Donor Advised Fund vs. Private Foundation

Donor Advised Funds

are convenient, flexible tools for individuals, families, businesses, or groups that want to be personally involved in making grants. Companies looking for an easy and effective way to give back to the community can establish a DAF and a team of employees can meet regularly to review local needs and recommend grants. Donor Advised Funds are typically less costly and easier to administer than private, family or corporate foundations. The donor or other named advisors can recommend grants to 501(c)(3) nonprofit organizations from the fund’s investment income and/or the corpus. Grants are made in the fund’s name, and the donor receives quarterly fund activity statements. The donor also has the right to name successor advisors to the fund who can recommend grants in the fund’s name after the death of the original donors.

Private foundation

allows extensive donor control over distributions, board selection and investment management. However, private foundations are highly controlled by the IRS with many special restrictions and regulations, including administrative and reporting burdens, excise taxes and a required minimum payout.