Turn a Private Foundation Into a Donor Advised Fund
Converting a private foundation to a named fund or supporting organization at a community foundation offers numerous advantages, provides real ways to stay engaged in giving, and can help you avoid many of the hassles of private foundation management.
Several times a year, a family foundation with broad funding guidelines receives scores of grant proposals in the mail, overwhelming the foundation’s single staff person as well as the board members who double as program officers. Getting buried in paperwork, keeping up with IRS requirements, and preparing to pass this legacy on to future generations can be daunting tasks. By transferring the funds to a community foundation, however, the burdens can be lifted while the name and philanthropic goals of the family foundation remain solid.
Here's a comparison: | | | | | Legal Identity | Separate nonprofit entity | Donor’s Choice of Name | Donor’s Choice of Name (separate nonprofit entity affiliated with Gulf Coast Community Foundation , i.e. affiliation with GCCFV earns this supporting organization status as public charity) | | Tax Status | Private Foundation | Public Charity (IRS Section 501(c)(3)) | Public Charity (IRS Section 509(a)) | | Taxation of Investments | 2% annually | None | None | | Payout Requirement | Grants must equal minimum of 5% of corpus annually | No requirement; spending policy established by the donor | Spending policy established by Board of Supporting Organization | | Deductibility of Gifts | Deductibility:
20% AGI* for appreciated property
30% AGI* for cash
| Deductibility:
30% AGI* for appreciated property
50% AGI* for cash
| Deductibility:
30% AGI* for appreciated property
50% AGI* for cash
| | Administration | Detailed annual filing with IRS for Form 990 | Record keeping, accounting, investments, and tax filing by Gulf Coast. (Quarterly statements; online fund availability 24/7) | All record keeping, accounting, investments, and tax filing completed by Gulf Coast. (Quarterly statements; online fund availability 24/7) | | Grantmaking Expertise | Board and staff responsible for all research, applications, due diligence, and monitoring | Research, due diligence, compliance with Patriot Act performed by Gulf Coast Community Foundation staff | Research, due diligence, compliance with Patriot Act, grant applications, site visits, and grant monitoring available through Gulf Coast Community Foundation staff | | Control | Trustees have complete control of distributions and responsibility for asset management | Donor makes grant recommendations, but cannot control investments (per IRS regulations) | Own board of trustees, a majority of whom are appointed by Gulf Coast Community Foundation | | Cost | Annual operating costs - including legal and accounting fees, insurance, office space, staff, travel, and miscellaneous expenses | No cost to establish; administrative fee negotiable depending on size of fund | No cost to establish; administrative fee negotiable depending on size of fund |
We welcome the opportunity to meet with you and discuss the advantages and disadvantages of each approach. Our desire is to help you find the solution that works best for you. To learn more, click here. If you have any questions that have not been answered, please contact us for more information.
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