A Terrific Way to Give Back

This blog post is written by BrightFire Expert, Kyra Howell. You can check out more of her work at The Business of Abundance and Foundations for Giving.

Many entrepreneurs have a consuming passion in their heart to share their love and gifts with the world, or at least with those whom they can best affect. This desire is to be celebrated, supported, and given the legs with which to walk into that dream. 

There is a misnomer around philanthropy that only those with a lot of money ($1 million or more in investable assets) can be true philanthropists, and the rest of us simply must fill in where we can with our heartfelt donations here and there. Gerbera in women hand. Spa resord.

But philanthropy isn’t just about giving money. The money feature is merely a tool used by some who choose that method to express the love and service they want to provide. Another terrific way to be a philanthropist is through the use of your time and your gifts. The best way to give back, using your time and your gifts, is through what’s known as a “private operating foundation.”

The private operating foundation is a unique creature in philanthropy. Many people who embark on creating their own charitable organization are not even familiar with its existence. I don’t want to bore you with minute details in this article, but I will give you some indication of why you might want to look into one and what they’re all about. 

While private operating foundations are governed by many of the restrictive private foundation rules, they have the benefit of having donor gifts receive the most liberal tax treatment available. To distinguish what this means, I should tell you what a regular non-operating private foundation is. That is where people who have a lot of money set up their own private foundation, where they invest their money in the foundation and write checks to charities from there. They don’t actually conduct charitable activities themselves. These individuals and businesses are only able to write off contributions to their foundation up to 30% of their adjusted gross income. This is in contrast to gifts to a public charity (Red Cross, United Way, etc.), for which donors can write off up to 50% of their adjusted gross income.

The great thing about private operating foundations is that the more liberal public charity deduction rules apply to them as well. This is good news for you, if you want to start your own foundation but don’t have a lot of money, because you can entice donors to contribute to your foundation with the 50% deduction allowance it provides. It’s a win/win all around. 

On TOP of that, you don’t have live by the strict requirements on public charities to constantly fundraise to meet the broad public support test. With your private operating foundation, you can put your own money into it when you want (which gives you a nice write-off), and you can conduct your operations with money from a few large donors who take an interest in what you’re trying to do. This allows you to spend your time relationship-building with that target market of potentially interested donors and then running the operations of your foundation. And that’s the best part. You get to decide which charitable programs you want to run based on your unique gifts and the segment of the world you want to help. 

So, the benefit to having a private operating foundation is that it allows its founder (and board) to run its own charitable programs and receive donor contributions without having to reach thousands for those contributions. It ALSO gives the founder control over the foundation’s operations (as distinguished from a public charity where board members must be drawn from the general public). For many individuals who want to provide a charitable service through a nonprofit entity, it truly is the best of all worlds.

About Tiffany deSilva

Tiffany deSilva is the founder, CEO, and visionary leader of BrightFire Women’s Business Network, LLC.

BrightFire Women’s Business Network is the premiere sales training and coaching resource for service-based women entrepreneurs who want to increase their sales, serve more people, and change more lives.

Feedback & Comments:

  1. Interesting! Always looking for new ways to be philanthropic. Thanks for sharing!

  2. Kyra, thank you for sharing. I was not familiar with private operating foundations before.

  3. This was really interesting, I had not known about private operating foundations before.

  4. How wonderful to learn about these private operating foundations. I will be checking this out further – thanks!

  5. Thank for sharing this. I’d never hear of this before. Great information to have when thinking about how you want to give back.

  6. Good to learn about other ways to be able to give.

  7. I have heard if these but did not realize how flexible they are. Thanks for the information.

  8. Wow! Very cool. I have a background in philanthropy and did not know about this type of foundation! LOVE it!! I’m going to look into the details. It makes a lot of sense. I may very well start one myself!



    Katherine C. H. E.
    Author, Be True Rich

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