Private Foundation or Donor Advised Fund: Making the Decision Easier

Arv and Pearl Tap enjoyed helping their favorite causes through their private family foundation for many years. However, once they reached a certain point in their lives, they found that administering the foundation was too time consuming. With the guidance of their professinal advisor, they converted their private foundation to a Donor Advised at the Grand Rapids Community Foundation.

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A Donor Advised Fund is a good option for those who wish to be involved in philanthropy personally or with their families, but prefer not to handle the administrative and organizational duties. Donor Advised Funds provide a flexible, uncomplicated way to give that contains many of the features of a more costly private foundation yet includes all of the tax benefits of a public charity.

Benefits of a Donor Advised Fund

Investments have potential to grow tax free
Donors may make additional contributions over time
Contributions to the fund are immediately tax deductible with a five year carry forward
Recordkeeping is simplified
Burden of administrative fees and costs of private foundations are eliminated
Donors make grant recommendations to organizations on their own timetable
Grant recommendations may be anonymous
Individuals can name multiple advisors to the account, enabling a legacy of giving to continue
No limit is set for number of grant recommendations annually ($250 minimum)
What the Michigan Probate and Estate Planning journal says about Donor Advised Funds