Ease of Creation | A simple Deed of Gift is all that is required. | Involves creation of a new organization, application for exempt status and expenditure of time and money. Lengthy IRS approval process. |
Tax Benefits^ | Taxpayer can deduct up to 50% of adjusted gross income for cash gifts. Full value of gifts of appreciated property is deductible up to 30% of adjusted gross income. | Cash gift deduction is limited to 30% of adjusted gross income. Deduction is limited to 20% of adjusted gross income. |
Accounting and Tax Preparation | No separate tax return to file, and no tax to pay. Annual audit and 990 done by Community Foundation. | Detailed reporting required and a 2% federal excise tax (1% in some cases) must be paid on net investment income, including gain on assets gifted to the foundation. Separate account statements required. |
Grant Administration | Staff expertise in identifying potential recipients, reviewing proposals and evaluating performance. | Trustees must perform, contract or hire for these services. |
Investments | No federal investment requirements; no equity concentration restrictions; opportunity to participate in investment pools. | Certain types of investments prohibited, and the foundation may not own more than a 20% equity interest in a business. |
Distributions | No minimum payout required. | Approximately 5% of net investment values must be paid out for charitable purposes annually. Prohibition against grants to support lobbying. Restriction on scholarship and research grants. |
Anonymity | Name of donors need be revealed only to the IRS. | Names and addresses of contributors, grants, investments, fees, and salaries must be made available to the public through the 990-PF*. |
Administration | Community Foundation handles phone, mail, and bookkeeping. | Trustees must perform, contract or hire for these services. |
Size | $25,000 minimum, payable over five years. | Substantial assets required. |
