One of the reasons the “mainstream” media try to convince you that the Internet, talk radio and Fox News are biased is that those entities tell you stuff the majority media doesn’t think is any of your business. Some of it isn’t--like whether Bill Clinton and Monica Lewinsky had an affair. (Whether he used government resources to cover it up or lied under oath was your business, however.)
So, if you’re so inclined to get your news from the majorities, you might not know that the Maggie Daley charity got $6.5-million city contract 4 days before Mayor Daley left office (1) because it came from the Drudge Report referencing a Chicago blogger who keeps up with such things. Whether this was reported by the Chicago (or any other) media, I do not know.
So how come with all the brouhaha about the “rich not paying their fair share” none of the majority media question why the super-rich all have Foundations? Bill and Melinda Gates, Bill and Hillary Clinton, Warren Buffett (who says he doesn’t pay enough in taxes). Even Roger Federer, Novak Djokovic and Rafael Nadal (tennis players) have Foundations.
So how does one start a Foundation, and how come the rich dentist next door doesn’t have one?
“You don't have to amass nearly as much money as Gates or Buffett to start your own private foundation, but you should start with a great big pile. Setup and maintenance costs can rapidly erase a small foundation's investment returns. Timothy McIntosh, a financial planner in Tampa, typically doesn't begin talking about starting private foundations with clients unless they have $5 million or so to commit.” ( 5)
“There's a big reason that wealthy people set up their own private foundations, often donating appreciated stock in their companies. They avoid paying capital-gains taxes on the value of the gift and get an immediate --but potentially limited--tax deduction. They also benefit because the invested assets of the foundation will continue to grow tax-free. That enhances their ability to give generously in the future.” (3)
Well, there you have it. Dr. Silverfillings might be rich according to our president, but his income is not high enough to generate the infusion of cash it takes to start a Foundation. For that, you need to found Microsoft (Gates), own a brokerage (Buffet), play professional tennis (Federer, Djokovic and Nadal) or be a former president and first lady of the United States (the Clintons).
So giving generously is the reason Astra-Zeneca, Ford, Susan Thomas Buffet, the Waltons (not the TV family, but rather the Wal-Mart guys), William and Flora Hewlett and David and Lucille Packard (Hewlett-Packard), Michael and Susan Dell (computers), John Templeton (Wall Street), the Weill family (whoever they are), etc. all have Foundations? As does Leona Helmsly who once famously say “only little people pay taxes”? (4)
Or is it that “Donations to a private foundation are tax deductible. However, it is important to understand that monies are not necessarily going directly to charity immediately. The private foundation is only required to distribute 5% of its asset value per year to charity. Therefore, the IRS has establish (sic) limits on how much of your charitable deduction can be used in any particular year.” (2)
Pardon the cynicism, but if giving generously is the point, why not just give generously? Why go through all the trouble to set up a Foundation. Unless, of course, the point is to shelter income from the IRS?
References:
1.(http://www.chicagobusiness.com/section/blogs?blogID=greg-hinz&plckController=Blog&plckBlogPage=BlogViewPost&uid=1daca073-2eab-468e-9f19-ec177090a35c&plckPostId=Blog:1daca073-2eab-468e-9f19-ec177090a35cPost:eb77893c-c97f-432a-9e10-e1a34923d106&plckScript=blogScript&plckElementId=blogDest)
2. (http://www.privatefoundation.com/tax_advantages.html)
3. http://articles.moneycentral.msn.com/RetirementandWills/RetireInStyle/YouCanBeYourOwnCharitableFoundation.aspx
4. http://foundationcenter.org/findfunders/topfunders/top100giving.html
5. http://www.usatoday.com/money/perfi/columnist/waggon/2006-06-29-charity_x.htm
