Although private foundations are considered the most flexible of all charitable vehicles, they are subject to federal, state and IRS regulations.

Most of these regulations are intended to ensure that in return for the tax exemption they receive, private foundations benefit the public, and not the individuals who created them. To keep your foundation functioning safely within legal and ethical bounds, you will need to establish some important groundwork: the policies and governance structure that will serve as the foundation’s infrastructure.

Reviewing concepts such as “self-dealing” and adopting written policies that cover everything from conflicts of interest to expenses might seem like bureaucratic overkill—especially for a small family foundation. However, even if your foundation’s board fits comfortably around your kitchen table, it makes sense to learn the basics of good governance and institute formal policies around expenses, conflicts of interest and compensation. Not only do these measures act as guardrails around your current activities, but they form a sturdy platform for future foundation growth.