Advantages of a Fund
Options At The Community Foundation (TCF)
Compared with a Private Foundation
| Private Foundation | Unrestricted Fund or Designated Fund of TCF | Donor Advised Fund of TCF | Supporting Organization of TCF | |
|---|---|---|---|---|
| Legal Identity | Separate nonprofit entity |
(Donor's Choice of Name) Fund of TCF | (Donor's Choice of Name) Fund of TCF | Separate nonprofit entity affiliated with TCF |
| Tax Status | Private Foundation | Public Charity | Public Charity | Public Charity |
| Taxation of Investment Income | Up to 2% annually |
None | None | None |
| Pay-out Requirement | Grants must equal 5% of principal annually | None | None | None |
| Deductibility
of Gifts |
Cash gifts deductible up
to 30% of adjusted gross income (AGI); gifts of appreciated property deductible at fair market value (up to 20% of AGI) |
Cash gifts
deductible up to 50% of adjusted gross income (AGI); gifts of appreciated property deductible at fair market value (up to 30% of AGI) |
Cash gifts deductible up
to 50% of adjusted gross income (AGI); gifts of appreciated property deductible at fair market value (up to 30% of AGI) |
Cash gifts deductible up
to 50% of adjusted gross income (AGI); gifts of appreciated property deductible at fair market value (up to 30% of AGI) |
| Administration | Detailed annual filing with IRS | All record-keeping and accounting performed by TCF | All record-keeping and accounting performed
by TCF |
All record-keeping and accounting performed
by TCF |
| Grantmaking Expertise | Larger
foundations require a professional staff |
TCF staff assists
in reviewing and monitoring proposals |
TCF staff may assist in reviewing and monitoring proposals |
TCF staff may assist in reviewing and monitoring proposals |
| Control | Trustees have complete control of grantmaking distributions and responsibility for asset management |
TCF Board of Trustees is responsible for grant- making to carry out donor's intent and for asset management |
Donor advisor(s) may make grant recommenda-tions subject to TCF Board approval; TCF is responsible for asset management |
Has own Board of Trustees, which is responsible for grantmaking and asset management |
| Cost | Significant cost to establish. Annual operating costs include legal and accounting fees, insurance, office space, staff and miscellaneous expenses |
No cost to establish Administrative cost of 1% on first $2 million of designated fund (declining fee scale on amounts over $2 million) or 2% on unrestricted fund; plus pro rata share of investment management costs |
No cost to establish Administrative cost of 1% on first $2 million (declining fee scale on amounts over $2 million); plus pro rata share of investment management costs From each new gift, 1% fee goes to unrestricted endowment for local grantmaking |
Modest cost to establish Administrative cost to operate depends on size, purpose of fund and nature & extent of services TCF is to provide |
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