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Create a WV Nonprofit
- Create a Community
Foundation
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Program

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Seekers

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Membership Forum

Geroge Hancock looking lovingly at his wife, Holly

Create a Private Foundation

Starting a new foundation will bring about a lasting imprint of a donor's vision. Private foundations can take a number of shapes. They can be created and run by families or a self-elected board of trustees. Through your foundation, you can create responsive, innovative systems to fund a range of options, from longstanding programs to cutting edge initiatives. A foundation can be one of several types, depending on mission. It's important, as with all major financial decisions, to seek legal counsel to help you determine what type of foundation works best with your assets and charitable vision.

SETTING GRANTMAKING PRIORITIES
Every foundation receives requests for more than it can fund. It is very important to set funding priorities and make available specific guidelines and criteria. These should be based on an understanding of the community needs and what can realistically be accomplished given a foundation's resources.

Some steps to help define your grantmaking priorities:

Assess community needs. Talk with your community foundations, United Way agencies, and other area funders to identify critical needs.

Think through your own charitable interests and match those up with need.

Determine what the foundation will NOT consider.

Balance priorities against resources to determine size of gifts you are likely to make. Set a range for grants limits.

Develop a guidelines process. Ask other funders for copies of their guidelines, and use these as models. You can also ask these funders to share their mailing lists, to help in your efforts to issue a request for proposals.

Design systems for grantee feedback and reporting.

Seek specialized legal counsel. A number of West Virginia attorneys specialize in nonprofit and foundation laws and regulations.

Types of Grants
Each grant below serves a different purpose.
Program—supports a specific issue or activity.
Capital—bricks and mortar projects, such as construction or equipment.
Challenge—a grant is issued as a challenge and fulfilled once additional funds or pledges have been received.
Operating—allows the grantee to apply the gift to core operations and annual expenses.
Start Up—seed funding for a new program or initiative. Demonstration—to support new and innovative programs that can be replicated.
Endowment—a fund that provides annual earnings that generally supports operating expenses.
Matching—funds that are made in answer to a challenge grant.
Proactive—the foundation seeks out the recipient without a competitive process.
Program Related Investment (PRI)—the foundation makes a low or below market value loan to a charity.
Multi-year Grant—the grant is paid over several years.
Grant Contingencies—conditions must be satisfied before a grant is provided.

A good Web tool to learn more about effective grantmaking is www.grantcraft.org.

Be sure to assess your resources and long-term vision for your philanthropy. Many donors are likely to find it far more cost effective, and fulfilling, to establish a donor advised-fund within a community foundation. The Giving Forum has a helpful calculator program that will help you ask the right questions to determine if a new organization, such as a private foundation, serves your interests best.

A Donor Advised Fund vs. A Private Foundation
	Establish Advised Fund Within a Community Foundation	Create a New Private Foundation
Organization	Established	Not established
Tax Exempt	501(c)(3)	Not established
Funds Required	Build up to $5,000	Experts recommend $1-$2 million
Donors Role in Selecting Grants	Donor, family, his/her committee recommends grants	Donor specifies grants
Tax Deductibility	Maximum	Limited
Federal Approvals/Restrictions	Approved by IRS • No payout requirement •No federal excise taxes on income •Tax return provided	•Requires 5% payout annually •Fund is charged 1% or 2% •Greater •Incidence of field audits; Must prepare tax return
Language for Making Gifts and Creation of Funds	In Place	Must Create
Office/Staff/Accounting	In Place	May need to obtain
Officer Liability	Covered	May need to obtain
Investment of Assets	Oversight Committee	Need to obtain
Overhead Costs	Est. 1%—covers everything	Substantial costs

In addition to the Council on Foundations, the Association of Small Foundations provides support for foundations with little or no staff. These organizations can direct foundation leadership toward resources that will aid in designing grantmaking guidelines, benchmarks, and best practices.

Plan Your Personal Giving | Why Give to a Community Foundation
Find Your Local Community Foundation | For Professional Advisors
Create a WV Nonprofit | Information for Grant Seekers
West Virginia Statistics | Grantmakers Membership Forum