group in a charitable foundation

How Can I Create a Charitable Foundation in Massachusetts?

Like many, you may make generous charitable contributions each year. But what if you want to establish a charitable foundation? Though it may seem to be a complicated undertaking, it may be one of the most fulfilling actions you ever take. 

For most people, establishing a charitable foundation is personal. Whether your inspiration comes from the illness or troubling situation of a close family member or the hardship of those you have read about or observed firsthand, something has stirred you to make a particular cause your own mission. You want to do more than give a gift — you want to create an organization to provide ongoing support, even after you pass away.

Benefits of Creating a Charitable Foundation

Creating a charitable foundations will accomplish several important things:

  • It will provide a long-term method of substantial charitable giving, bringing in funds from multiple sources.
  • It will provide tax benefits.
  • It will establish a proud legacy for you and your family.

Your Knowledgeable Estate Planning Attorney Can Help

Creating a charitable foundation is complicated, involving many steps, a great deal of paperwork, and comprehensive legal knowledge. In order to ensure that you attend to all necessary details and follow all appropriate protocol, you should work with a trusted professional estate planning attorney

Funding and Investment Options of a Charitable Foundation

Assets that can be held in a private foundation include:

  • Cash and publicly traded securities
  • Tangible assets, like art, jewelry or collectibles
  • Intangible personal property, like copyrights, royalties or patents
  • Life insurance and annuities
  • Real estate

Also, if you have a Charitable Remainder Trust, you can usually name your foundation as the beneficiary.

What Your Charitable Foundation Can Accomplish

Fortunately, private foundations can pursue a broad range of activities to advance their charitable purpose, such as:

  • Make grants to individuals for economic hardship and/or disaster relief 
  • Run charitable programs, such as clothing drives 
  • Set up award and scholarship programs
  • Provide grants to international organizations
  • Provide loans to be repaid to the foundation

Your charitable planning attorney will guide you to make certain that every venture you take relative to your charitable foundation will be productive, legal, and meet all IRS requirements.

Steps You Must Take to Start Your Nonprofit in Massachusetts

Once you have identified a need in your community that is unmet by existing agencies and organizations, you are ready to speak to your attorney about taking the following steps to reach your goal by incorporating and applying for a 501(c)(3) status. 

When you attain this status, you will:

  • Be able to apply for grants
  • Accept donations
  • Be exempt from federal corporate income tax
  • Limit the liability of your foundation’s officers and directors

Most of all, you will establish your foundation as a legitimate enterprise and gain public interest in your cause. Your experienced charitable giving attorney will guide you through the 10 steps involved in this process which include:

  1. Naming your organization

Some research must be done to make sure your name is original so there is no conflict with any other organization in Massachusetts. The name of your foundation must meet all state requirements and also indicate that it is a corporation. 

  1. Designating incorporators and directors
  2. Preparing and filing articles of incorporation
  3. Obtaining an Employer Identification Number (EIN)

Similar to a Social Security number, this number can be used to hire employees, open a bank account for the foundation, apply for nonprofit status, and submit 990 tax returns. 

  1. Storing all records relating to your charitable foundation
  2. Formulating policies and drafting documents to govern the foundation
  3. Planning to hold regular organizational meetings of the board of directors
  4. Applying for 501(c) tax-exempt status with the IRS
  5. Registering for fundraising (charitable solicitation) in Mass. (and in other states if need be) 
  6. Applying for any other necessary business licenses and permits

Special permits may be necessary if, for example, you want to run a bingo night or raffle.

For most people, creating a charitable foundation is as overwhelming as it is exciting, but there is no reason to hesitate. With your attorney’s help, you will move the world in the right direction.

©Surprenant & Beneski, P.C. 35 Arnold Street, New Bedford, MA 02740, 336 South Street,   Hyannis MA 02601 and 45 Bristol Drive, Easton MA 02375.  This article is for illustration purposes only.  This handout does not constitute legal advice.  There is no attorney/client relationship created with Surprenant & Beneski, P.C. by this article.  DO NOT make decisions based upon information in this handout.  Every family is unique and legal advice can only be given after an individual consultation with an elder law attorney.  Any decisions made without proper legal advice may cause significant legal and financial problems.