In this week’s Forbes online, Monte Burke and William Barret discuss whether celebrity foundations and endorsements serve as an effective form of charitable giving. It seems that the benefit of charitable giving to the star who gives is twofold; not only do they benefit by strengthening their brand (association with ‘good works’ is something we need all our celebrities to do), but by running their own private foundations, they are afforded maximum tax benefits. The article estimates that in a high income year in the US, a celebrity can give $1 million to their own private foundation and get a current tax deduction for all of it.
But how do charities benefit from these celebrity foundations? Burke and Barret disappointingly do not come down conclusively on either side. It would appear that in some cases if funds come primarily from the celebrity (so there are no fundraising costs) and the foundation runs no programmes (they simply make grants to other charities) overhead costs can be negligible. For example, David Letterman’s American Foundation for Courtesy and Grooming handed out $1.2 million to a wide range of charities with overhead expense of just $25. However, at the other end of the spectrum, a foundation created by Rosie O’Donnell, the For All Kids Foundation, gave out $2.9 million in grants last year but spent another $1.9 million on overheads.
To read more visit the Forbes website.
