Donor Advised Funds vs. Private Foundations
When compared to a private foundation, a donor advised fund at The Community Foundation is a smart way to achieve your philanthropic goals with greater tax advantages, fewer administrative hassles, more cost savings and a highly comparable level of grantmaking flexibility.
Private foundations that transfer assets to The Community Foundation enjoy immediate excise tax relief, freedom from reporting requirements and lower administrative costs. This often means that more of the foundation’s assets can be used for philanthropic purposes.
We hope you will find this information useful:
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CFWNC
Donor Advised Fund |
Private Foundation |
| Donor Involvement |
Donor recommends grants to qualified nonprofits. Grants are approved by The Community Foundation board. |
Donor appoints board, which controls all grantmaking decisions. |
| Tax Status |
Public Charity – no tax on fund balance or income. |
Private Charity – subject to annual excise tax of 2% of assets. |
| Income Tax Deductions for Gifts of: |
| Cash |
Up to 50% of adjusted gross income (AGI) |
Up to 30% of adjusted gross income (AGI) |
| Appreciated Stock |
Fair market value up to 30% of AGI |
Fair market value up to 30% of AGI |
| Real Estate and Closely Held Stock |
Fair market value up to 30% of AGI |
Cost basis up to 20% of AGI |
| Costs |
| Initial fees |
None |
Several thousand dollars in legal and accounting fees and filing expenses |
| Minimum contribution |
$10,000 |
$5 million+ recommended |
| Ongoing costs |
$250 and up annually, depending on type of fund and balance. |
Annual accounting, investment, reporting and tax services. |
| Grantmaking Focus |
Determined by donor |
Determined by donor |
| Grantmaking Effectiveness and Support |
Fund is supported by a professional staff, knowledgeable about community needs and nonprofit effectiveness. |
Burden of knowledge about need and effectiveness is on the donor, paid staff or consultants. |
| Payout Requirements |
None |
5% of net asset value |
| Reporting Requirements |
Handled by The Community Foundation |
Annual IRS Form 990-PF must be filed and made available to the public |
| Accountability and Liability |
Donors may remain anonymous The Community Foundation monitors regulatory requirements |
Donors are named on the 990-PF Board responsible for adhering to regulations on investments and grantmaking. Significant penalties can apply. |