The following is an excerpt from Ice Miller's Business Transition Strategies to Preserve Wealth Guide, which provides insights on a variety of topics to help ensure a smooth business transition. 

Many families (or related corporations) are interested in giving back to the community in the form of charitable contributions. A private foundation is an ideal vehicle for accomplishing this goal, for two reasons: (1) it can be used to provide direct monetary assistance to local charitable organizations, thereby helping the less fortunate, and (2) contributions to a private foundation may serve to reduce a donor's taxes.

What is a Private Foundation?

A private foundation is typically formed as a nonprofit corporation pursuant to a state statute. Once the foundation is properly formed, it must apply for state and federal tax-exempt status. Upon receiving a determination that it is exempt from taxation, the foundation must operate in conformance with state corporate law, as well as with state and federal laws and regulations applicable to tax-exempt organizations.

As you can see, a private foundation can serve as an excellent means of achieving a donor's charitable and financial goals, provided the donor and his or her advisors understand and comply with the appropriate federal and state requirements. However, those requirements and limitations make it vitally important that you obtain expert advice with respect to the formation and operation of your foundation. Ice Miller stands ready and able to assist you with this process.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.