Real World Graduation, Question 70: Charitable Foundations

RealWorldGraduation_Question_70_CharitableFoundations   <– PDF

A famous person decides to set up a tax-exempt Foundation. He names the Foundation after himself (like the Ford, Carnegie, and Rockefeller Foundations), files all the necessary paperwork, and begins to solicit tax-deductible contributions from the public.  Although the Foundation has zero assets at the beginning, the Foundation receives a great deal of money from the public owing to the founder’s personal popularity.  After withholding a small percentage for administrative costs, he bundles all the contributions received from the public into large amounts and gives the money away to various causes, such as AIDS research, literacy, etc.  All of the donations are made in the name of the Foundation.  What is the main benefit of this arrangement?

a) People get to take a tax deduction for their contributions.

b) The money contributed, except for administrative costs, goes to good causes that help the less fortunate.

c) Enough money can be concentrated in each of the charitable areas to make a real difference.

d) People feel better about themselves by helping others.

e) All of the above.

(The answer is on p. 2 of the PDF.)


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