Giving Approaches

Giving Approaches

Compare These Approaches to Giving

Discover the Benefits of Working through Your Community Foundation

Establishing a Fund

Community Foundation
You can establish a fund with your Community Foundation quickly and efficiently with simple documents.  
Private/Family Foundation*
Establishing a new foundation requires legal, accounting and operational expenses on an on-going basis.
Commercial Gift Fund
Sponsors of commercial gift funds are generally not located in your community. Direct contact may be difficult due to their size.

Tax Exempt Status

Community Foundation
A Community Foundation is a public charity with 501(c)(3) status and is fully tax exempt.
Private/Family Foundation*
Donor must establish a separate nonprofit corporation and apply for federal tax exemption with articles of incorporation and bylaws.
Commercial Gift Fund
Public charity covered under nonprofit status of corporate entity’s charitable subsidiary.

Tax Treatment of Cash Gifts

Community Foundation
Tax deduction of up to 60% of Adjusted Gross Income (AGI).
Private/Family Foundation*
Tax deduction of up to 30% of Adjusted Gross Income (AGI).
Commercial Gift Fund
Tax deduction of up to 60% of Adjusted Gross Income (AGI).

Tax Treatment of Appreciated Publicly Traded Securities

Community Foundation
Tax deduction of 100% of fair market value up to 30% of AGI.
Private/Family Foundation*
Tax deduction of up to 100% of fair market value up to 20% of AGI.
Commercial Gift Fund
Tax deduction of 100% of fair market value up to 30% of AGI.

Tax Treatment of Appreciated Closely Held Stock

Community Foundation
Tax deduction of 100% of fair market value up to 30% of AGI.
Private/Family Foundation*
Tax deduction generally limited to cost basis up to 20% of AGI.
Commercial Gift Fund
Tax deduction of 100% of fair market value up to 30% of AGI, but closely held stock usually not accepted.

Tax Treatment of Real Estate Gifts

Community Foundation
Tax deduction of 100% of fair market value up to 30% of AGI.
Private/Family Foundation*
Tax deduction generally limited to cost basis up to 20% of AGI.
Commercial Gift Fund
Real estate usually not accepted.

Tax Treatment of Qualified Charitable Contributions from IRA

Community Foundation
Donors 70½ and older can transfer up to $100,000 from their individual retirement account (IRA) to your Community Foundation for a fund. The donation can be used to meet the required minimum distribution and would be excluded from both income and itemized deductions. Donor advised funds do not qualify.
Private/Family Foundation*
Private non-operating (grantmaking) foundations do not qualify.
Commercial Gift Fund
Donor advised funds do not qualify.

Annual Tax Returns

Community Foundation
Individual funds are not required to file. The Community Foundation handles all reporting, prepares and files all tax reports to the IRS and provides an annual independent audit.
Private/Family Foundation*
Must file annual Federal 990-PF and supporting schedules, which indicate staff salaries, investment performance, fees, etc. Trustees must perform, contract or hire staff for these services.
Commercial Gift Fund
The commercial gift fund is responsible for filing annual tax returns.

Investments

Community Foundation
A diversified portfolio and economies of scale offer efficiencies and minimize risks. A Community Foundation works with professional money managers and its Investment Committee provides experienced oversight.
Private/Family Foundation*
Selection of investment strategies and professional fund advisors can become a very time consuming responsibility for a private foundation's Board of Trustees.
Commercial Gift Fund
Donors may choose from among firm’s investment pools. In some cases, donor’s investment advisor can manage assets.

Administrative Expertise

Community Foundation
A Community Foundation provides expertise to donors on a wide range of gift management, finance and fund administration issues.
Private/Family Foundation*
Must hire staff or Board members to carry out administrative tasks on their own.
Commercial Gift Fund
Varies. 

Grantmaking Support

Community Foundation
Professional staff is available to assist donors by identifying community needs and opportunities, assessing grantees, verifying grantee nonprofit status, and conducting research and program evaluation to ensure maximum community impact.
Private/Family Foundation*
Donors must arrange and support their own grantmaking and monitoring structure. Requires extensive time to review proposals, investigate community needs, confirm status of grantees and evaluate previous distributions.
Commercial Gift Fund
Varies. Most do not have professional grantmaking experience. Minimum due diligence is provided to ensure grants are used as donor intended by the grant recipients. The large number of funds administered may outweigh the attention given to each fund.

Donor Involvement in Grantmaking

Community Foundation
Donor recommends grants for qualified nonprofit groups and has the Community Foundation handle all grantmaking. Community Foundation approves grants. 
Private/Family Foundation*
Donor appoints Board, which controls investments and grantmaking. 
Commercial Gift Fund
Donor recommends grants to qualified nonprofit groups. Trustees of the gift fund approve grants.

Flexibility

Community Foundation
As a public charity, a Community Foundation's organizational structure is purposely designed to allow greater flexibility to respond to and meet emerging needs and opportunities in the community.
Private/Family Foundation*
Expensive and lengthy legal proceedings may be required to change the purposes of a private foundation.
Commercial Gift Fund
Typically provide limited options in their charitable product offerings.

Accountability

Community Foundation
A Community Foundation obtains an independent audit each year. Publication of an annual report and thoughtful selection of Board members to ensure funds are used in the communities' best interests.
Private/Family Foundation*
Laws and regulations governing private foundations differ greatly from those of public charities and may require expensive specialized legal and finance expertise.
Commercial Gift Fund
Donor needs to check with the commercial gift fund sponsor to determine what accountability measures are taken.

Privacy

Community Foundation
Individual donors or grants remain anonymous. If the donor wishes, the Community Foundation can serve as a buffer between the donor and grantseekers.
Private/Family Foundation*
Required to file tax returns on grants, investment fees, staff salaries, etc. These are public records and are compiled into grantseeker directories with the names and addresses of substantial donors and details of donations. 
Commercial Gift Fund
Donors may remain anonymous.

Ongoing Costs

Community Foundation
Pooled administration; annual fee supports Community Foundation’s charitable work in the community as there are no shareholders or private investors with a Community Foundation. 
Private/Family Foundation*
Can be several thousand dollars for legal, accounting and filing fees. Additionally, private foundations are required to pay an annual 1 percent or 2 percent excise tax on their net investment income, depending on the value of their assets and the amount distributed to charities each year.
Commercial Gift Fund
Varies.
Reviewed & updated 10/24/18

*There is a difference in the tax treatment of an ‘operating’ vs ‘non-operating’ private foundation.

NOTE: Policies and laws governing charitable gifts are subject to change. Examine carefully the policies that apply when you create a fund or foundation. The Community Foundation is not in the business of rendering legal, accounting or financial advice. Always discuss your plans with your attorney, accountant, or financial advisor.


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