Jan 1, 2006 12:00 PM

By Vincent C. Travagliato, executive director, Morgan Stanley, Private Wealth Management Division, N

Private foundations are usually organized as trusts or not-for-profit corporations. When choosing between the two, advisors tend to focus on ease of formation and maintenance, flexibility and standards for trustees or directors. They generally don't see the entities' differences as significant. But the form can impact a foundation's investment options, particularly when an entity has less than $25 million in investments. In certain circumstances, a foundation organized as a trust has more investment flexibility with alternative assets than a foundation of the same size organized as a nonprofit.¹

Foundations' adoption of modern portfolio theory has enabled them to invest in so-called “alternative assets,” such as hedge funds, private equity funds and venture capital funds. To obviate the need for these types of U.S. funds to register as investment companies under U.S. securities laws, investment is typically limited to no more than 99 “accredited investors” or any number of “accredited investors” who are “qualified purchasers.”

Topics of Interest

Estate Tax	Donor Advised Funds
GSTs	Family Offices
Private Foundations	Life Insurance
2010 Tax Act News	Industry Trends Surveys

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Topics of Interest

Estate Tax	Donor Advised Funds
GSTs	Family Offices
Private Foundations	Life Insurance
2010 Tax Act News	Industry Trends Surveys

E-Newsletter Signup

2011 Trust Glossary

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50 Years Ago This Month

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50 years ago, in May 1962, we featured articles such as: "Future of Canadian Trusteeship" by Arthur H. Mingay", "Training Trust Employees" by Ian M. Marr, "What is a Trust Officer?" by Eric J. Brown, and "Selling Services" by Donald I. Webb.

Conrad Teitell's Guide to Tax Benefits For Charitable Gifts

Click here to view the most up to date guide (September 2011)

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