Donor Advised Fund vs. Private Foundation

Helping your clients determine how to best implement their personal legacy needs to weigh issues of responsibility, control, flexibility, and cost. ┬áInvite us to join in your conversations with your clients. . . we’ll bring value and unique options to the table.

ElementsDonor Advised Funds at CFLNFCPrivate Foundation
START UP CONSIDERATIONS
CostNoneIncorporation fees, legal fees, accounting fees
TimeframePaperwork approved within daysGenerally months to more than a year for final IRS approval
Financial LimitationsConsidered endowed $10,000 ($25,000 for Scholarship Funds)Most experts recommend at least $5 million
TAX DEDUCTIBILITY
Cash GiftsUp to 50% of Adjusted Gross IncomeUp to 30% of Adjusted Gross Income
Publicly Traded SecuritiesFair Market Value up to 30% of Adjusted Gross IncomeFair Market Value up to 20% of Adjusted Gross Income
Real Estate and Closely Held StockFair Market Value of up to 30% of Adjusted Gross IncomeFair Market Value up to 20% of Adjusted Gross Income
DISTRIBUTION AND PAYOUT REQUIREMENTS
Corpus or Fund AssetsNo payout requirements. Donor can distribute far more than 5% if wished!Required annual payout of at least 5% of assets
INCOME AND REPORTING CONSIDERATIONS
Tax StatusFund becomes a "component" fund of CFLNFC, a 501(c)(3) public charityA 501(c)(3) Private charity
Excise Tax on Investment IncomenoneUp to 2% various taxes on net investment income
Tax Filings and Financial AuditAll inclusive under CFLNFMust prepare and file Form 990PF, State Filings
PUBLICITY
DonorCan receive optimal publicity OR choose total anonymityDonors are publicly cited on Private Foundation Tax Return published online
ADMINSTRATION
StaffingCFLNC staff is YOUR personalized staff and grant making expertMust hire, oversee, administer, etc.
Grants Due DiligenceGrants laws and regulations closely monitored and adhered to. Staff help to identify, investigate, assess granteesMust stay in step and aware of current laws, perform due diligence
Investment ManagementBenefits from our oversight and knowledgeable investment policy for endowment and grant makingResponsibility of trustees
DONOR INVOLVEMENT
DocumentationFund Agreement provides flexible approaches, including donor involvement in grant recommendationsMust maintain bylaws and policies
TimespanFlexible and foreverMost private family foundations seek professional oversight after three generations as family shift, move, loose interest
SummaryFlexibility, greater tax advantages, low administrative costs, efficient & knowledgeable grant making, increased privacy, credible investment practices, legal policies in placeAutonomous Control