Simpler Alternative to a Private Foundation

Often, people think a private foundation is the only charitable vehicle to invest and grant out charitable assets.

While private foundations are powerful giving vehicles for individuals and families, starting and maintaining them can be challenging. They require exhaustive time and resources, not to mention the magic ingredient of expertise to ensure all legal requirements are met.

Consider a simpler alternative by choosing a donor-advised fund, your Private Foundation Solution.

Donor-Advised Funds

Family Philanthropy with Donor Advised Funds

A donor-advised fund offers a simple, flexible way to increase your charitable giving while providing maximum tax benefits.

Through a donor-advised fund at The San Diego Foundation, you get the benefits of a private foundation, without being subject to start-up costs, tax exempt status or annual income excise tax.

Unlike a private foundation, a donor-advised fund does not need to disclose certain financial information, including private tax return details. There are no complex legal requirements, and they do not require the annual 5 percent payout requirement that private foundations do.

“Converting our private foundation to a donor-advised fund at The San Diego Foundation allowed our large extended family the ease of grantmaking and carrying on the legacy of our grandparents without the headache of managing a private foundation.”

Bob Fletcher
Ed & Mary Fletcher Family Fund Advisor

Donor-Advised Funds vs. Private Foundations

Administration

Tax status

Donor-Advised Fund

Public charity

Private Foundation

Private charity

Administration and fiduciary responsibility

Donor-Advised Fund

Fiduciary services provided by your support staff at The San Diego Foundation

Private Foundation

Private Foundation handles all accounting, investments and IRS filings

Research and expertise

Donor-Advised Fund

Expert staff is available to inform grant decisions and provide research on most impactful ways to give

Private Foundation

Private Foundation handles all needs assessment and research about social impact areas

Liability and risk

Donor-Advised Fund

The San Diego Foundation provides insurance

Private Foundation

Private Foundation must purchase liability and risk insurance

Engagement

Privacy

Donor-Advised Fund

Donor and family name may remain anonymous

Private Foundation

Donor and family name, along with grant information, is open to the public

Donor involvement

Donor-Advised Fund

You and your trustees decide investment pool and recommend grants to nonprofits

Private Foundation

You and your trustees appoint a board which controls investments and grantmaking

Grantmaking

Donor-Advised Fund

The San Diego Foundation staff streamline and execute a grantmaking and/or scholarship process that fits your needs

Private Foundation

Private Foundation develops and solicits RFPs, as well as reviews applications and communicates with nonprofits

Trustee support

Donor-Advised Fund

The San Diego Foundation staff helps facilitate meetings in a neutral environment to mitigate trustee and family dynamics and provide charitable expertise

Private Foundation

Trustees and family handle all decisions internally on their own

Tax Deductions

Cash gifts

Donor-Advised Fund

Up to 60% of adjusted gross income

Private Foundation

Up to 30% of adjusted gross income

Appreciated stock gifts

Donor-Advised Fund

Fair market value up to 30% of adjusted gross income

Private Foundation

Fair market value up to 20% of adjusted gross income

Real estate gifts

Donor-Advised Fund

Fair market value up to 30% of adjusted gross income

Private Foundation

Cost basis up to 20% of adjusted gross income

Expenses

Startup costs

Donor-Advised Fund

None

Private Foundation

Thousands in legal costs that increase based on size and complexity of Private Foundation

Excise taxes

Donor-Advised Fund

None

Private Foundation

Subject to tax of up to 2% net investment gains

How Donor-Advised Funds Work

A donor-advised fund is a simple, tax-efficient way to give to your favorite nonprofit organization or area of interest.

Give

Make your tax-deductible donation to The Foundation. You can contribute assets such as cash, stock or real estate and get one tax receipt.

Grow

Your initial contribution grows tax-free. It is invested to maximize your return and strengthen your grantmaking and social good power.

Grant

Recommend a grant to support your favorite community initiatives or nonprofit organizations when you are ready.

Consider donor-advised funds for:

Private Foundation Alternatives

Private Foundation Alternatives

Quick to set up, a donor-advised fund removes the headache of setting up your own private foundation while offering maximum tax benefits and customized charitable giving.

Private Foundation Conversions

Private Foundation Conversions

Don’t let the conversion process be an obstacle to getting the most out of your philanthropy. Our Giving Team can guide you through converting an existing foundation with your financial advisor.

Additional Giving Vehicles

Additional Giving Vehicles

Add a donor-advised fund to your charitable giving strategy. Leverage a team of giving experts, grantmaking support and administrative services to increase your impact.

Multi-Generational Giving

Multi-Generational Giving

A donor-advised fund allows families to establish a legacy of giving without the administrative burden of a private foundation.

“We rely on The San Diego Foundation to identify the emerging needs in our region. With their guidance and our trust, we’re able to grant to nonprofits meeting those needs and making the most impact for causes that matter today.”

Linda F. Hervey
on behalf of the Hervey Family Fund

How The San Diego Foundation Can Help

Since 1975, The San Diego Foundation has been a trusted advisor for individuals and families exploring ways to make the most of their charitable giving.

Interested in learning how donor-advised funds could be an alternative to a private foundation for you?

Cami Mattson

Contact our Director of Development & Stewardship Cami Mattson at cami@sdfoundation.org or (619) 814-1385.