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They gave you the wheel. We’ll help you lead the way. The San Joaquin Community Foundation has a profound understanding of our diverse community’s nuanced needs. We can help you identify charitable solutions that align with your clients’ visions for our community. Whether it’s establishing a donor-advised fund or leaving a legacy gift, we’ll help you present donors with exciting choices. Let’s navigate the possibilities together. Learn more about our funds below.
Donor Advised Funds vs. Private Foundations
Donor Advised Funds
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 Foundations
Private Foundations allow 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.
Donor Advised Fund
Private Foundation
Creating the Foundation
Established at the Community Foundation by a simple agreement
Nonprofit corporation or trust organized as a private foundation with additional legal and tax advice
Tax Exempt Status
Shares the public charity tax exempt status of SJCF, as a “component” of SJCF
Must apply for private foundation tax exempt status from the IRS
Start-up Costs
No cost to donor
Similar to a corporate start-up requiring substantial legal, accounting, and operational start-up costs
Recommended Size
$5,000 or more
Substantial assets required ($5 – 10 million)
Charitable Deductions for Cash Gifts
Tax deduction of up to 50% of adjusted gross income (AGI)
Tax deduction of up to 30% of adjusted gross income (AGI)
Charitable Deductions for Appreciated Property
Tax deduction available for full fair market value of marketable securities and other property
Tax deduction may be taken for fair market value of marketable securities up to 20% of AGI. Tax deduction for other property is limited to the lower of cost or fair market value
Donor Control
Donor makes advisory grant recommendations; final decision rests with SJCF’s board of directors
Donor retains complete control over investments and grant making, subject to IRS requirements
Self-Dealing Rules
Private foundation self-dealing rules do not apply
Strict regulations prohibit most transactions between a private foundation and its donors (including related persons or organizations)
Payout Requirements
Upon donor discretion
Must pay out for charitable purposes at least 5% of its asset value annually, regardless of its income
Contact with Potential Grantees
SJCF provides at donor request
Donor must provide
Administrative Concerns (personnel, facility, gift and grant management)
Services provided by SJCF
Must establish and/or obtain these services
Annual Costs
Minimal
Administration can be costly
Annual Taxes
None
Subject to an excise tax of up to 2% of net investment gain, including net capital gains and income
Annual Tax Filings and Returns (900 Report)
Not required (reported as part of SJCF’s annual reporting)
Must be filed by the private foundation with required reporting schedules
Investments
Fund assets are professionally invested through SJCF’s investment program
Must research, secure, and carefully monitor its own investment vehicles
Fiduciary Responsibility
SJCF fulfills the associated fiduciary responsibilities
The private foundation board has fiduciary responsibility
Liability and Risk Insurance
Provided by SJCF
Must be purchased by the private foundation
Get in Touch
Together, we can turn your client’s charitable goals into reality. Reach out today.
Address
6731 Herndon Place
Stockton, CA 95219
Telephone
209.943.2375