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.