You may think a private foundation is the only charitable giving option for your clients 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 significant expertise to ensure all legal requirements are met.
Through donor-advised funds (DAFs), your clients receive the benefits of a private foundation with less overhead, improved tax deductions, increased grant flexibility and access to local giving experts.
Donor-Advised Fund vs. Private Foundation
|Donor-Advised Fund||Private Foundation|
|Annual 5% payout required||✓|
|Maximum tax benefits||✓|
|Grant and admin services||✓|
|Form 990 required||✓|
|Fees re-invested into community||✓|
|Network with local donors||✓|
|Donor owns brand||✓||✓|
A DAF acts as a charitable giving account for your clients and provides maximum tax benefits.
Clients receive the benefits of a private foundation, without being subject to start-up costs, obtaining tax-exempt status or annual income excise tax.
Unlike a private foundation, a donor-advised fund does not require you 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 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.”
Ed & Mary Fletcher Family Fund Advisor
We Can Help
Since 1975, SDF has helped passionate, socially minded citizens find ways to create positive impacts in communities across San Diego and beyond.
Interested in learning how donor-advised funds can meet your clients’ financial planning and charitable giving goals? Contact our charitable giving experts.