Private Foundations

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 Foundation’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 foundation’s contribution to the donor advised fund is a “qualifying distribution” 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

To learn more about Private Foundations, contact Marjory Kaplan, Chief Executive Officer, or Charlene Seidle, Senior Consultant, or call 858-279-2740.