~ An Alternative to a Private Foundation ~

Community foundations are free of onerous restrictions and excise taxes imposed upon private foundations since the IRS recognizes the quasi-public nature of them.  Donors benefit from the greater economy of a large-scale united effort.  Private foundations choose to transfer their assets to community foundations each year upon learning that they can accomplish their charitable objectives without the regulations, excise taxes, and paperwork they previously experienced.

Private Foundation

  • Federal excise tax imposed on net investment income
  • Requirement for payout of a minimum percentage of net investment asset value- whether or not earned
  • Lifetime contributions deductible for income taxed only up to 30% of adjusted gross income for cash gifts, or 20% for long-term capital gain property
  • Complex federal limitations on ownership of equity in a business
  • Detailed reporting rules, with potentially severe penalties for noncompliance
  • Professional assistance required in accounting, investment, and reporting, at the expense of funds otherwise for charitable purposes
  • Dependence on donor’s or family members’ time, expertise, and availability to select worthy recipients of results, or a need to hire professional expertise

Community Foundation

  • No federal excise tax
  • No minimum payout for charity required, allowing flexibility to accept gifts of low earning property with high growth potential
  • More liberal annual limits on tax deductibility: up to 50% of adjusted gross income for cash gifts, 30% for capital gain property
  • No restrictions on percent of business ownership
  • No specific federal reporting, other than normal annual IRS returns
  • Management provided at minimal cost as part of the total operation of the staff and volunteer leadership

Foundation staff and Board committees select and monitor grant recipients, with reference to guidelines established by donor(s) or donor-designated fund advisors