It is the one thing keeping me from starting a private family foundation. Giving a lot of hard-earned money to a foundation that I start only to have a board vote to give the money to organizations I oppose. It happened to the Ford Foundation, the Packard Foundation, the Annenberg Foundation, you name it.
For what it's worth, it's easier to maintain control over a private family foundation since you can operate it as a family office. There is no expectation of wider board control vs. a public charity. That said, you still don't own it. That's why some people have chosen to donate to a DAF instead of starting a foundation. There's limitations to that strategy, however. We'll have another video soon on how founders can better control a 501(c)(3) through a single member structure. Stay tuned!
@@gregmcray Easier, perhaps, but not fool proof especially after the founder dies and the board can just vote to do whatever the heck it wants. I very much look forward to the video about single member structure especially in places where states require family foundations to have 3 or more board members. Thanks!
@@TheTerryE Not every state requires 3 or more directors. Please see the states of Delaware, MA, CA, NV, and etc. they only require 1 director for a public charity, but it's best practice to have at least 3. NH is the worst it requires 5 unrelated directors.
Fantastic question. The IRS requires a charitable asset distribution clause to be present in your STATE incorporation document (Articles/Charter). Therefore, losing your tax exempt status at the IRS doesn't impact your Articles. Of course, if you lose 501c3 status, you could later amend your Articles to remove the distribution clause, but then you would almost certainly run afoul of state nonprofit corporate law. This is an area in which board members and/or founders should tread carefully. Neither the IRS nor the states take kindly to personal appropriation of donated goods.
