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