Many people want to start foundations, but few start out knowing exactly what sort of organization they are going to create. The purpose of this chapter of Mastering Foundation Law: The Council on Foundations Compendium of Legal Resources is to help potential donors understand the many different entities that are commonly referred to as foundations and to provide an understanding of the legal framework necessary to establish a foundation.
The Council on Foundations is a membership organization that supports grantmakers in a variety of ways, including providing best practices in foundation management. The Council provides basic information to help you understand the general steps necessary to start a foundation, but does not provide legal or technical assistance for starting a foundation.
Once your foundation has been established, we would welcome your organization as a member, and provide access to resources to help with ongoing management. Whether on a shorter or longer time arc, many foundations go through the following life cycle: getting started; ongoing operations; and spend down.
With guidance from its board, foundations must decide whether to operate in perpetuity, or to wind down operations. The decision to spend down may be a difficult one, and is often a decision made by its founder or board, based on inputs ranging from donor intent to declining endowments.
The Council on Foundations has created a host of resources to guide you through each step of the foundation life cycle, and can also provide information from its Knowledge Center and Legal departments to help inform your decisions.
In-Depth knowledge on Foundation Lifecycle
Mastering Foundation Law: The Council on Foundations Compendium of Legal Resources is a comprehensive guide to foundation law for the non-lawyer. It is easy to use, self-directed, and regularly updated. Once completed, the Compendium will be comprised of around 40 chapters covering all aspects of foundation law, from creating a charitable foundation and grantmaking basics to self-dealing and planned giving.
Closing a nonprofit charitable institution presents a range of unknowns to the grantmaking community. In this analysis, authors John Dickason and Duncan Neuhauser provide guidance to foundations considering whether to create a time-limited foundation or bring a foundation to an end. Topics include managing finances, grants, human and physical resources, archives, history and records.
Exiting fields is a common practice in the philanthropic sector. It is often spurred by foundations’ continuous quest for innovation, new leadership, or a decline in assets. However, this practice is often performed with little advance notice, unclear rationales, and no consistent best practices. Exiting a field responsibly is essential to achieving the compelling and far-reaching goals that foundations set for themselves, so how can they help strengthen and sustain fields when their support ends? Consultant Janice Petrovich discussed effective practices in this important area.
From the Family Foundation Advisor, this article reviews the sunset-vs.-perpetuity issue and considers the potential benefits of a sunset date, with the special considerations of small family foundations in mind.
Frequently asked questions about starting a foundation.
There's more to closing down a private foundation than packing up and turning off the utilities. Here are some questions, considerations, and IRS direction.