Are you talking with your board and investment advisors about asset allocation? Concepts to consider A number of concepts should be understood before you tackle the important work of creating an investment policy and allocating assets. Investment time horizon How long do you want your foundation to exist? Do you plan for your foundation to... Read More
In addition to fairly consistent and often dramatic appreciation in value, real estate can generate substantial cash flow. The yield from real estate often exceeds what one can derive from fixed income securities, such as bonds or Treasury bills (T-Bills). Between 1972 and 2000, Real estate investment trusts (REITS) generated an average yield of 12.45%... Read More
With all the attention given to the excise tax rules (e.g., sections 4940–4946 of the Internal Revenue Code [IRC]), the directors or trustees of private foundations (i.e., “managers”) may be inclined to overlook their fiduciary duties under state or common law. This complacency can be compounded by the fact that many private foundations are governed... Read More
Funders can engage in advocacy, can fund advocacy, and can encourage grantees to engage in advocacy, with exceptions involving lobbying and electioneering. The two types of lobbying are direct lobbying, communicating with legislators to express a view about specific legislation, and grassroots lobbying, asking the public to communicate with legislators to express a view about... Read More
Board members should be aware of three key legal requirements that may impact foundation investments. Avoid jeopardizing investments The board has the legal responsibility to manage the foundation’s assets in a manner that avoids imprudent investments. The Internal Revenue Service (IRS) may penalize the foundation if it is found to be engaging in investments that... Read More
Consider offsetting capital losses with capital gains. Over the past decade, the largest taxable component of investment income for most foundations has been realized capital gains. Foundation management should review their portfolio to ascertain if they can take losses to offset any realized gains. Foundations should be aware that any excess capital losses over capital... Read More