Grand Rapids Community Foundation Donor Advised Funds compared to Private Foundations
| Characteristics | Donor Advised Fund | Private Foundation |
|---|---|---|
| Creation | No start-up costs | Substantial start-up costs |
| Minimum Size | $50,000 | $1 million and up |
| Anonymity | Anonymity is available if desired | All activities are public record |
| Tax Benefits | Donor realizes maximum tax benefits | Gifts do not receive as favorable tax treatment |
| Tax Exempt Status | Fund shares public charity status with GRCF | Must establish separate tax-exempt status |
| Annual Tax Filings and Returns | None required | Separate tax return must be filed with required schedules |
| Charitable Deductions for Cash Gifts | 50 % of adjusted gross income (AGI) | 30 % of AGI |
| Charitable Deductions of Long-term Capital Gain Property | 30 % AGI of full fair market value | 20 % AGI of full fair market value |
| Excise Tax | No excise tax | Up to 2 % annually |
| Administration | Costs are lower due to economies of scale | Administration can be very expensive unless operations are volunteer based |
| Payouts | No minimum payout | 5 % must be paid out annually |
| Restrictions | Not subjected to restrictions of private foundations | Many restrictions set on certain activities which often lead to downfalls |
| Fund Changes | Fund can change with community and donor needs | Court proceedings may be required to change original purpose of the foundation |
| Professional Oversight | Every fund benefits from professional staff and board oversight and fiduciary responsibility | Many foundations are too small to afford staff, reasonable investment fees and insurance |
| Professional Management | Highly qualified management is guaranteed throughout fund's perpetuity | Succession plans guaranteeing effective management are difficult to execute and federal compliance can be burdensome |
© Grand Rapids Community Foundation - 161 Ottawa Avenue NW 209 C - Grand Rapids, Michigan 49503 - 616.454.1751
