Seeking damages in excess of $14 million, a Greenwich, Connecticut charitable art foundation is suing Manhattan’s Forum Gallery and its Directors, Robert and Cheryl Fishko, for alleged wrongdoing. The lawsuit touches on an interesting estate planning topic: private foundation giving.
Established in 1993 by investment manager Richard McKenzie, Seven Bridges Foundation is a nonprofit organization that aims to “support living artists and to promote their creativity.” The Foundation’s collection of artwork (which includes pieces by Norman Rockwell and Auguste Rodin) is housed between two galleries and in an outdoor sculpture garden, on 80 acres of land in Greenwich. Apparently, McKenzie purchased some of this artwork directly from Fishko. To obtain other pieces, McKenzie used Fishko as an agent for the foundation; Fishko agreed to negotiate lower prices for artwork and McKenzie agreed to pay him a 5% commission. McKenzie alleged that instead, Fishko inflated prices and kept the approximately $3.5 million difference.
As we wait to learn if the court will give credence to McKenzie’s claims, we want to point out that private, charitable, tax-exempt foundations are more common than you may think. It is likely that the Seven Bridges Foundation is just one part of McKenzie’s estate and charitable plan. We, at Altman & Associates, regularly work with philanthropic clients to establish these types of entities. Foundations can work for individuals who want to make substantial gifts to charity but want to control the distribution and use of funds, either during their lifetime or after their death. Furthermore, the whole family can be involved. We work with clients to create and administer such entities and counsel on issues like non-profit status, annual reporting and audits, and compliance with charitable guidelines.
– Gary Altman, Esq. and Coryn Rosenstock