| Issue |
Donor Advised Fund at TCF |
Supporting Organization |
Private Foundation |
| Creating the Foundation |
Established at TCF by a simple agreement |
Nonprofit corporation or trust created with assistance from TCF |
Nonprofit corporation or trust organized as a private foundation |
| Tax Exempt Status |
Shares the public charity tax exempt status as a “component” of TCF |
Shares the public charity tax exempt status of TCF |
Must apply for private foundation tax exempt status from the IRS |
| Start-up Costs |
No cost to donor |
Minimal costs through collaboration with TCF |
Similar to a corporate start-up requiring substantial legal, accounting, and operational start-up costs |
| Recommended Size |
$25,000 or more ($10,000 minimum) |
$5 million or more |
Generally $2-$5 million to justify start-up costs |
| Charitable Deductions for Cash Gifts |
Tax deduction of up to 60% of adjusted gross income |
Tax deduction of up to 60% of adjusted gross income |
Tax deduction of up to 30% of adjusted gross income |
| Charitable Deductions for Appreciated Property |
Tax deduction available for full fair market value of marketable securities and other property
Tax deduction available up to 30% of adjusted gross income |
Tax deduction available for full fair market value of marketable securities and other property
Tax deduction available up to 30% of adjusted gross in income |
Tax deduction may be taken for fair market value of marketable securities. Generally, tax deduction for other property is limited to the lower of cost or fair market value
Tax deduction available up to 20% of adjusted gross income |
| Donor Control |
Donor makes advisory grant recommendations – final decisions rest with TCF’s Trustees |
Donor holds significant organizational influence and may appoint minority of the board |
Private Foundation’s Trustees or Directors retain complete control over investments and grantmaking, subject to IRS requirements |
| Self-Dealing Rules |
Private foundation self-dealing rules do not apply |
Private foundation self-dealing rules do not apply |
Strict regulations prohibit most transactions between private foundation and its donors (including related persons or organizations) |
| Payout Requirements |
Do not apply |
Do not apply |
Must pay out for charitable purposes at least 5% of its asset value annually, regardless of its income |
| Administration |
Services provided by TCF |
Affiliation with TCF provides access to existing services |
Must establish and/or obtain these services |
| Operational and Grantmaking Guidance |
TCF staff available to consult with client and research charities |
TCF staff available to consult with client and research charities |
Little to no assistance available |
| Annual Costs |
Minimal |
Shared by TCF and therefore kept at a minimum |
Can be costly but varies according to size and complexity of the foundation |
| Annual Taxes |
Generally no tax on investment income |
Generally no tax on investment income |
Subject to an excise tax of up to 2% of net investment gain, including net capital gains and income |
| Annual Tax Filing & Return (990 Report) |
Not required (reported as part of TCF’s annual reporting) |
Can be prepared and filed by TCF, or TCF can oversee preparation |
Must be filed by the private foundation with required reporting schedules |
| Investments |
Fund assets are professionally invested through TCF’s various options |
May avail itself of professional investment services offered by TCF |
Must research, secure, and carefully monitor its own investment vehicles |
| Fiduciary Responsibility |
TCF fulfills the associated fiduciary responsibility |
Administrative guidelines provided by TCF |
The private foundation board has fiduciary responsibility |
| Liability and Risk Insurance |
Provided by TCF up to $10 million |
Provided by TCF up to $10 million |
Must be purchased by the private foundation |