FAQs

How long does it take to get my new foundation?

Normally, you will have a foundation within 24 hours.

How do I apply for a new foundation?

Call us at 703-437-9720

How much should I put into my foundation?

There is no limit to how much you can put into your foundation. If your goal is to get the largest income tax deduction possible, you should consider putting 30% of your pre-tax income into your foundation. If your goal is to build the largest foundation or avoid estate tax, you may wish to select a percentage of your net worth — 25%, for example — to put into your foundation. Check with your tax advisor for the tax implications of your specific situation.

How much does it cost?

It is quite inexpensive. Contact us for full details.

What makes my foundation tax exempt?

Technically, your foundation will be a not-for-profit corporation, which qualifies as a tax-exempt charity under section 501(c)3 of the Internal Revenue Code.

Are there any limits on what my foundation can do?

Yes. Sterling will manage your foundation to ensure that you do not do anything that is prohibited. Generally speaking, your foundation may not engage in business transactions with you, members of your family, your company, or your employees. For example, your foundation could not own a significant piece of your business, nor could it buy assets from you or sell assets to you. An important exception to this rule is that your foundation may hire you or members of your family to perform work for the foundation (see below).

Can my foundation hire me or my children?

Yes. The compensation that is paid to the employee must be reasonable for the work performed.

What charities can I give to?

You can give to any charity which is recognized by the IRS as a public charity. Of course, there are thousands and thousands. Generally this includes churches and synagogues, hospitals, schools, universities, most scientific and educational organizations, museums, symphonies, opera companies, poverty relief groups, homeless shelters, environmental organizations, etc. In certain circumstances, your foundation can also give donations to foreign charities that would not be deductible if those donations were given by an individual.

Do I have to give money to charity each year?

Yes. You can give as little as 5% of your foundation's average net assets to charity each year. Of course, you can give more. Many foundations elect to give the minimum in the early years. This allows the foundation to grow more rapidly until the founder finds the time to devote himself or herself more fully to philanthropy.

Can I manage the money myself or pick a money manager myself?

Yes. The only limitation on how you can invest the money is that you may not invest it in so-called "jeopardy investments." In practice, this is very rarely an issue.

What do I have to do each year?

You don't have to do very much at all. The only things you must do are decide what charities to support, and occasionally sign documents.

Where will my foundation's money be physically?

You decide which firm will hold your foundation's money. It can be at the same place where you have your stocks, bonds, mutual funds or other accounts.

How do I get account statements?

You will get account statements directly from the bank, brokerage firm, or money management firm which holds your foundation's assets.

How will I know how much to give away each year?

The general rule is that your foundation must give away 5% of average net assets each year. Sterling will calculate the amount for you, and advise you months in advance of the deadline.

Is there a minimum amount I must keep in my foundation?

No. However, you might want to keep in mind that there are minimum costs associated with running your foundation.

How do I make a gift to charity from my foundation?

It's easy. Simply fill out a Disbursement Request Form and send it to us. We'll prepare the grant check, and the required letter which accompanies it to assure that the recipient charity qualifies. We need to review all grant requests before the grants go out to ensure that your foundation remains in compliance with all the rules.

At your option, we'll send the check and letter to you to send to the recipient, or we'll send them for you. Generally, recipient charities must be qualified as tax exempt organizations under section 501(c)3 and public under section 509(a)1.

Who is Sterling?

Founded in 1998, Sterling Foundation Management, LLC is the nation's leading provider of private foundation administration services and liquidity for CRT interests. Sterling's principals have written and spoken widely on the subject of philanthropy, foundations, and CRTs. Sterling's founders co-authored Creating a Private Foundation, which was published by Bloomberg Press in 2003 and is now in its second printing, and Managing Foundations and Charitable Trusts published in 2011.

How do I keep up with the latest news, trends and best practices for private foundations?

Follow Sterling on Linkedin at https://www.linkedin.com/company/sterling-foundation-management-llc or Twitter https://twitter.com/SterlingFndMgt @SterlingFndMgt to receive timely and relevant news pertaining to starting and managing private foundations.