There are many philanthropic reasons why a donor might establish a private foundation, but there are also short-term and long term tax benefits to consider. Donors may be able to take advantage of four main tax benefits when making donations to a private foundation:

  1. Reduction of income tax liability;
  2. Tax-advantaged growth of assets contributed to the foundation;
  3. Avoidance of capital gains taxes for appreciated assets; and
  4. Reduction or elimination of potential estate taxes.

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