event was hosted by The Orange Coast Memorial Foundation. The evening featured wine tastings, whisky presentations, lite bites and a silent auction to benefit Orange Coast Memorial Medical Center.

This small intimate event featured live accoustic guitar music by Kurt Hunger. I'm ready to book him for my next party!

While listen to Kurt we enjoyed talking with winemakers and learning more about their process. The Penville Grenache was excellent! These two were so enthusiastic sharing about their process and vineyards. I'm not a huge fan of whiskey but my husband enjoyed the tastings along with the craft cocktails using whiskey. The custom engraved wine glasses were a nice touch too.

The event featured a photo booth, passed appetizers that included artisanal pizza, a cheese plate, deep fried risotto and chicken satay. There was a select offering at the silent auction and unfortunately we didn't win the concert tickets we had bid on. Tickets for the event were $100 each with $80 benefiting Orange Coast Memorial Medical Center. I hope this becomes a yearly event!

Taste of Orange Coast
January 28, 2017
The Island Hotel, Newport Beach 

Photos from the Event 

Taste of the Nation | Montage Hotel, Laguna Beach, CA

I love discovering charity events that donate a huge portion of the ticket price to the actual charity. To determine this amount, I usually contact the organizer to see what portion of the ticket is tax deductible.

In the case of Taste of the Nation, $260 of the $300 ticket price goes to No Child Hungry. It seems a bit contradictory; I will enjoying a lovely evening of wine and food while benefiting ending childhood hunger. But I do look to support events that give such a large portion to their respective charity and bring awareness to people about the needs in our community.

Some charity events in Orange County simply have an auction at their events to raise money.  While this still does some good, I much prefer part of my ticket price to benfit the cause. As an extra bonus, I was able to book this event with my Citibank Visa for an additional 10% off along with earning miles for travel.

Share Our Strength's Taste of the Nation is the premier culinary benefit dedicated to making sure no kid in America grows up hungry. In Laguna Beach, Taste of the Nation brings together the finest chefs and mixologists and corporate and individual supporters to raise the funds needed to end childhood hunger.Poverty is complex; feeding a child is not.

Sunday May 21, 2017 2-7pm
Montage Resort, Laguna Beach CA
To see line-up of Guest Chefs, Beverages and Beneficiaries, visit their website
(photo credit)

Just Pack One | Orange County, CA

Just Pack One is a small movement to help homeless people and people who are struggling financially.

 To join in, grab a backpack and fill it with food that can be eaten without kitchen gear. Include wet wipes or personal toiletry items if you want, maybe a book or magazine or blanket. I often include a t-shirt.

Most importantly, include information and maps to the local food bank or social services in your city. Families and Individuals in crisis don't have the time or energy to "google" and find out the resources available to them.

 Keep the pack in your car.
Give it to someone in need.
And then Just Pack One more.

 “If you can't feed a hundred people, then just feed one.” Mother Theresa
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