When most people think of private foundations, they picture ultra-wealthy families setting up complex entities that are expensive and time consuming to administer: Think the Rockefeller Foundation or the Bill and Melinda Gates Foundation.

But private foundations can be set up relatively easily and sometimes with as little as $250,000, say advisors who have helped clients shape their philanthropic efforts. However, many clients and advisors have misconceptions about the process.

“Setting up a private foundation is easier than many people think,” says William Sutton Jr., head of philanthropic services for U.S. UBS. “For many clients, a private foundation can be a good fit for their philanthropy or it can be used as a complement with other philanthropic vehicles.”

Sutton says he likes to see at least $500,000 as an initial contribution to set up a private foundation, but this is in contrast to the minimum of $5 million or more that people often think is necessary. “I have talked to financial advisors who think you need $10 million to start a foundation, but we have started them for as little as $250,000,” he says.

“There are firms out there that make it easy to start a foundation now. Creating a private foundation is a good way for an advisor to embed himself with the client family,” Sutton adds.

Foundation Source, based in Fairfield, Conn., is one of the companies that helps advisors and investors set up private foundations. Foundation Source can create the foundation in a matter of days, rather than months, which is what many people think is necessary, says Robert Chartener, Foundation Source CEO.

The firm then handles the administration, taking that burden off the donor, Chartener says. Sixty-five percent of private foundations are started with less than $1 million, says Foundation Source, which has helped establish 1,200 foundations out of a total market of 84,000 that have been created.

Creating a private foundation is also a way to let the donor control where the money goes, unlike donor-advised funds and community foundations, Sutton says. Money can be available immediately to help in disasters and it can be used for such things as scholarship funds with specific criteria.

“A private foundation can also be a way for a philanthropist to create a legacy for future generations,” says Nathaniel Mosley, senior vice president of investments at UBS Financial Services Inc. in Dallas.

Mosley says he stumbled into the field of creating private foundations by accident.

Fifteen years ago, he talked with a patriarch of a family that had several hundred million dollars and he asked how the man taught his children the value of money and the good it can do. The ultra-wealthy man said he created a small private foundation for his children to achieve that goal.

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