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Comparing Philanthropic Options

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DONOR ADVISED FUNDSCOMMERCIAL GIFT FUNDSPRIVATE FOUNDATION
Donor
Control
Donor recommends grants to qualified nonprofits. Grants are approved by the Community Foundation’s Executive Committee and the investments are overseen by the Finance Committee of the Board of Directors.Donor recommends grants to qualified nonprofits, and may choose from among the firm’s investment options. Grants are approved by Trustees of the gift fund.Donor appoints Board, which controls investments and grantmaking.
Tax
Status
Public charity—as a fund under the Community Foundation’s public charity status.Public charity—as a fund under the non-profit status of the firm’s charitable subsidiary.Private charity—as a separate 501(c)(3) organization under Section 509(a).
Income Tax Deductions
Gifts of
Cash: Up to 50% of AGI.
Stock: FMV up to 30% of AGI.
Real Estate: FMV up to 30% of AGI.
Cash: Up to 50% of AGI.
Stock: FMV up to 30% of AGI.
Real Estate: FMV up to 30% of AGI, if accepted by firm.
Cash: Up to 30% of AGI.
Stock: FMV up to 20% of AGI.
Real Estate: Cost basis up to 20% of AGI.
Philanthropic
Services
Professional staff is available to develop strategy, provide input on community needs, and identify, assess, and verify non-profit status of grantees. Donor education, family engagement, and peer networking provided as desired.Varies by firm. Most do not offer personalized advice on grantee selection or family engagement.Board must arrange and support their own grantmaking, monitoring and administrative structures.
Start-up ConsiderationsInitial costs: None
Minimum contributions: $500 annual minimum fee
Time to establish: Immediate
Initial costs: None
Minimum contributions: Typically $5,000
to $25,000
Time to establish: Immediate
Initial costs: $3,000 to $6,000 for legal expenses and filing fees.
Minimum contributions: Typically $10 million or more for cost efficiency
Time to establish: Several months
Annual Admin RequirementsFee: Tiered fee schedule beginning at 1% with a minimum annual fee of $500, plus investment management fees. Reporting: NoneFee: Fees and investment expenses vary by firm.
Reporting: None
Fee: Several thousand dollars for legal and accounting expenses and filing fees.
Reporting: 990-PF tax form must be filed annually.
Annual Distribution RequirementsNoneVaries. Typically 5% of average fund assets over five years.5% of net assets annually, otherwise a 30% penalty tax.
Excise TaxNoneNone1% to 2% of net investment earnings.
ContinuityDonor may name successor advisor(s) to the fund.VariesMay continue to future generations.
PrivacyDonor may remain anonymous.Donor may remain anonymous.Officers, Directors, Trustees, corpus and grants listed in IRS Form 990-PF.