Weighing the benefits of private and public charity

Running a successful, mission-driven foundation requires steadfast vision, strong leadership, and hard work. It also takes time. While the investment of time begins with the startup, it will continue for years to come. And of course, it takes money as well. Theoretically, any amount is possible, but practically, many underestimate the amount needed to operate efficiently, both in terms of the charitable asset and ongoing operating costs. Many private foundations are established without a thorough assessment of all the costs involved and the alternatives available. Often prompted by year-end tax planning or the influence of peers, a quick decision can result in a costly and long-term responsibility. 

The supporting organization option

Generally, it is possible for a private foundation with $5 million in assets, or the potential to reach $5 million in the future, to become a supporting organization of the Community Foundation. Besides easing the administrative and cost burdens of managing a private foundation, transferring it to the Community Foundation permits the private foundation to take advantage of many aspects of our public charity status.

Private versus Community Foundations

Looking for a highly personal way of giving without having to assume the responsibilities and costs that come along with establishing and maintaining a private foundation? An Amador Community Foundation Donor-Advised Fund could be the right charitable vehicle for you.

Benefits of a Community Foundation Donor-Advised Fund include:

  • Maximizing your tax savings and simplifying charitable giving
  • Providing access to professionals who can advise and inform on local nonprofit organizations and community needs
  • Creating a fund without having to dedicate your gift to a single charitable organization or local cause
  • Exposing your children or grandchildren to the joys and responsibilities of philanthropy
  • Ensuring your philanthropic interests will continue in perpetuity
  • Allowing you to establish a named fund or remain anonymous in your giving

Comparison – Private Foundation vs Community Foundation Donor-Advised Fund

Items to ConsiderPrivate FoundationCommunity Foundation Donor-Advised Fund
Setup procedureMust incorporate and apply for IRS tax-exempt approvalSimple agreement. Can be set up in as little as one day
Initial costsLiability insurance, direct administrative costsPooled administation, low cost, no fees

Tax Benefits

  • Cash
  • Appreciated stock
  • Closely held stock
  • Up to 30% of adjusted gross income
  • Up to 20 % of adjusted gross income
  • Deduction limited to basis
  • Up to 50% of adjusted gross income
  • Up to 30% of adjusted gross income
  • Deduction at fair market value
Excise TaxUsually 2% of investment incomeNone
Reporting requirementsAnnual 990-PF Must be filed by foundation or hired staffNone required of the donor. Community foundation handles all reporting.
GrantmakingMust research and identify agencies/programs to fundCommunity foundation program staff educates donors regarding worthy agencies and programs; provides information on qualified opportunities.
Grant managementMust ensure all recipients are qualified 501 (c) (3) organizationsCommunity foundation verifies organization’s status, plus donors can access the community foundation’s strategic grant-making services.
Distribution requirements5% annual distribution required self-dealing restrictionsNone. Donors can make grant recommendations a their discretion
PrivacyTax return is public recordDonor may choose to remain anonymous

Simply put, the Amador Community Foundation improves the quality of life for the citizens of Amador County today and for generations to come. 

We connect local generosity with local needs.

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