If you are thinking about establishing a private family foundation, talk to our experts first. A Supporting Organization or a Donor Advised Fund with an advisory committee may fulfill your philanthropic vision and provide additional benefits not available with a private foundation.
If you already have a private foundation and want to give up the recurring costs, restrictions and compliance requirements, you can easily disband the private foundation and transfer the remaining assets to establish a donor-advised fund or a supporting foundation at JCF.
With a private foundation, the IRS requires a mandatory annual five percent distribution of your assets. Supporting foundations and donor-advised funds have less stringent requirements and no mandatory distribution requirements, thus you can take your time and deliberate on the grants to be recommended. Additional contributions can be made to the foundation at any time, in any amount.
Please contact us if you would like to talk about your interests.
A Comparison of Gift Planning Vehicles
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|
SupportingOrganizations |
PrivateFoundations |
Donor AdvisedFunds |
Start-up Expense and Time |
One-time $5,000 start-up fee plus direct legal and accounting costs. Three weeks to three months to create entity. |
Legal and start-up fees can be substantial. Three weeks to three months to create entity. |
No cost to donor. Can be established immediately |
Ongoing Administrative Fees |
Same Fee schedule as Donor Advised Fund with a minimum annual fee of $5,000. |
Varies with choice of board and level of services required. |
Up to first $1,000,000 x 1.50%$1,000,001 – $3,000,000 x 1.10%$3,000,001 – $5,000,000 x 0.80%$5,000,001 – $10,000,000 x 0.50%$10,000,001 and greater x 0.25% |
Management Services |
JCF manages all administrative functions and oversees entire grant making process |
Board of Private Foundation responsible for all functions including hiring administrative staff to perform necessary duties. |
JCF manages all administrative functions and oversees entire grant making process |
Tax Deduction Limits for Gifts of Cash |
50% of adjusted gross income with a five-year carryover |
30% of adjusted gross income with a five-year carryover |
50% of adjusted gross income with a five-year carryover |
Tax Deduction Limits for Gifts of Stock or Real Property |
30% of adjusted gross income with a five-year carryover |
20% of adjusted gross income with a five-year carryover |
30% of adjusted gross income with a five-year carryover |
Annual Taxes |
None |
Excise tax of 1% to 2% of net investment income annually; possible penalty taxes |
None |
Valuation of Gifts |
Fair Market Value |
Fair market value for cash and publicly traded stock. Cost basis for gifts of closely held stock or real property |
Fair Market Value |
Grant Making |
Board approves grants to qualified charitable organizations from fund principal and/or income. |
Donors’ family and board members have complete control of all grant making decisions, but must make grants equal to a minimum of 5% of assets |
Fund advisors may recommend charitable grants to qualified organizations from fund principal and/or income. |
Investments |
Board members select investments and may choose to use JCF’s professionally managed investment pools. |
Donors’ family and board members have complete control of all investment decisions, subject to self-dealing rules |
Fund advisors may recommend investing the fund in either of two professionally managed investment pools. |
Required Annual Distribution |
None |
Minimum Distribution requirement 5% of net assets value annually, regardless of how much the assets earn |
None |
Privacy |
Public Tax Returns |
Public Tax Returns |
Donor may choose anonymity. |
Governance |
Separate board with JCF holding the majority vote. Some restrictions apply |
No restrictions regarding who serves on the board, but self dealing rules apply |
N/A |
Succession |
Donor has option to involve future generations to ensure a continuing legacy. |
Donor has option to involve future generations to ensure a continuing legacy. |
Donors may name successor advisors to the fund and involve future generations to ensure a continuing legacy |
Perpetuity |
Can exist in perpetuity |
Can exist in perpetuity |
Can exist in perpetuity |
Minimum to Establish |
$1,000,000 |
None |
$5,000 |
Tax Returns & Audit |
Included in JCF’s consolidated audit and JCF responsible for completion of tax returns. |
Private Foundation manages any audit and files own tax returns. |
Fund included in JCF’s audit and tax returns. |
Tax Status |
Public Charity |
Private Foundation |
Public Charity |
Directors & Officers Insurance |
Covered under JCF’s policy |
Needs to obtain own policy. |
n/a |
Gift Acceptance Policies |
New non-cash gifts accepted per JCF’s established policies |
Must establish own policies and procedures |
New non-cash gifts accepted per JCF’s established policies |
Service & Support of Knowledgeable Staff |
Provided by JCF staff or may employ own staff |
Must retain own staff |
Provided by JCF staff |
Creating the Foundation Vehicle |
Separate non-profit entity created with the assistance of JCF |
Non-profit entity created as a private foundation |
Established as a fund of the JCF |
Please consult with your professional advisor to determine best option for your philanthropic needs.