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Community Foundation vs. Private Foundation

Establishing a fund with The Community Foundation has some distinct advantages over a private foundation.

When individuals and families learn the costs, ongoing administrative burdens, quarterly tax payments, mandatory pay-out rates and reduced tax benefits of private foundations they are often prompted to search for an alternative. Establishing a named fund at The Community Foundation often meets the needs of donors more efficiently and effectively.

about these issues, we are discussing a very serious subject – money. Money determines how you live, how you support your family, how you will retire, how you are taxed and how you share with others. It also says a lot about how hard you have worked and how committed you are to making good decisions.

Establishing a fund with The Community Foundation has some distinct advantages over a private foundation. When we talk

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We take the responsibility of your investment with us as an honor, and we continually work to ensure that donors are happy with fund service and how grants are distributed.

Things to Consider

Fund with Community Foundation

Create Private or Corporate Foundation

Organization

Established (1997)

Must establish

Tax Exempt

501(c)(3) Status

Must establish with IRS

Funds Required

$10,000 minimum

Experts recommend $10 million minimum

Selection of Grantees

Donor, family or his/her advisory committee recommends grantees

Donor specifies grantees

Tax Deductibility of gifts

a) Up to 50% of donor’s Adjusted Gross Income (30% with appreciated assets) b) Excess may be carried over for five years

Limited to 30% of donor’s AGI (20% with appreciated assets)

Federal approvals, restrictions and special taxes

a) Approved by IRS b) No payout requirement c ) No federal excise tax

a) Must receive IRS approval b) IRS requires 5% of assets to be paid out annually c) Fund is charged 2% federal excise tax on income unless strict requirements are met d) Greater incidence of IRS field audit

Legal documents for creation of, foundation designation of funds and grant awards

In place

Must create

Office

In place

May need to obtain

Staffing

In place

May need to obtain

Accounting

In place

Must obtain

Tax Return (state and federal)

Community Foundation prepares

Must prepare

Public Report

Report to public made annually

Must prepare reports for the general public

Knowledge of Potential Grantees

Community Foundation provides

Must develop

Grant Evaluation Process to Ensure Donor’s Intent Satisfied

In place

Must develop

Public Recognition for Donor

Fund may be named or anonymous

Must provide or rely on grantee organization

Director/Officer Liability Insurance

In place

Must obtain

Investment of Assets

Finance Committee oversees investment policies

Must establish policies and select investments

Organization Overhead

1%

Substantial costs; plus 2% federal excise tax on income

Profile for Lisa Biever

Community Foundation Newsletter Fall 2012  

The Community Foundation's Fall 2012 newsletter.

Community Foundation Newsletter Fall 2012  

The Community Foundation's Fall 2012 newsletter.

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