The Better Alternative to a Private Foundation

Your client may enjoy overseeing a private family foundation. But private foundations have a number of financial and administrative disadvantages when compared to public charities. These drawbacks include greater investment restrictions, mandatory distribution and reporting responsibilities, fewer tax benefits and the sometimes-heavy burden of personally administering a private foundation.

There's a better way to make a philanthropic impact and receive advantageous charitable gift deductions: Partner with The Lake County Community Foundation. Here's why your client will benefit:

Better Income Tax Treatment

Your client's gifts to her private foundation receive a deduction of 30% of their adjusted gross income. Property donations qualify for a 20% deduction. However, when your client contributes to a supporting organization or donor advised fund of The Lake County Community Foundation, she can deduct as much as 50% of her adjusted gross earnings for cash gifts and 30% for property donations.

Fewer Restrictions

Your client may contribute closely held stock to a donor advised fund or supporting organization and deduct its fair market value, up to 30% of the adjusted gross income. Your client's charitable fund may also hold larger blocks of closely held stock—an option not available to private foundations. Finally, while restrictions are placed on what other donors can contribute to your client's private foundation, there is no limit on tax-deductible gifts made to your client's donor advised fund or supporting organization.

Learn more about the types of assets your client may give to the Foundation.

Easier Administration

The Foundation performs full administrative duties for donor advised funds. A separate board of directors—appointed by your client and the Foundation's Board of Advisors—administers supporting organizations with oversight. But even supporting organizations have fewer administrative and tax-reporting responsibilities than private foundations.

Anonymity or Recognition

Your client may make charitable gifts through the Foundation and remain anonymous. A private foundation, on the other hand, must make publicly available the names of major donors.

Expert Advice and Support

When you and your client work with the Foundation, you get access to our staff's expert advice about Lake County's greatest needs and the not-for-profit organizations that serve it. Guided by our informed opinions, your client can design a strategic giving program that has the greatest reach and impact in our community.

Grant Making Input

When your client partners with the Foundation, he retains an important place in the grant making process. Your client may define his donor advised fund's philanthropic objective and make grant recommendations. Donors with supporting organizations may sit on its board of directors or recommend directors to the board.

No Distribution Requirements

Donor advised funds and supporting organizations are not required to distribute a percentage of annual income, as private foundations must.

No Excise Taxes

Unlike private foundations, donor advised funds and supporting organizations are exempt from paying excise taxes on investment income.

Minimal Start Up Costs

The costs are minimal to set up a donor advised fund with the Foundation. While there are costs associated with establishing a supporting organization, they are lower than the substantial legal and accounting fees associated with a private foundation.

Talk to us about converting your client's private foundation.