by Denyve Boyle, CFRE, CAP®
As you work with clients who have established a private foundation, it is not uncommon for the conversation to eventually turn to whether this structure still makes sense. What began as a seemingly logical vehicle for organizing a family’s philanthropy can, over time, become administratively burdensome, especially as leadership transitions to the next generation. In many cases, transferring a private foundation’s assets to a donor advised fund at Community Foundation Tampa Bay can offer a simpler and more flexible path forward.
You may already be familiar with the general benefits of a donor advised fund. A donor advised fund can reduce administrative responsibilities, eliminate many of the complex tax compliance requirements, and allow families to focus more fully on their charitable goals rather than ongoing operations. The technical mechanics of making the transition are also relatively straightforward:
–Confirm that the private foundation’s board has approved the termination and documented the decision appropriately.
–Work with Community Foundation Tampa Bay to determine the fund or combination of funds that best aligns with your client's charitable goals. Depending on their objectives, this may include a donor advised fund, an endowed fund, a scholarship fund, or a combination of these options, while preserving the family's name, grantmaking priorities, and philanthropic legacy.
–Grant the bulk of the private foundation’s remaining assets to the new fund, leaving a reserve to cover final expenses.
–Satisfy outstanding liabilities and complete the private foundation’s final tax filings and state-level dissolution requirements.
While these steps are important, the transition is ultimately about more than mechanics. It is an opportunity to reposition the family’s philanthropy for the future by reducing administrative burdens while preserving, and in many cases enhancing, the impact of the family’s giving.
One aspect of the transition deserves particular attention because it is easy to overlook: communication with grantees. For many private foundations, relationships with nonprofit organizations have developed over years, and sometimes decades. In some cases, grantees may rely on annual or recurring support.
When a private foundation winds down, a lack of clear communication can create confusion or uncertainty for the organizations that have come to depend on that funding. As a trusted advisor, you can play an important role in helping your client plan for this transition thoughtfully. The Community Foundation can also serve as a trusted resource throughout the process. Our team has close relationships with hundreds of nonprofit organizations across our community. Here are five tips to help your client develop a thoughtful communication plan with the support of the Community Foundation Tampa Bay team:
–Encourage your client to communicate early and clearly with key grantees. Your client does not want nonprofit organizations to hear about the transition from anyone else.
–The communication itself does not need to be complicated. A straightforward email explaining that the private foundation is transitioning to a fund at Community Foundation Tampa Bay, and that the family remains committed to charitable giving, can go a long way.
–If possible, encourage your client to reach out personally to each nonprofit grantee before sending the email communication. This is more than a thoughtful gesture. It is a meaningful way to maintain and deepen trust.
–If the client intends to continue supporting certain organizations, it is helpful to reassure those nonprofits that future grants may be recommended through the Community Foundation.
–Messages can also affirm the mission of the Community Foundation and the broader resources and network it provides to both your clients and the nonprofit organizations they have supported for many years.
As always, the Community Foundation is here to help you and your clients navigate both the technical and relational aspects of this process. Whether your client is ready to move forward now or is simply beginning to explore options, our team is honored to work alongside you to help ensure a smooth and thoughtful transition that supports your clients' charitable objectives.
Denyve Boyle, CAP®, CFRE, MBA is the Associate Vice President of Philanthropy at Community Foundation Tampa Bay. She is an experienced, highly motivated professional that inspires philanthropy throughout the community by educating and engaging individual donors, corporations, and professional advisors. She can be reached by phone at (813) 609-4868 or via email at dboyle@cftampabay.org.
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