Donor Advised Funds
A donor advised fund is a charitable giving vehicle wherein
an individual, family or corporation makes an irrevocable,
tax-deductible contribution of personal assets to a charity
and at any time thereafter can recommend grant distributions
to qualified public charities. This may sound just like a
private foundation, however, there are differences and limitations.
A Private Foundation is typically used for amounts over $500,000.
This is mainly due to the increased administrative and compliance
requirements associated with Private Foundations.
Donor Advised funds are also a good fit for those people
who do not have anyone to name as a successor private foundation
director. They can also be used for donors who want to pre-establish
an endowment that can run automatically after their passing,
common for establishing an ongoing scholarship.
Donor Advised Funds are also restrictive in the types of
assets that can be gifted to them. Art work, collectable's
and real estate are usually not allowed as a gifted asset.
Below is a comparison chart that outlines some of the difference
between private foundations and donor advised funds.
Donor Advised
Funds |
Private Foundation |
| No donor start up costs |
Start up costs are $4,950 |
| Higher income tax deductibility
- Cash can be fully deducted at a rate of 50% of
AGI
- Publicly traded securities and real estate can be
fully deducted at a rate of 30% of AGI
- Gift and estate tax deduction of 100%
|
Lower Income tax deductibility
- Cash can be fully deducted at a rate of 30% of
AGI
- Publicly traded securities, restricted stock and
real estate can be fully deducted at a rate of 20%
of AGI
- Gift and estate tax deduction of 100%
|
| No federal excise tax. |
1 to 2% federal excise tax imposed on earnings. |
| No annual tax return required to be filed
by the donor. |
Federal and state tax returns required to be completed
and filed annually. The administrator will do this for
you. |
| All aspects of the account can be done anonymously if
desired, no public records. |
All activiaties and tax returns are public
record and can be viewed by the public online. |
| Grants to charity can be done on your time frame with
no annual grants required. |
Required to distribute 5% of assets annually. |
| Donors can not participate in management
activities and are not permitted to receive compensation.
|
Foundation directors can be actively involved
with foundation activities and can be compensated for
their work from the foundation. |
| Limited in the types of assets that can be gifted. |
Art work, collectable's and real estate
can be gifted. |
| Few regulatory requirements and those are handled by
the Fund. |
Regulatory requirements are extensive.
Can be outsource to a third party. |
As you can see, there are several differences. Probably the
biggest advantage the private foundation has over donor advised
funds is the ability of the directors to take a more active
roll in the foundation if desired and also receive reasonable
compensation from the foundation for their time and activities
associated with it.
For more detailed information on Donor Advised Funds you
can visit one of our other web sites located at www.DonorAdvisedFunds.com
We are also available to help you review both products and
determine which one would make a good fit for your individual
goals and situation. just give us a call toll free at 800-535-4720
Click Here to request a copy
of our FREE Private Foundation Planning Guide.
Tactical Wealth Advisors, LLP
Investment advisory services are provided through Tactical
Wealth Advisors, LLP a Registered Investment Advisor. The
information contained on this site is for educational purposes
only, it is not intended to be professional tax or legal advise;
consult a tax advisor about your specific situation.
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