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Read articles about the benefits of opening a Donor Advised Fund with The San Francisco Foundation.

All the Benefits of Your Own Foundation Without the Headaches: The San Francisco Foundation Donor Advised Fund

The San Francisco Foundation is a resource for philanthropists and their advisors who are dissolving private foundations. We have worked with dozens of private foundations in the recent past, and we are currently partnered with two private non-operating foundations that are dissolving and transferring their assets to donor advised funds at the Foundation. With both clients, we met with the directors of the foundations, outlined the steps for dissolution, and recommended legal counsel who could assist them with the process.

There are two primary options at The San Francisco Foundation for private foundations that are considering terminating:

Donor Advised Funds: In some cases, private foundations dissolved and established multiple donor advised funds, one for each director with a pro-rata share of the corpus of their foundation.

Supporting Organizations: For foundations with assets greater than $3 million, a more formal approach is to create a supporting organization. We are also able to speed up the process of creating a supporting organization with the IRS, reducing often a year-long wait, because the Foundation has created a number of supporting organizations already incorporated and classified as tax exempt organizations by the IRS.

The Foundation can also help private foundations needing assistance satisfying their five percent distribution requirement. By transferring assets to a donor advised fund, they are able to meet their requirement and have flexibility in making grants into the community.

The advantages for donor advised funds and supporting organizations at the Foundation are numerous. In addition to the ease and efficiency of our donor advised funds, through the Foundation’s Donor Choice program, a private foundation can recommend an investment manager for their donor advised fund if the amount of the fund is greater than $5 million.

If you have a private foundation client that is looking for an exit strategy or needs to meet their distribution requirement, please contact Development and Donor Services staff at donorservices@sff.org or 415.733.8500 with questions.

 

Seven Steps to Terminating Private Foundations

By Erik Dryburgh, Partner, and Amy Rodriguez, Associate, at Adler & Colvin

dryburgh-rodriguez_enews.jpgOur firm has assisted a number of clients in terminating their private foundation, and their motivations vary. For some the administration may have become too burdensome, or the asset value may not be sufficient to support the cost of operations. For others, there may be no obvious successor to take over, or the donor’s children may not agree on how to conduct their grantmaking.

Many of our clients terminate their foundation by granting its assets to a donor advised fund, like those available at a community foundation. By being involved in a local organization like The San Francisco Foundation, they stay involved in grantmaking while benefiting from a lower cost structure, grantmaking expertise, and educational opportunities.

To assist your clients in terminating a California private foundation in corporate form, follow these steps:

  • The board passes a resolution approving (i) the dissolution of the corporation, (ii) the transfer of all remaining assets to one or more public charities, and (iii) the preparation of a Certificate of Dissolution (or, if the vote is not unanimous, the preparation of a Certificate of Election to Dissolve and a Certificate of Dissolution).
  • Each board member signs (but does not date) the Certificate of Dissolution.
  • The foundation requests a written waiver of objections to the plan of dissolution from the California Attorney General’s office. The waiver request must contain certain specific information about the recipient charity(ies) and the planned distributions, and a copy of the signed, but undated, Certificate of Dissolution.
  • After the waiver is received, the foundation notifies its creditors of the proposed dissolution, winds up its affairs, settles any outstanding debts, and transfers all remaining assets to the designated recipient charity(ies).
  • After all debts are paid and the funds are distributed, the Certificate of Dissolution is dated and filed, along with the Attorney General’s waiver of objections, with the California Secretary of State.
  • The foundation prepares and files the final information returns with the IRS and FTB, and files a final RRF-1 form with the Attorney General’s office.
  • The foundation sends written notification, including the required information, to the IRS’s exempt organization’s unit.