Private foundations provide charitably minded individuals and families with a way to do creative, flexible things with tax-privileged assets.
"As long as the investment you want to make from your private foundation is for a charitable purpose, you have the flexibility to invest in a nonprofit, for-profit, individual or consultancy," according to Berit Ashla, a San Francisco-based philanthropic director of Foundation Source. "Your options range from an orphanage in India that has never heard of an IRS 501(c)(3) designation to a public radio station in San Diego that may be running a youth training and broadcasting program."
Last week, Ashla hosted a webinar to describe 10 such options.
1: Design a Scholarship
Many are familiar with this concept, but a number of Foundation Source's clients are willing to fund less traditional scholarships, not just one's 'A' students with outstanding CVs. Some clients who are self-made entrepreneurs have chosen to support students who remind them of themselves, in that they did not have many opportunities to get top grades—and scholarships—because they had to work after school, Ashla said.
Other clients have specifically designed scholarships for women returning to the workplace after taking time off as a mother who want to retrain to get into a new career. Still others have targeted immigrants to the U.S. who come with degrees, but need assistance to obtain further accreditation.
2: Make International Grants
Foundation Source's clients increasingly are making international grants. According to Ashla, some clients are bringing next-generation members onto their boards who have had more international exposure than the founders and understand the interconnection of all the work the foundation cares about. A creative tension often results: Founders want to make donations locally in recognition of the source of their wealth, while new generation members do not want to be confined to those geographic borders. Foundation Source has educated and facilitated international grants for a number of these clients, she said.
Several ways exist–some riskier than others–to make international grants. Among the less risky are to fund U.S.-based nonprofit organizations with established international programs; or friends-of organizations, domestic charities designed to benefit international charities.
3: Conduct Direct Charitable Activities
A foundation engages in a direct charity when it runs an activity or program by itself rather than supports a nonprofit to carry it out. The possibilities here are limited only by the foundation's imagination, Ashla said. Examples from Foundation Source clients include publishing an unpublished poet and setting up programs to provide funds to buy clothes for low-income people entering the workplace. One client bought used but essentially up-to-date college textbooks and sent them to his native India for use in local universities.
4: Prize Philanthropy
The idea of a prize is to incentivize a desired behavior; in contrast, awards tend to be ongoing events that periodically recognize an individual or organization demonstrating certain qualities. Prizes can be both large and small. Most are familiar with the Ansari X Prize for space flight. Ashla said the power and excitement of this prize lay not so much in its $10 million purse, but in the intellectual rigor, imagination and teamwork that was activated by the prize competition. She said smaller foundations and other organizations are thinking through how to present prizes to further their goals, activate people and reach beyond the "usual suspects."
5. Use Grassroots 'Agents'
Ashla said that in order to be most effective, foundations often have to partner with people on the ground who are doing the work and know the issues they want to address with your philanthropy.
For instance, Foundation Source clients interested in juvenile detention have recruited people with experience working with at-risk juveniles, such as juvenile hall judges and school principals, and had them serve as agents for the foundations, giving them discretionary money to distribute—with foundation board approval—as they see fit to the young people. These agents understand issues on ground, and with the money have the flexibility to address them.
