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.
Set-Up Considerations |
Costs |
Time Frame |
Minimum Contribution |
Community Foundation
|
None |
Immediate |
No minimum |
Private Foundation |
Legal, accounting & filing fees |
1 - 2 months |
No minimum |
Commercial Gift Fund |
None |
Immediate |
$5,000 - $25,000 minimum |
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. |