Private Foundation Alternatives

Donor advised funds are a smart, attractive alternative to a private foundation.

When people want to make a difference in their community, incorporate family into philanthropy, and build a legacy, they consider starting a private foundation. While private foundations may be appropriate for some families, the administrative requirements and operating costs can be substantial.

A donor advised fund at the North Carolina Community Foundation is a flexible, convenient, cost-effective option for your clients considering a private foundation.

And now, with our Charitable Investment Partners Program, your client may continue engaging you as investment manager on their NCCF fund while taking advantage of the Foundation’s philanthropic expertise and relationship-based services.

The chart below compares key features of a private foundation with those of a donor advised fund:

 

  Tax Deductibility Ease Cost Grantmaking
Donor Advised Fund
  • Deduct up to 60% of AGI for cash gifts
  • Deduct up to 30% of AGI for gifts of long-term appreciated securities, real estate, closely-held stock
  • Quick and easy to establish; can be done in a matter of days
  • Fund assets professionally managed through NCCF or by your financial advisor through our Charitable Investment Partners Program
  • A DAF endowment may be started with a minimum gift of $25,000.
  • 1% annual administrative fee (stepped down for funds over $1 million)
  • The NCCF Support Fee helps advance the charitable mission of NCCF, is reinvested into the community, and enables NCCF to provide you with robust donor services
  • No requirements for annual granting; 5% recommended
  • A dedicated NCCF team member will offer you personalized philanthropic guidance, as well as local and statewide knowledge and expertise
  • NCCF provides due diligence review of grantees
  • Anonymity available
Private Foundation
  • Deduct 30% of AGI for cash gifts
  • Deduct 20% of AGI for gifts of long-term appreciated securities; deduction limited to cost basis for gifts of real estate and closely-held stock
  • Several months and costly to establish
  • Responsible for all legal, accounting and filing
  • $10 million minimum recommended to justify operating costs
  • Annual excise taxes of 1-2%
  • All costs - legal, accounting, payroll, audit - incurred by private foundation
  • Annual minimum payout of 5% required, penalty on undistributed amount
  • Donor must establish and oversee all evaluation, monitoring, and reporting

Does your client have a private foundation but want to engage with NCCF?

Convert private foundation to a donor advised fund. If your client wants to simplify their involvement in the administration and maintenance of their private foundation but wishes to preserve the foundation’s legacy, consider converting it to a donor advised fund at NCCF.  The name of the client’s private foundation may be preserved (although anonymity is also an option) and grantmaking may continue in accordance with their foundation’s original giving intent.

Keep private foundation and establish a parallel DAF at NCCF. Your clients with a private foundation may find value in establishing a parallel donor-advised fund to access the comprehensive services at NCCF, for anonymous grantmaking, or as a vessel to accept part or all of the private foundation’s required annual distribution to allow additional time for grant decisions.


Contact a Member of Our Team Today

Kathryn Roebuck Holding, J.D.
Director of Development
Email
919-256-6932
To begin, and for advisors and donors in central counties
Beth Boney Jenkins
Development Officer, East
Email
910-782-2895
For advisors and donors in eastern counties
Megan Lynch Ellis
Development Officer, West
Email
828-355-4306
For advisors and donors in western counties
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While private foundations may be appropriate for some families, the administrative requirements and operating costs can be substantial.<\/p>\r\n<p>A <a href=\"\/create-a-fund\/types-of-funds\/what-is-a-donor-advised-fund\">donor advised fund<\/a> at the North Carolina Community Foundation is a flexible, convenient, cost-effective option for your clients considering a private foundation.<\/p>\r\n<p>And now, with our <a href=\"\/for-professional-advisors\/chipp\">Charitable Investment Partners Program<\/a>, your client may continue engaging you as investment manager on their NCCF fund while taking advantage of the Foundation&rsquo;s philanthropic expertise and relationship-based services.<\/p>\r\n<p>The chart below compares key features of a private foundation with those of a donor advised fund:<\/p>\r\n<p>&nbsp;<\/p>\r\n<table class=\"pfaTable\">\r\n<thead>\r\n<tr>\r\n<th>&nbsp;<\/th>\r\n<th>Tax Deductibility<\/th>\r\n<th>Ease<\/th>\r\n<th>Cost<\/th>\r\n<th>Grantmaking<\/th>\r\n<\/tr>\r\n<\/thead>\r\n<tbody>\r\n<tr>\r\n<th>Donor Advised Fund<\/th>\r\n<td data-title=\"Tax Deductibility\">\r\n<ul>\r\n<li>Deduct up to 60% of AGI for cash gifts<\/li>\r\n<li>Deduct up to 30% of AGI for gifts of long-term appreciated securities, real estate, closely-held stock<\/li>\r\n<\/ul>\r\n<\/td>\r\n<td data-title=\"Ease\">\r\n<ul>\r\n<li>Quick and easy to establish; can be done in a matter of days<\/li>\r\n<li>Fund assets professionally managed through NCCF or by your financial advisor through our Charitable Investment Partners Program<\/li>\r\n<\/ul>\r\n<\/td>\r\n<td data-title=\"Cost\">\r\n<ul>\r\n<li>A DAF endowment may be started with a minimum gift of $25,000.<\/li>\r\n<li>1% annual administrative fee (stepped down for funds over $1 million)<\/li>\r\n<li>The NCCF Support Fee helps advance the charitable mission of NCCF, is reinvested into the community, and enables NCCF to provide you with robust donor services<\/li>\r\n<\/ul>\r\n<\/td>\r\n<td data-title=\"Grantmaking\">\r\n<ul>\r\n<li>No requirements for annual granting; 5% recommended<\/li>\r\n<li>A dedicated NCCF team member will offer you personalized philanthropic guidance, as well as local and statewide knowledge and expertise<\/li>\r\n<li>NCCF provides due diligence review of grantees<\/li>\r\n<li>Anonymity available<\/li>\r\n<\/ul>\r\n<\/td>\r\n<\/tr>\r\n<tr>\r\n<th>Private Foundation<\/th>\r\n<td data-title=\"Tax Deductibility\">\r\n<ul>\r\n<li>Deduct 30% of AGI for cash gifts<\/li>\r\n<li>Deduct 20% of AGI for gifts of long-term appreciated securities; deduction limited to cost basis for gifts of real estate and closely-held stock<\/li>\r\n<\/ul>\r\n<\/td>\r\n<td data-title=\"Ease\">\r\n<ul>\r\n<li>Several months and costly to establish<\/li>\r\n<li>Responsible for all legal, accounting and filing<\/li>\r\n<\/ul>\r\n<\/td>\r\n<td data-title=\"Cost\">\r\n<ul>\r\n<li>$10 million minimum recommended to justify operating costs<\/li>\r\n<li>Annual excise taxes of 1-2%<\/li>\r\n<li>All costs - legal, accounting, payroll, audit - incurred by private foundation<\/li>\r\n<\/ul>\r\n<\/td>\r\n<td data-title=\"Grantmaking\">\r\n<ul>\r\n<li>Annual minimum payout of 5% required, penalty on undistributed amount<\/li>\r\n<li>Donor must establish and oversee all evaluation, monitoring, and reporting<\/li>\r\n<\/ul>\r\n<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>","excerpt":"","media":0,"custom":{"blocks":{"blocks":[{"fieldset":"fd39717673c942dfb102a174d17a8b99","fieldset_slug":"_wysiwyg","text":"<h2>Does your client have a private foundation but want to engage with NCCF?<\/h2>\r\n<p><strong>Convert private foundation to a donor advised fund.<\/strong> If your client wants to simplify their involvement in the administration and maintenance of their private foundation but wishes to preserve the foundation&rsquo;s legacy, consider converting it to a donor advised fund at NCCF.&nbsp; The name of the client&rsquo;s private foundation may be preserved (although anonymity is also an option) and grantmaking may continue in accordance with their foundation&rsquo;s original giving intent.<\/p>\r\n<p><strong>Keep private foundation and establish a parallel DAF at NCCF.<\/strong> Your clients with a private foundation may find value in establishing a parallel donor-advised fund to access the comprehensive services at NCCF, for anonymous grantmaking, or as a vessel to accept part or all of the private foundation&rsquo;s required annual distribution to allow additional time for grant decisions.<\/p>","image":"","alignment":""},{"fieldset":"8d2e0895df77444baf2690fb407972d5","fieldset_slug":"_button_block","button1_text":"Comparing Giving Options (PDF)","button1_link":"https:\/\/nmcdn.io\/e186d21f8c7946a19faed23c3da2f0da\/7868d48393ef4e3bb7bca8cdf7bc2f20\/files\/comparing-giving-options-v5-.pdf","button2_text":"","button2_link":"","button3_text":"","button3_link":""},{"fieldset":"fd39717673c942dfb102a174d17a8b99","fieldset_slug":"_wysiwyg","text":"<hr \/>\r\n<h2 style=\"text-align: center;\">Contact a Member of Our Team Today<\/h2>","image":"","alignment":""},{"fieldset":"458683df409c4ac9a3f9d1389daa0ac4","fieldset_slug":"_contacts","contact_1_image":"https:\/\/nmcdn.io\/e186d21f8c7946a19faed23c3da2f0da\/7868d48393ef4e3bb7bca8cdf7bc2f20\/files\/Kathryn-Roebuck-Holding.jpg","contact_1_name":"Kathryn Roebuck Holding, J.D.","contact_1_title":"Director of Development","contact_1_email":"kholding@nccommunityfoundation.org","contact_1_phone":"919-256-6932","contact_1_blurb":"To begin, and for advisors and donors in central counties","contact_2_image":"https:\/\/nmcdn.io\/e186d21f8c7946a19faed23c3da2f0da\/7868d48393ef4e3bb7bca8cdf7bc2f20\/files\/Beth-Boney-Jenkins.jpg","contact_2_name":"Beth Boney Jenkins","contact_2_title":"Development Officer, East","contact_2_email":"bjenkins@nccommunityfoundation.org","contact_2_phone":"910-782-2895","contact_2_blurb":"For advisors and donors in eastern counties","contact_3_image":"https:\/\/nmcdn.io\/e186d21f8c7946a19faed23c3da2f0da\/7868d48393ef4e3bb7bca8cdf7bc2f20\/files\/Megan-Lynch-Ellis.jpg","contact_3_name":"Megan Lynch Ellis","contact_3_title":"Development Officer, West","contact_3_email":"mellis@nccommunityfoundation.org","contact_3_phone":"828-355-4306","contact_3_blurb":"For advisors and donors in western counties","contact_4_image":"","contact_4_name":"","contact_4_title":"","contact_4_email":"","contact_4_phone":"","contact_4_blurb":""}]},"masthead":{"title":"","counties":"","affiliate_logo":"","sub_text":"","background_image":"","caption":""},"latest_blog":{"post":""},"social_sharing":{"share_image":""}},"inMenu":true,"publishedAt":1632332236,"orderChildrenBy":"ordinal","enableComments":false,"permission":"read","id":"1aa22c7ffeeb477da66d6f9215d4c257","parent":"2b2b706b4cc9410cb130d40ae9ca32e7","node":80929,"created":1632332236,"modified":1635269519,"fresh":1,"type":"page","children":{},"relations":{}}