For Advisors: Community vs. Private Foundation

Community vs. Private Foundation

	Donor Advised Fund at Greater Everett Community Foundation	Private Foundation
Set-up Considerations
Costs	None	Legal, accounting, investment and
Time Frame	Immediate	Generally 1-2 months
Minimum Contributon	None/$25,000 for endowed fund	$1 million recommended to justify
Income Tax Deductions
Cash	Deduction of up to 50% of AGI	Deduction of up to 30% of AGI
Publicly Traded Securities	FMV deduction of up to 30% of AGI	FMV deduction of up to 20% of AGI
Real Estate/Closely Held Stock	FMV deduction of up to 30% of AGI	Deduction is limited to the donor’s cost basis or FMV, whichever is lower, up to 20% of AGI
Administration
Administrative Services	Services covered by an annual fee of 1% of fund value; reduced fee structure above $500,000	Performed by trustees, staff or outside professional agencies
Investment Management	Professional investment management and oversight for 1% of fund value	Performed by trustees, staff or outside professional agencies
Tax Considerations
Tax Status	501(c)(3) public charity status as a component part of GECF	501(c)(3) private foundation; not as favorable as public charity status
Tax Return & Audits	Not applicable	Performed by trustees, staff or hired professionals
Income Tax	Not applicable	2% of net investment income
Private Foundation Excise Taxes	Not applicable	Various excise taxes imposed for failure to meet payout requirements and for engaging in certain prohibited transactions
Payout Requirements
	No required payout	Annual payout of at least 5% of foundation assets regardless of foundation’s income for charitable purposes
Donor Involvement
	Donor recommends grants to GECF for distribution to qualified charitable organizations. GECF oversees grant administration	Donor appoints board, which controls investments and grantmaking
Grantmaking Support
	GECF’s professional staff can help identify and assess grantees, advise on community needs and verify charitable status of grantees	Performed by trustees, staff or outside professional agencies

Definition of Terms: GECF: Greater Everett Community Foundation, AGI: Adjusted Gross Income, FMV: Fair Market Value