Giving in LA

May is Asian Pacific Islander American Heritage Month (APIAHM).  While there is much to celebrate in terms of accomplishments and advancement by the Asian Pacific Islander American community, this post highlights something different.

A few weeks ago I had the honor of attending the first-ever national philanthropic briefing on the Asian American and Pacific Islander community.  Hosted by The White House Initiative on Asian Americans and Pacific Islanders (WHIAAPI), the event brought together foundation colleagues, community experts, and high-level federal officials to strategize around our community’s serious needs.

It also highlighted surprising facts that often go unnoticed.  For example:

• Only 13% of Native Hawaiians and Pacific Islanders 25 years of age or older have at least a bachelor’s degree.
• More than 26% of Hmong Americans, 22.5% of Bangladeshi Americans, and 17.4% of Micronesians live in poverty.
• 35.5% of Korean Americans, 18.3% of Vietnamese Americans and 17.7% of Indian Americans 10 years and older lack health coverage.
• AAPIs that become unemployed remain unemployed longer than any other ethnic group.
• AAPI students are 20% more likely than other ethnic groups to be bullied in the classroom.
• Almost 50% of AAPI students are enrolled in community colleges, not four-year private institutions.
• AAPIs in Ohio must take a 12-hour bus ride to New York City to receive culturally and linguistically competent healthcare.

The White House briefing in April was a historic call for decision-makers in federal agencies, community groups and charitable organizations to support the President’s mandate to increase public-private sector collaboration to address unmet needs throughout the Asian American and Pacific Islander community.  The briefing resulted in an overwhelming response from the attendees, especially from those in philanthropy.

The Ford Foundation, Kellogg Foundation and Kresge Foundation, for example, immediately joined together to commit a $1 million so that a long-term, strategic planning process will result in a sustainable model for change in our communities.

We, the people in foundations, corporations and government, must all heed the call and take it to the next level.

Thanks for reading,
Leslie

Leslie Ito is the Arts Program Officer for the California Community Foundation. 

In my last post, I addressed why private foundations are appealing to many donors who want to formalize or advance their personal philanthropy.  What many donors don’t consider before creating one, however, are the costs that come with this seemingly flexible solution.  These unanticipated costs lead many private foundations to fail over time.

Here are three common reasons why:

1.    Inability to address a private foundation’s administrative burdens.  People who form private foundations are often surprised by the administrative tasks required to establish and operate a private foundation.  They must file certain documents with the state and IRS when forming the foundation.  They must segregate the foundation’s assets from their own and invest them.  They must file tax returns annually and comply with other IRS requirements when making grants to other charitable organizations.  They must comply with the restrictions against private inurement, private benefit, and self dealing.

Failure to comply with the rules can result in action by the state’s attorney general or the IRS, including losing a private foundation’s tax exempt status.  Several companies provide these administrative services to private foundations for a fee.  In June 2011, however, 275,000 nonprofit organizations lost their federal tax exempt status for failure to file legally required documents with the IRS for three consecutive years.

2.    The next generation has different abilities or priorities.  Although families form private foundations as a way to promote family giving, the needs of the family and purpose in their giving often change or diverge over time.  For example:

•    Areas of interest change – where Mom and Dad were interested in health care, the children are interested in the arts and the environment.
•    Family members move – where Mom and Dad were interested in supporting local charities, the children do not feel the same connection to the place or are more interested in supporting causes elsewhere.
•    Children don’t have the time or energy to spend on private foundation matters due to jobs, a new family or other obligations.
•    Children lack the ability or are simply not interested in managing the administrative burdens required to ensure the tax exempt status of the family’s private foundation.

Private foundations are often dissolved and their assets distributed to a donor advised fund, supporting organization or public charity after the first or second generation.

3.    Cost of administration reduces the impact made on the cause.  While there are over 100,000 private foundations, based upon IRS filings, more than 65% have less than $1 million in assets and more than 90% have less than $10 million.  Costs of administration reduce the ability of a private foundation to meet its main objective, namely providing funds to a particular need.  Accordingly, private foundation boards often decide to dissolve and distribute the assets to achieve greater impact.

Thanks for reading,
Don
Don Gottesman is a senior development officer at the California Community Foundation

One of the wonderful things I love about Los Angeles is our entrepreneurial spirit. Whether that means opening a café selling locally roasted coffee or providing consulting services to help contractors build more energy efficient homes, Angelenos have a desire to fill niches, innovate, and build better mousetraps. This entrepreneurial spirit often extends to our charitable giving, leading us to consider enhancing or formalizing our giving through a dedicated vehicle.

People are often advised to create a private foundation. Why?

Private foundations are, essentially, a type of charitable, grant-making organization that allows a person to:

• leave a family legacy
• employ family members
• control board appointments and investments
• control which charities to support

Private foundations also help maintain high public visibility and are, arguably, one of the most flexible charitable solutions. Most people don’t know, however, that flexibility often comes at a cost. For example:

• Administrative burdens:
  Forming the private foundation
  Investing its assets
• Identifying and assessing charities to receive grants
• Tax return preparation and other IRS and state tax filings
• Reduced income tax deductions
• Distribution requirements to avoid IRS penalties
• Lack of anonymity

While private foundations can lead to innovative approaches to solving needs that are near and dear to the donor, careful consideration should be given to the family’s taste for administration, the foundation’s ability to address changes in the family, and the true impact the foundation can deliver to the charitable cause it targets.

It’s also important for individuals and families to know that because of the array of different charitable institutions that exist today, they don’t have to go about their philanthropy alone. Community foundations and national charitable funds are available to help execute your philanthropy (and actualize the mission behind it), without you having to shoulder the administrative burdens behind it.

You may be surprised to know that many private foundations fail, and my next post will explain why.

Thanks for reading,
Don

Don Gottesman is a senior development officer at the California Community Foundation.