Private Foundations vs. Family Foundation Funds
| Community Foundation | Private Foundation | |
|---|---|---|
| Organization | Established 1935 | Not yet established |
| Tax exempt | § 501(c)(3) status | Not yet established |
| 5% payout rule | Not subject to | May have to payout 5% of assets |
| Excise Tax on investment income | Do not pay | May be subject to tax |
| Tax Deductibility for Donors | Maximum under law | Uncertain; provisional status if approved |
| Mechanism for Receiving Gifts | Established mechanisms to handle gifts of real estate, securities & cash | Need mechanisms for receiving and managing of gifts |
| Language for Making Gifts & Creation of Funds | In place | Must create |
| Sophisticated Gift Instruments (Pooled Income, Lead, Annuity, and Unitrusts) | In place | Must create |
| Office | In place | Need to obtain |
| Staffing | In place | Need to obtain |
| Accounting | Computerized & independentCPA audit conducted each year | Must employ |
| Tax Return (Attorney General &IRS) | Prepared by CPA | Must prepare |
| Public Report | Annual report to public (over 1,000 copies distributed) | May be required |
| Acknowledge Donors | Donors recognized in publications and thanked individually for each gift | Need systems |
| Director and Officer Liability | In place $3 million | Needed (costly and difficult to obtain) |
| Liability Insurance | In place $2 million | Needed |
| Employee Bonding | Yes | Needed |
| Investment of Assets | Professional Investment Committee | Need to obtain |
| Organization Overhead | Spread over all our assets | Start-up costs and costs spread over smaller asset base |
| Credibility | Wide public acceptance | New organization |
For a more thorough discussion about establishing a fund, contact us at (814) 454-0843.