Charitable Giving Funds vs. Private Foundations

The Community Foundation provides a personal, local and flexible approach to giving. As you consider if this approach is better suited to your giving goals when compared to the establishment of a private foundation, we are here to help.

Income Tax Considerations	Cash	Capital Gain Property	Excise Taxes	Endow Iowa Eligibility
Community Foundation	Deduction of up to 60% adjusted gross income	30% of adjusted gross income	No tax on fund's investment income	Donors to Endow Iowa qualified funds can receive a 25% Iowa tax credit in addition to normal federal deductions
Private Foundation	Deduction of up to 30% adjusted gross income	20% of adjusted gross income	2% tax on investment income	Does not qualify for Endow Iowa Tax Credits
Commercial Gift Fund	Deduction of up to 60% adjusted gross income	30% of adjusted gross income	No tax on fund's investment income	Does not qualify for Endow Iowa Tax Credits

 

Administration	Administrative Services	Investment Options	Fund Distribution
Community Foundation	Community Foundation handles accounting, audit, due diligence, check writing, etc.	Four portfolio options or donor may choose their own investment manager	No annual minimum*
Private Foundation	All costs including payroll, audit, compliance, legal, etc. are responsibility of the private foundation	Investment vehicles selected and overseen by board	Annual required minimum payment of 5% of assets
Commercial Gift Fund	Commercial gift fund handles accounting, audit, due diligence, check writing, etc.	Multiple options, in most cases	May require a minimum of 5% payout

*Endow Iowa funds are limited to a 5% maximum payout.

Visibility	Public Disclosure
Community Foundation	Limited public disclosure of fund's activities, anonymity is optional for acknowledgement in grant letters.
Private Foundation	Desire for degree of visibility is determined by board and issues own grant guidelines. Must disclose all of the grants they make on the IRS form 990. Balance is also public information.
Commercial Gift Fund	Limited public disclosure of fund's activities, anonymity optional for acknowledgement in grant letters.

 

Grantmaking Capabilities & Restrictions	Future Purpose	Community Knowledge	Flexibility of Grants
Community Foundation	Ultimate current and future purpose defined by donor.	Expert knowledge of local nonprofits and community needs.	Broad flexibility.
Private Foundation	Purpose may be changed by future board.	Must determine nonprofit and community needs.	Determined by board.
Commercial Gift Fund	Ultimate current and future purpose defined by donor.	Determined by board.	Broad flexibility.