Creating a Corporate Foundation | How-to Guides for running your business from Work.com

Once upon a time, the handful of corporate foundations in the United States rang with the hallowed names of industry--Ford, Carnegie, Rockefeller. No more. Laws have changed dramatically to favor even small, family-run companies, and a little bit of advance planning can a huge difference when the eventual inheritance taxes kick in.

Plus, you get the fabulous gift of giving away a lot of money while still alive, a gratifying retirement career to say the least.

Action Steps
The best contacts and resources to help you get it done

Corporate Foundations 101

Decide if a private foundation -- and all of the legal and tax work it implies -- is really your bag. Perhaps you will choose instead to simply write a big check at retirement age.

I recommend: The IRS has a good overview of what you will need to begin a serious private foundation. Before you decide on what focus your foundation will have, research competing organizations through Guidestar or FoundationSearch.

Get training you'll need

Most foundations either hire professional grant-makers or rely on the free time of family members to develop those skills. Either way, you and your board will need to know the basics, even to manage a team of professionals.

I recommend: A number of groups offer training and consulting, including the Grantsmanship Center, the Giving Institute, the American Association of Grant Professionals, and the Association of Fundraising Professionals.

Outsource the work

What often gets small foundations in trouble is the overhead cost of starting up and running. A number of organizations offer to to back-office and legal work, letting you focus on giving.

I recommend: Among those are retirement fund giant Fidelity, Foundation Source, American Endowment Foundation's donor-advised funds and the Association of Small Foundations' Foundation in a Box.

Networking for grantmakers

A huge learning curve can be overcome in a couple of years simply by getting involved in umbrella groups that aim to teach and lead foundations.

I recommend: Among these are the Council on Foundations and the Foundation Center. Stanford's graduate business school runs SSI Review, which examines foundation practices.

Keep track of trends in the non-profit world

Tax laws change, giving styles change, even needs change as natural disasters strike or diseases rampage in the developing world.

I recommend: Keep up on the trends by reading key periodicals, including the Chronicle of Philanthropy, the Giving Forum and Philanthropy Roundtable. Business magazines Forbes and BusinessWeek both track the field closely.

Tips & Tactics
Helpful advice for making the most of this Guide

A donor-advised fund can give you a lot of the tax advantages with far fewer legal hassles. You write a single check then decide what to give where over time on the interest.
Foundations often go through growing pains long after the founder or company is gone. Consider a fund design that stipulates that all principal be spent withing a specific time frame, perhaps by 20 years after your death.
Know a good local corporate foundation, one you admire? You could always do as billionaire investor Warren Buffett chose to do: He gave most of his money to Bill Gates to give away instead.

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