Many philanthropists use the Foundation as an alternative to, or in concert with, a private foundation.
Some private foundations have ambitious granting plans, but a small or nonexistent staff to execute them. Your private foundation can retain the Foundation to provide consulting in the development and execution of granting programs.
If you already have a foundation, you may wish to do without the recurring costs, restrictions and compliance requirements of a private foundation. You can terminate a private foundation easily and transfer the remaining assets to establish a donor advised fund or a supporting foundation. Then take advantage of the Foundationâ€™s philanthropic services, and continue to pursue your charitable objectives with ease and efficiency.
You can also establish a donor advised fund at the Foundation to be the recipient of the mandatory annual five percent distribution of the private foundation. The private foundationâ€™s contribution to the donor advised fund is a â€śqualifying distributionâ€ť that counts toward the payout requirement. You can take your time and deliberate on the grants to be recommended from the fund.
Advantages to Donor Advised Funds
|Donor Advised Fund||Private Foundations|
|Cash Contribution||Deductible up to 50% of adjusted gross income||Deductible up to 30% of adjusted gross income|
|Appreciated Marketable Securities||Deductible up to 30% of adjusted gross income||Deductible up to 20% of adjusted gross income|
|Closely Held Stock and Most Other Appreciated Property||Deductible at fair market value up to 30% of adjusted gross income||Deductible at cost up to 20% of adjusted gross income|
|Required Annual Distributions||None; active grantmaking is encouraged||5% of assets|
|Excise Tax on Net Investment Income||None||1 – 2%|
|Annual Tax Reporting||None||Annual Federal and State returns|
|Legal and Accounting Fees||None||Required annually|
|Confidentiality||Can be kept completely anonymous||990-PF must be publicly disclosed|