Giving Compass' Take:

• Amit Raizada covers the pros and cons of starting a family foundation and discusses the type of positive legacy one can leave through it.

• How could a family foundation help you achieve your philanthropy goals?

• Learn more through our family philanthropy guide.

Giving through a private foundation offers tremendous advantages over giving as an individual. Not only can you magnify your philanthropic impact, establish your personal legacy, and help bring your family together, but they offer financial benefits too.

About 50 percent of private foundations in the U.S. are family foundations, according to the Council on Foundations. Family members will often serve as members of the foundation’s board and will decide how the assets of the foundation can be used to meet the foundation mission — by making grants to charities or individuals. As with all private foundations, family foundations must disperse at least five percent of assets every year. A private family foundation’s grants are publicly viewable, which can make it easier for nonprofits and donors to learn what the foundation cares about and which causes and organizations it supports.

A family foundation has an initial board of directors which typically includes the family patriarch and/or matriarch. Subsequent or additional board members usually consist of family members or close personal advisors that are familiar with the Founders’ goals and aspirations for the foundation. When established, a private family foundation is funded with cash, appreciated securities, or other assets. The foundation then reinvests these assets to fit the investment goals set forth by the board using the investment income and appreciated assets to make future donations or grants to charities.

It is advisable to consult with an experienced CPA and estate lawyer as setting up private family foundations and administering them is complex.

Read the full article about building a philanthropic legacy through family foundations by Amit Raizada at Medium.