Many people seem to believe that “inheriting” e.g. The Gates Foundation is just as profitable as inheriting tens of billions in cash. My gut tells me that charitable law must be more complicated than that. What’s the truth?
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No, you use them to make bribes. A new school in the town where you want to build a marginally dodgy chemical factory, that sort of thing.
If I inherited 5B I would have 5B to spend, if I inherited a Foundation with 5B net worth I would have nothing to spend and nothing to gain since a foundation is a non profit organization
As others have pointed out, however, there are ways to make some of that money return to you but not much
It depends on how the organization is structured And what rules the trustees have to abide by.
for example the governing documents may say: this charity will only help Left Handed people born in March.
so if you were born on April 1st, you’re SOL.
The foundation owns its assets, and a person cannot inherit them. The best you (as a money grubbing worthless layabout family member of a billionaire) can hope for is to draw a salary as an employee or trustee.
It’s better than cash because you don’t pay taxes or open your books to the IRS. The charity will send funds to some charities and receive funds from other charities. But primarily it will cover the expenses and salary if the board, which can be use of properties, vehicles and living expenses.
While it’s not literally as good as cash, a charitable foundation is great for “rich people hobbies”.
You can draw a healthy salary from the administrative budget, use it as an avenue or direct subject of your charitable giving and direct the foundation to focus their resources to your philanthropic interests or subjects. While it’s a bit unfair to reduce these missions as “hobbies”, if you wanted to go see the world and make a difference out there, the foundation will ensure more of your money goes towards your projects and less towards taxes.
Ask Chelsea and Hillary. You can live like a billionaire. Even billionaires don’t spend all their money.
You can be the CEO and be paid as much as you want to, you can use the charity for PR, you can use it to buy the shares of your own companies.
It’s not as good but better than nothing.
Just like good and bad people there are good and bad foundations.
Some foundations do good for the world.
Other foundations are just grift and a way to avoid paying taxes (including inheritance taxes). Many foundations only spend a fraction of their donations on a charitable cause, and CEOs of those “foundations” often make millions.
From the tech world two of the worst “foundations”/nonprofits are: Mozilla – where CEO makes 2 millions of dollars per year while laying off the employees. And Wikipedia that only spends less than a half of it’s donations on actually maintaining wikipedia. Majority of their profits go to maintaining a lavish headquarters in middle of San Francisko and paying high six figure salaries for executives.
I recommend: [https://www.charitywatch.org/our-charity-rating-process](https://www.charitywatch.org/our-charity-rating-process) (Wikimedia would get D using their criteria, btw.)
At a certain point, after one can have any comfort they want, any additional money is only valuable for growing fame and influence with wild projects or giving money to people making change in the way they want to see it. Most ways one may wish to influence things can be couched as charitable goals that fit into the legal definition of a foundation. Some very rich families aim to keep enough money to buy whatever they want to in their personal holdings, and then what’s left they move into a family foundation, with the family members and trusted friends as board the board. The board controls the giving priorities and elects the new board, so technically the family doesn’t “own” the foundation but it does control the decisions as long as it stays united and holds a majority of the board seats (or doesn’t add any non family board members in the first place)
Once the money is in a foundation, the money transferred is tax deductible for the donors and it grows tax free (as long as it doesn’t break rules, ie by self dealing — transferring money back to direct ownership buying services from the family company) while still being within their control and used for things that improve their reputation and influence (or more charitably to improve the world as they see it, given there isn’t anything left to buy).
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