Supporting organizations can be a powerful tool for helping donors create an alternative to a mid- to large-size private foundation.
Generally, it is possible for a private foundation with $5 million in assets, or the potential to reach $5 million in the future, to become a supporting organization of a community foundation. Besides easing the administrative and cost burdens of managing a private foundation, transferring it to The Denver Foundation permits the private foundation to take advantage of many aspects of our public charity status.
Section 507 of the Internal Revenue Code permits termination of a private foundation in either trust or corporate form with distribution of its assets to a public charity. The two primary requirements for the termination of a private foundation are that the private foundation must distribute all of its net assets to one or more tax-exempt organizations and that each organization has been in existence for a continuous period of at least five years preceding the distribution. The Denver Foundation fulfills both of these requirements and the private foundation's assets typically form a permanent donor-advised fund under a similar name.
The members of the Philanthropic Services Group are glad to help you and your client explore this option in more detail. Please call us at 303-300-1790 for more information or to set up a meeting.