Private foundations that transfer assets to The Community Foundation enjoy immediate excise tax relief, freedom from reporting requirements and lower administrative costs.
| CFWNC Donor Advised Fund | Private Foundation | |
|---|---|---|
| Donor Involvement | Donor recommends grants to qualified nonprofits; grants are approved by CFWNC board | Donor appoints board that controls all grantmaking decisions |
| Tax Status | Public Charity - no tax on fund balance or income | Private Charity - subject to annual excise tax of 2% of assets |
Income Tax Deductions for Gifts
| CFWNC Donor Advised Fund | Private Foundation | |
|---|---|---|
| Cash | Up to 60% of adjusted gross income (AGI) | Up to 30% of adjusted gross income (AGI) |
| Appreciated Stock | Fair market value up to 30% of AGI | Fair market value up to 30% of AGI |
| Real Estate and Closely Held Stock | Fair market value up to the 30% of AGI | Cost basis up to 20% of AGI |
Costs
| CFWNC Donor Advised Fund | Private Foundation | |
|---|---|---|
| Initial fees | None | Several thousand dollars in legal and accounting fees and filing expenses |
| Minimum Contribution | $10,000 | $5 million+ recommended |
| Ongoing costs | $250 and up annually, depending on type of fund and balance | Annual accounting, investment, reporting and tax services |
| Grantmaking Focus | Determined by donor | Determined by donor |
| Grantmaking Effectiveness and Support | Fund is supported by a professional staff, knowledgeable about community needs and nonprofit effectiveness | Burden of knowledge about need and effectiveness is on the donor, paid staff or consultants |
| Payout Requirements | None | 5% of net asset value |
| Reporting Requirements | Handled by CFWNC | Annual IRS Form 990-PF must be filed and made available to the public |
| Accountability and Liability | Donors may remain anonymous; CFWNC monitors regulatory requirements | Donors are named on the 990-PF; board responsible for adhering to regulations on investments and grantmaking or significant penalties can apply. |