Among the types of funds offered by the Foundation, a Donor-Advised Fund is one of the most popular because it affords all of the advantages of a private foundation without the tremendous administrative, organizational and financial duties.
To create a private foundation, you must start the organization, hire staff, establish a board and obtain tax-exempt status through the IRS. Following its creation, a private foundation is required to file IRS Form 990-PF annually and will incur administration fees.
Establishing an endowment fund can take as little as one hour and is much easier and less time consuming to manage than a private foundation.
Items to Consider
||No setup fees|
||Liability insurance, direct administrative costs
||Pooled administration, low costs|
- Closely held
|Up to 30% of adjusted gross income
Up to 20% of adjusted gross income
Deduction limited to basis
|Up to 50% of adjusted gross income|
Up to 30% of adjusted gross income
Deduction at fair market value
||Usually 2% of investment income annually
|Investment, accounting, audit and tax returns
||Trustees must perform, contract, or hire staff for these services
||Community Foundation handles all investments and accounting, files annual tax return and provides annual independent audit|
||Trustees and Staff must research and identify agencies/ programs to fund
||Community Foundation program staff educates donors regarding agencies and programs; provides information on qualified giving opportunities|
||Must ensure all recipients are qualified 501 (c) 3 organizations
||Community Foundation verifies organization’s status.|
Additionally, donors can access the Foundation’s strategic grantmaking services
5% annual distribution required, whether or not the Foundation’s investment earns that amount.
|None. Donors can make grant recommendations at their discretion|
||Tax return is public record
||Donor may choose to remain anonymous|