|
Community
Foundation |
Private
Foundation |
IRS charitable status |
501(c)(3) & 509(a)(1)
(public charity)
|
501(c)(3)
(private
foundation) |
Governing body |
1. Advisory Committee
Advisor may be
established or may be committee of family
members and/or others.
Successive
generations may participate in future
giving.
2. Community Foundation must have final
approval for all grants and administrative
matters.
|
Governing body may
consist of donor and related
persons.
Governing body must approve all
grants and administrative matters. |
Tax treatment of cash gifts |
Deductible up to 50 percent of adjusted gross
income (AGI). |
Deductible up to 30 percent of
AGI.
|
| Tax treatment of gifts of
appreciated publicly-traded securities |
Full market value deductible up to 30 percent
of AGI.
|
Full market value deductible
up to 20 percent of AGI. |
Tax treatment of closely held stock or
real estate |
Full market value deductible up to 30 percent
of AGI or cost basis up to 50 percent of
AGI.
|
Deduction limited to donor's cost basis, up
to 20 percent of AGI. |
Deduction carry-over
available
|
Five additional years |
Five additional years |
Ease of establishment, incorporation and
tax exemption |
One signed document
(Fund Agreement)
Automatically covered by the Community
Foundation's tax exempt status |
Corporation or trust required
Must apply to IRS for tax-exempt status using
Form 1023. (IRS may take six months or longer to
process)
|
| Excise tax on investment income
and net realized capital gains |
None |
1%-2%
|
Self dealing rules |
Not
applicable
|
Strict prohibition
under IRC Section 4941. |
Minimum payout requirements
|
None (can accumulate
toward a sizable project or grant with no
required payout)
A Community Foundation fund has the
flexibility to hold low yield
property.
|
Yes (minimum 5%
of average asset value each year under IRC
Section 4942)
A private foundation must meet the minimum
distribution rules whether or not the
foundation's investments earn that
amount. |
Restriction on private
investment |
Yes |
Yes (in addition, you
cannot engage in acts that may violate strict
self dealing rules that apply only to private
foundations) |
| Restriction on holding interests
in business enterprises |
No |
Yes |
| Application of expenditure
responsibility procedures for grants to
organizations and programs that are not public
charities |
Yes |
Yes (under IRC Section
4945 - taxable expenditure retax for failure to
make "expenditure responsibility"
investigations) |
| Possibility of advisory role for
donor and family in grantmaking |
Yes |
Yes |
| Separate
annual IRS tax return required |
No |
Yes |
Privacy |
Yes. Individual
donors' fund assets size, gifts and grantmaking
are kept private and confidential. No public
disclosure of individual grants or donations is
required. Donors are generally recognized for
grants disbursed, but grants may be made
anonymously. If a donor wishes, the Community
Foundation can serve as the buffer between
donors and grant-seekers. |
No (IRS Form 990-PF which is open to
public inspection on the internet)
Private foundations are
required to file detailed tax returns on grants
issued, investment fees, trustee fees, staff
salaries, asset size, etc. and then publish a
notice to the public that the tax return is
available for public viewing. These are public
records and are often compiled into grant-seeker
directories. |
Investment, accounting, audit and
tax returns
|
The Foundation handles
all investments and accounting, files annual tax
return and provides annual independent
audit. |
Trustees must perform,
contract or hire staff for these
services. |
General administration |
Community Foundation
handles all financial and administrative
management. |
Trustees must perform,
contract or hire staff for these
services. |
Grant
administration |
If donor wishes, the Community
Foundation can identify potential recipients,
investigate applicants, make grant payments and
monitor performance. |
Trustees must perform, contract or
hire staff for these services. |
|
Liability and
insurance
|
Advisors to funds are covered by
Community Foundation's liability and office
insurance policies. Fundraising events and other
activities will require insurance. |
Any Directors and Officers
liability insurance, employee bonding, and
office insurance must be separately
purchased. |
|
Costs
|
The Community Foundation fee for most funds is 1% of the asset balance annually. Funds with assets above $500,000 receive reduced fees. |
Private foundations of under $1 million had average costs of 4.8% of assets, and those of $1-10 million had average costs of 3% of assets. |
