The continuing economic boom is creating an explosion of family philanthropy in the U.S., with 4,000 new family foundations coming into existence between 1995 and 1997 alone, Business Week reports.
Today, family foundations control more than $100 billion in assets and make about $6 billion in grants a year, according to the Washington-based Council on Foundations.
Unlike the best-known family foundations, such the Gates Foundation with nearly $22 billion in assets, many family foundations have less than $5 million in assets.
Many people start foundations with less than $1 million, although philanthropic consultant Tracy Gary says that foundations are an efficient giving alternative for those with $2 million or more to donate.
Wealth specialists caution potential donors not to create a foundation for tax purposes because tax benefits for foundations can be smaller than for other charitable donations.
“The IRS basically says the less control you have over the money, the greater the tax break,” Karen Green of the Council on Foundations told BusinessWeek.
Foundation expenses vary, and the Council on Foundations estimates starting a family foundation costs $10,000. Annual expenses will cost 2 percent to 3 percent of the total endowment on average, Business Week says.