• "I am deeply grateful to the Masonic Village's employees, and will never be able to express my gratitude to all of them." — Catherine L.

  • "I liked my Masonic Charity Foundation charitable gift annuity so much, I opened three more. Why? I might be old-fashioned, but the scriptures have taught me the virtue of looking out for others. Knowing that the funds left in my gift annuities will care for the Masonic Village residents makes me feel wonderful." — Dorothy B.

  • "I am writing to tell you, from the bottom of my heart, just how wonderful the last two years of my mother's life were, thanks to all of you at the Masonic Village at Burlington." — Carol O.

  • "It's not just the Masonic Village's beautiful facilities and the many services that are offered to the residents – most of all, it's the employees. They are personally dedicated it seems to each and every individual here." — Catherine L.

  • "We are equally grateful for the 'loving arms of hospice' that were wrapped around our family in our hour of need." — M.W.

  • "When we decided to come to the Masonic Village at Burlington, we knew it was going to be a very big change in our lives. When we came here, we were very pleased that it was not difficult. We would recommend the Masonic Village highly to a friend." — Joseph and Bertha B.

  • "There is simply no way to express the depth of gratitude I feel for the Masonic Village at Burlington – thank you!" — Jim C.

  • "We know first-hand how very special Acacia Hospice's caregivers are, and we thank every single one of them from the bottom of our hearts." — J.M.

  • "It is with a grateful heart that we extend to you our deepest gratitude for the loving care that Acacia Hospice afforded our beloved Aunt." — M.W.

  • "It has been a source of tremendous relief that my parents were in such caring and professional hands during the final years of their lives." — Jim C.

  • "It takes a very special person to do the job Acacia Hospice's caregivers do every day. We would like you to know we think you have an incredible group of 'Angels.'" — J.M

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Tuesday July 23, 2019

Case of the Week

Lucky Lucy Lindstrom's "No Self-Dealing" Charity


Lucky Lucy Lindstrom finished college and headed west. She started as a financial analyst with a large company in Seattle. After just four years, she became a Registered Investment Advisor (RIA) and began advising clients. Lucy also managed her own investments. With her keen insight into financial markets, Lucy soon began to move from traditional stocks and bonds into futures and commodities markets. Lucy was so successful in these markets that she now manages only her mega-dollar personal portfolio.

Somewhat late in life, Lucy discovered the wonderful world of philanthropy. She volunteered at her favorite charity and learned that giving someone in need a helping hand is even more gratifying than making another million in the futures market.

Lucy had invested $1,000,000 in stock in a Canadian oil "wildcatter" with the name Northern Long Shot, Inc. This company has been drilling new exploratory wells in the far north. Recently, the stock rose from the $1 per share that she paid to over $5 per share. Lucy was delighted with her gain and decided she wanted to give the $5,000,000 to a charitable foundation to help those in need.

Lucy discussed options with her attorney and her favorite charity. Lucy was very interested in a private foundation. She asked her attorney for reasons to select a private foundation. Her attorney noted that private foundations are more expensive to operate, appreciated gifts are deductible only up to 20% of adjusted gross income (AGI) and deductions for gifts of real estate to a private foundation are limited to cost basis. He also explained that there is usually a 2% excise tax on investment income and that private foundations are subject to various rules on self-dealing, minimum distributions and excess business holdings. However, a private foundation would give Lucy full control.


Lucy said, "Wow! There are a lot of negatives about private foundations. So why set up a private foundation? And if I fund a private foundation, can I manage the investments and receive my normal Registered Investment Advisor payments from the foundation?"


Her attorney responded and noted that private foundations are subject to the Sec. 4941 self-dealing rules. There is an incidental exception for payments to donors, family members and other disqualified persons. However, the compensation must be for necessary services and must be reasonable.

For the private foundation, the additional services for management of the portfolio are necessary. Lucy's proposed level of compensation is reasonable and comparable to that received by other individuals in similar circumstances. Thus, the Sec. 4941(d)(2)(E) exception would apply and compensation to Lucy will be permitted.

However, her attorney suggested that there was no need to run any risk with the Lindstrom Private Foundation. Lucy does not need added income, and the foundation fees will not be a large part of her annual income. Therefore, Lucy decided to provide the portfolio management services to the Lindstrom Foundation without compensation.

Published September 14, 2018
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Previous Articles

Lucky Lucy Lindstrom's "Ultimate Control" Charity

Lucky Lucy Lindstrom's "Wheeler-Dealer Charity LLC"

Lucky Lucy Lindstrom's "Personal Loan" Charity

Lucky Lucy Lindstrom's "Cousins' Scholarship" Plan

Lucky Lucy Lindstrom's Flood Recovery Plan