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Building A Legacy: Choosing Between Donor-Advised Funds And Private Foundations

For individuals with significant resources and a strong philanthropic vision, creating a legacy is about more than leaving money behind. It is about defining values that endure and making a long-term impact aligned with your life’s purpose. Establishing a philanthropic legacy allows you to determine how you are remembered and ensures your influence continues to shape the world for generations to come.

Why Legacy Matters

At its core, building a legacy offers the opportunity to live and give with intention. It invites you to think beyond personal success and consider how your values can benefit others. It also provides clarity and motivation by connecting your wealth to a broader purpose that reflects who you are and what you believe in.

Strategic Choices for Philanthropists

When designing your giving strategy, one of the most important decisions is choosing the right structure: a donor advised fund vs family foundation. Each option presents distinct advantages depending on your goals, your desired level of involvement, and your long-term vision.

Working closely with trusted legal, financial, and philanthropic advisors can help ensure your giving strategy is thoughtfully planned. At Creative Planning, our team is ready to support you in aligning your financial goals with your charitable values.

Donor-Advised Funds: Flexible and Efficient

A donor-advised fund is a streamlined, low-maintenance option for individuals who want to give strategically without the operational demands of managing a foundation. You make a charitable contribution to a sponsoring public charity, which holds the funds in a separate account. You can recommend when and where the funds are distributed, and the sponsoring organization facilitates the grants.

Although legal control rests with the sponsoring charity, donor recommendations are typically followed. This structure offers flexibility, immediate tax benefits, and greater anonymity, making DAFs an attractive choice for many philanthropists.

Private Foundations: Greater Control, More Responsibility

For those seeking deeper involvement in their charitable work, a private foundation provides full decision-making authority over investments, grantmaking, and operations. It offers the opportunity to engage family members in a long-term philanthropic mission.

However, this control comes with additional responsibilities. Private foundations require more substantial startup costs, ongoing administration, tax filings, and regulatory compliance. Activities and financial records are publicly disclosed, which may be a consideration for those who value privacy. Despite these obligations, many donors find the structure rewarding, especially when legacy-building is a family priority.

Choosing What’s Right for You

If you envision your legacy as a hands-on, multigenerational business venture, a private foundation may be the right fit. If you prefer a more flexible, cost-effective option with fewer administrative obligations, a donor-advised fund might better suit your needs.

In the end, building a legacy means creating impact on your terms. Whether you choose a DAF or a private foundation, the structure should reflect your values, your vision, and the lasting influence you hope to have.

Moving Abroad Checklist

Initial Considerations

Will your partner be travelling with you?

If so, what will they be giving up in your present home and will they be able to continue with their career in your new home? You will need to check whether a separate visa is required for your partner to work or if your visa gives that right. If they are unable to work you will need to decide on the effect on your finances and what alternatives are available to give a fulfilling life (home business, training, voluntary work).

Are you taking family with you?

Moving with family raises many exciting opportunities, but also can create challenges. The HSBC Expat Explorer survey indicates that expat kids can take six months to settle in to their new country (see article). Getting young or even older children to prepare to move and leave their friends and family behind can be a challenge and should be thought through.

The options for education is another area that needs to be thought through.

Moving your child to a new country with a different education system can be a great opportunity to broaden their experience, but if they are close to key exams the timing can make this inadvisable. If you do take your family with you, it is important to decide between joining the local school system or choosing an international school.

Where will you be living?

Whether you will be living in a house or apartment, furnished or unfurnished, these decisions will affect what you need to take with you. The time you are planning to live overseas will also affect whether you should leave your property at home empty, rent it out or sell it. See the article Sell, Store or Ship.