Which is weird because I thought that’s how rich people used foundations named after themselves? I thought it was mostly self-funded and a way to lower their tax burden
Yeah, but if you control said foundation, you can then have it spent on things that you care about. It isn’t the get out of tax free card that some people make it out to be, but it can probably be beneficial in some situations.
Is what I, someone who hasn’t got the slightest clue about U.S. law, thinks.
Sure, but in theory the charity can be audited and it shouldn’t be buying you stuff you would have spent that money on otherwise… Like, you can’t give money to a charity and have it buy you a yacht.
You can pay yourself as admin of said charity. Give me $100, I pay $20 tax or stick it in charity to reduce my tax burden. I have $80. I get 100 other people to give my charity $100 each, it has $10k, I take 50% for admin costs, the rest is disbursed. I still make more money than lost to any tax. That’s how a rich person makes money by running a charity. Make even more family money by putting your kids on the BoD.
I mean, sure. I was more thinking about “I care about deforestation/child poverty/outlawing abortion/etc, so I’m gonna make sure my money goes there, and I won’t even have to pay taxes on (that part of) it”, with maybe a bit of “I own (many shares of) a company that does X, so why not suggest that the foundation prefers them as a supplier”.
Like, that doesn’t allow you to buy yachts with it, but if you’re working with that kind of money, you probably have a yacht, or don’t want one/another, and exerting influence is the most interesting thing you can use it for. The particular objective doesn’t have to be harmful, but I feel that it gives very few people another way to excert outsized control on our world, and take revenue away from the state, which might also waste it, but over which the people should, theoretically, be able to excert more influence than on a very wealthy individual.
Technically you can as long as the yacht is used exclusively for the charity. This was the case when the rightwing tried to say a BLM charity foundation misused funds to buy a mansion, but it turns out the mansion stayed in the hands of the charity even after those administrators left the foundation. AFAIK the mansion was only ever used for meetings, fundraisers, and celebrations.
Foundations aren’t deductible though. You have to give it away to an honest-to-God charity approved by the IRS for it to do anything. And even then, you can never get more money by donating it than you would just keeping the money.
My bad, that’s true. I guess it’s that private foundations are more limited in how much you can deduct. To qualify as a public charity, a foundation needs to get at least a third of its funding from the public and have other board members, so they can’t just be self-funded and self-directed. A private foundation still has to be for a qualified charitable purpose but only lets you deduct half as much of contributions.
They don’t get the same kind of social debts between each other when they donate to their own charities. You know, the back scratching thing that I mentioned.
There is a lot more to it than just the charitable donation deduction. They are all getting a tax deduction for exchanging money with other wealthy people through their charities and the charities spend money on each other’s businesses.
Maybe they could donate their own money.
Which is weird because I thought that’s how rich people used foundations named after themselves? I thought it was mostly self-funded and a way to lower their tax burden
You lower your tax burden by as much as the taxes you would have otherwise paid on the money you gave to charity.
If you give 100$ that would have been taxed at 30%, you get a 30$ tax deduction, you’re still down 70$.
Yeah, but if you control said foundation, you can then have it spent on things that you care about. It isn’t the get out of tax free card that some people make it out to be, but it can probably be beneficial in some situations.
Is what I, someone who hasn’t got the slightest clue about U.S. law, thinks.
Sure, but in theory the charity can be audited and it shouldn’t be buying you stuff you would have spent that money on otherwise… Like, you can’t give money to a charity and have it buy you a yacht.
You can pay yourself as admin of said charity. Give me $100, I pay $20 tax or stick it in charity to reduce my tax burden. I have $80. I get 100 other people to give my charity $100 each, it has $10k, I take 50% for admin costs, the rest is disbursed. I still make more money than lost to any tax. That’s how a rich person makes money by running a charity. Make even more family money by putting your kids on the BoD.
And then you pay taxes on that salary.
Of course. Still making $, though.
You’re not making more than if you had just kept that money in the first place.
I mean, sure. I was more thinking about “I care about deforestation/child poverty/outlawing abortion/etc, so I’m gonna make sure my money goes there, and I won’t even have to pay taxes on (that part of) it”, with maybe a bit of “I own (many shares of) a company that does X, so why not suggest that the foundation prefers them as a supplier”.
Like, that doesn’t allow you to buy yachts with it, but if you’re working with that kind of money, you probably have a yacht, or don’t want one/another, and exerting influence is the most interesting thing you can use it for. The particular objective doesn’t have to be harmful, but I feel that it gives very few people another way to excert outsized control on our world, and take revenue away from the state, which might also waste it, but over which the people should, theoretically, be able to excert more influence than on a very wealthy individual.
But that’s a tax advantage anyone can have access to by giving money to the charity of their choice.
The tax advantage, yes, the control, no. I like giving to doctors without borders, but I can’t control their objectives, nor their leadership.
In the end, my problem is with giving power to individuals who can’t be held accountable. The tax part was mostly an excuse to rant about that.
I can’t hire my friends to run my charity and pick their salary
But then your friend would pay taxes on that income so your money ends up being taxed.
Technically you can as long as the yacht is used exclusively for the charity. This was the case when the rightwing tried to say a BLM charity foundation misused funds to buy a mansion, but it turns out the mansion stayed in the hands of the charity even after those administrators left the foundation. AFAIK the mansion was only ever used for meetings, fundraisers, and celebrations.
Foundations aren’t deductible though. You have to give it away to an honest-to-God charity approved by the IRS for it to do anything. And even then, you can never get more money by donating it than you would just keeping the money.
Foundations are typically 501c3s
My bad, that’s true. I guess it’s that private foundations are more limited in how much you can deduct. To qualify as a public charity, a foundation needs to get at least a third of its funding from the public and have other board members, so they can’t just be self-funded and self-directed. A private foundation still has to be for a qualified charitable purpose but only lets you deduct half as much of contributions.
They put their money into other people’s charities so it doesn’t look so obvious. Scratching each other’s backs.
So what doesn’t look so obvious? You know that donations can be claimed on your taxes too, right?
They don’t get the same kind of social debts between each other when they donate to their own charities. You know, the back scratching thing that I mentioned.
There is a lot more to it than just the charitable donation deduction. They are all getting a tax deduction for exchanging money with other wealthy people through their charities and the charities spend money on each other’s businesses.