Private Foundation or Community Foundation?

Three generations of a family sitting together on a bench holding brightly colored flowers.

Donor-Advised Funds are a popular option for charitable people and businesses who want customized giving options. Fund holders make their own recommendations for grants made from their fund. Think of it as having all the joy of a private foundation without the burden of administration and costs of legal and tax work. Donations to the fund can be made in cash, appreciated securities, and even complex gifts such as real estate.

You may name your own fund as you wish at the Community Foundation. Some use their family name, such as “The Smith Family Charitable Fund,” while others name their fund in memory of a loved one. Some remain anonymous or choose a creative name such as “The Giving Tree Fund.” Fund holders may choose one generation as successor advisor(s), after which time the fund becomes an endowed fund for a purpose chosen by the donor.

Your fund will be pooled and invested with over 560 other funds at the Community Foundation so that your fund can grow over time.

To establish your family legacy through a donor-advised fund that is custom-tailored and flexible, give us a call! We'll help you translate your philanthropic vision into action.

If you set up the “Jane and John Doe Foundation” as a private foundation, you’ll typically:

  • Spend time and money creating a new organization
  • Annually file a detailed federal tax return
  • Pay excise tax on net investment income
  • Research and determine annually which organizations should be awarded grants
  • Be sure that grants paid out each year equal or exceed 5 percent of the foundation's asset value
  • Assume expenditure responsibility for certain types of grants
  • Adhere to rules relating to the total voting stock held by "disqualified persons"
  • Avoid a long list of other "self-dealing" transactions
  • Avoid investments which jeopardize the foundation's charitable purposes
  • Pay additional taxes for failure to take corrective action
  • Recognize the stricter income tax deduction limits for gifts to the foundation
  • Make available the names and addresses of substantial donors
  • Cover administrative and staffing costs as required­

If you establish the “Jane and John Doe Fund” as a donor-advised fund with the Community Foundation:

  • Establish the fund in minutes, not months
  • Choose the fund's name (or it can be anonymous)
  • No upfront set-up costs
  • Anyone can add to the fund at any time, in any amount after the $50,000 minimum, during your lifetime or through an estate gift
  • You're an active partner with the Foundation because you can make annual or more frequent grant recommendations on distributions from the fund
  • You can name successor advisors to perpetuate and encourage family involvement
  • No ongoing federal excise taxes on investment income
  • More advantageous income tax deductions
  • We handle the administrative work for you
  • We have our finger on the pulse of local nonprofits and needs in the community
  • We write and distribute grants ($1,000 minimum recommended) in the name of your fund