Q:WHAT ARE FAMILY FOUNDATIONS AND HOW DO THEY WORK?

A:
Family foundations are endowments that are committed to supporting certain causes. These private foundations help people to leave a legacy, transmit their values to future generations, and give to charity.

Family foundations are usually set up to support certain causes, such as education and medicine, or to support specific char-ities, such as the American Cancer Society or United Way. Family members or employees of the foundation often handle the day-to-day operations, and they also supervise the investment and management of the foundation’s assets.

Private family foundations are created as nonprofit corporations or trusts. The organizations are governed by boards of directors or groups of trustees, which may include family members.

As tax-exempt entities, family foundations must distribute at least five percent of their assets for charitable purposes each year. Gifts of cash or other assets, such as stock, to private foundations are tax-deductible.

There are more than 30,000 private family foundations in the United States. About half of these foundations were established within the last 20 years — not a surprising statistic, considering how well the U.S. economy fared over the last decade.