Trust or Corporation? Choosing the Right Foundation Structure

And Why It’s Not Just a Legal Question

A few years ago, I helped a family in California set up a private foundation. They had just sold their business and wanted to give back in a thoughtful, lasting way. But before they could begin the work they were excited about—grantmaking, strategy, legacy—they had to make a decision that felt surprisingly technical: Should the foundation be set up as a trust or a nonprofit corporation?

It’s a question that comes up more often than you might expect. And while it may sound like something best left to lawyers and tax experts, I’ve learned that this decision actually reveals a lot about the kind of foundation a family wants to build—and the kind of legacy they want to leave.

The Legal Structure Is a Mirror of the Family’s Priorities

Some families prioritize control and clarity of purpose. They want to ensure their original intent is carried out exactly, even generations from now. For them, a trust structure often makes sense. It’s more rigid, less prone to future changes, and keeps the donor’s voice at the center of the foundation’s identity.

Others prioritize flexibility and collaboration. They want future board members—especially children or grandchildren—to have room to evolve, adapt, and steer the mission in response to new challenges. In those cases, a nonprofit corporation may be a better fit. It allows for amendments, evolving governance, and more dynamic leadership structures.

A Family in Singapore Chose Simplicity First

One cross-border family I worked with—an American couple living in Singapore—initially wanted to build a complex family trust. But after a few conversations, they admitted their real goal was to start giving quickly and figure things out as they went. They opted for a nonprofit corporation. “We want our kids to grow into this,” they said, “not feel boxed in by what we wrote today.”

That choice gave them breathing room. Today, their children sit on the board, and their foundation supports education programs across Asia and the U.S.—with input and ownership from the whole family.

Practical Differences, Simplified

Here’s how I usually explain the contrast in plain terms:

• Trusts are simpler to set up quickly and offer more control but are harder to amend later. Good if you want rigid guardrails and minimal future changes.

• Corporations take more effort up front but offer flexibility over time. Good if you envision active boards, future generations shaping policy, and potentially hiring staff.

And yes—there are tax nuances too. Corporate foundations are often taxed differently than trusts depending on the type of income they generate. But I always remind families: these should be supporting factors, not the drivers.

Think About Who Will Be at the Table

Another lens I offer families is: Who will be making decisions in 10 or 20 years?

• If you envision a single trustee or a very small group staying consistent over time, a trust might suit you well.

• If you see multiple generations, rotating boards, or a formal governance process with officers and committees, a corporate structure is likely the better long-term fit.

One Chinese-American family I worked with set up a trust because they wanted to preserve the exact vision of the grandparents. But they also included a clause to revisit the structure every 20 years. It was their way of honoring legacy while leaving the door ajar for change.

Closing Reflection

I’ve come to believe that choosing a legal structure is like choosing the frame for a painting. It doesn’t define the art, but it shapes how the art is held, protected, and displayed over time.

So if you’re facing this decision, don’t be afraid to ask the personal questions alongside the legal ones. Who are you building this for? How much freedom do you want the next generation to have? What kind of structure will help—not hinder—the story you want your philanthropy to tell?

Get the right team around you. But more importantly, take a moment to look inward. The right structure usually reveals itself when the purpose is clear.