Forming a Texas Nonprofit Private Foun

[snich53]

Forming a Texas Nonprofit Private Foundation, with Primary Funding Sourced from a Delaware LLC.

LLC operates as a professional consultancy, with 10% of gross contract proceeds set aside as donations to Foundation causes focusing on education and community enrichment.

LLC further commits to donate up to an additional 10% of gross contract proceeds as one-time matching contributions to the registered domestic charity of its clients’ choosing, with said matching contributions paid via Foundation grants (once additional donations are confirmed).

What are thoughts regarding this basic structure? I believe an LLC’s total donations to any private foundations are limited to 30% of income in terms of deductibility when taxed as a pass-through or “S”-entity, so a 20% gross donation maximum seems reasonable. And it also seems to be a great way to build a legacy of giving.

 

[FlyingRon]

Why do you need a foundation? Nothing prohibits an individual or LLC from making their own contributions.

 

[davew9128]

I believe an LLC’s total donations to any private foundations are limited to 30% of income in terms of deductibility when taxed as a pass-through or “S”-entity, so a 20% gross donation maximum seems reasonable.

Your understanding on the limitations of donations to eligible tax exempt is incorrect.

 

[Taxing Matters]

What are thoughts regarding this basic structure?

Are you the only owner of the consultancy LLC? Will you be making a S-corporation election for the LLC (and that may not provide you much advantage, if any, but the details of your business matter). And will you be organizing and operating the foundation?