Private Foundation Alternatives
Flexible Giving
Considering a private foundation? It's not the only option for your clients. Important tax benefits and administrative efficiencies can be gained with other solutions.
Strategic Solutions for Your Clients
Our range of services can be tailored to any of your clients' needs. Whether they are just starting out on their philanthropic journey, or they are considering a private foundation, we can be a valuable partner.
Private Foundation Services
Private Foundations
- Do your clients already have a private foundation? We can offer valuable community insights and helpful philanthropic services to make their work even more meaningful. We can provide back-office support, grant-making assistance, insights on current community needs or information on local nonprofits.
- We offer a variety of services on a fee-for-service schedule. Our charitable support fees for entities for whom we do not hold or invest the assets are customized on a case-by-case basis.
Starting or Unwinding a Private Foundation
- A Donor Advised Fund might be a great solution if your client is considering setting up a private foundation or ceasing operation of one. It's important to compare the tax advantages to determine the best option for your clients.
Supporting Organizations
Let us help as you and your client consider the advantages of creating a supporting organization, which is a public charity that allows for a greater tax advantage.
- We offer professional support, including financial and administrative support.
- Expertise in local community needs and grantmaking.
- Donors receive favorable tax status and full participation in grantmaking, while avoiding the financial and management burdens that private foundations encounter.
Concierge Services for Families and Businesses
Our concierge and customized services include a suite of enhances services to help guide individuals, families and companies.
- Ensure meaningful conversations, clarify mission and values and develop a clear strategy to achieve charitable goals.
- Deep knowledge of community needs and local nonprofits.
- Specialized training to help guide individuals, families and business owners as they turn their deep values into a charitable strategy.
The Seed for Success Foundation is a supporting organization of the Sioux Falls Area Community Foundation. Hear about their experience.
Is your client considering a private foundation?
The chart below can be a resource as you consider the best vehicle to meet your client’s needs.
Private Foundations and Donor-Advised Funds at a Glance
Private Foundation | Donor Advised Fund | |
|---|---|---|
| Administrative Fees | Typically high, but can be modest | Fees starting at 1% and decreasing for balances over $1 million |
| Set-up Process | Legal work required, can be time consuming | Can be done in less than a day with no set-up fee |
| Tax Deduction for Contributions | Cash: 30% of AGI Securities: 20% of AGI Privately Owned Assets: Cost Basis | Cash: 60% of AGI Securities: 30% of AGI Privately Owned Assets: Fair Market Value |
| Excise Taxes | Up to 2% of annual investment income | None |
| Annual Distributions (Grantmaking) | Required 5% distribution | Flexible, with no minimum requirement |
| Anonymity | No | Yes, donors can choose full/partial anonymity if desired |
| Lead beneficiary of CLAT | No | Yes |
| Perpetuity | Yes, if desired | Yes, if desired |
| Ongoing Administration | Responsible for administration and IRS filings | Community Foundation handles all administration and IRS filings |
Please note, exceptions to the rules always apply, and each situation is unique and should be evaluated based on circumstance.