Weighing Your Options: GCF or a private foundation?
In the world of tax-exempt organizations, there are two basic camps: the private (or family) foundation, and the public charity. GCF, its component funds, and its affiliates, have attained public charity status, and are therefore entitled to certain tax advantages not afforded to private foundations. Affiliation with GCF can save donors time and money by reducing the administrative hassles, tax burdens, reporting requirements, and self-dealing restrictions placed on a private foundation.
The following table compares some aspects of private foundations and donor advised funds:
|
Family Foundation |
Donor Advised Fund |
| Requires legal assistance to draft and file for IRS tax-exemption. Should have substantial assets to be economical to operate. |
Inexpensive and easy to establish. Takes only $5,000. GCF is already tax-exempt. |
| Board must file an annual tax return (990-PF) |
Funds are included as part of GCF’s Form 990. (No need for separate form) |
Income tax charitable deduction:
-is limited to 30% of AGI for cash
-is fair market value for publicly traded stock and limited to 20% of AGI.
-is cost basis for closely held stock and limited to 20% of AGI. |
Income tax charitable deduction:
-is limited to 50% of AGI for cash
-is fair market value for publicly traded stock and limited to 30% of AGI.
-is appraised value for closely held stock and limited to 30% of AGI. |
| Donor has complete control over the funds. |
Donor can recommend grant recipients and investment advisor. |
| Must pay out for charitable purposes at least 5% of asset value annually. |
No payout requirement. |
| May be subject to excise taxes. |
No excise taxes apply. |
| Administration can be costly and time-consuming for establisher. |
GCF handles all administrative aspects at low cost. |
If you have already established or are thinking of establishing a private foundation, consider the advantages of a setting up a donor advised fund or a supporting organization at GCF. Donor advised funds and supporting organizations may be created in addition to or in place of a private foundation.
For more information or a free consultation about your specific situation, contact a member of GCF's Giving Strategies Group at (513) 241-2880.
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