Comparing a Private Foundation with Donor Advised Funds

Things to Consider

Fund with the Santa Fe Community

Create a Private or Corporate


Established 1981

Must establish

Tax Exempt

501(c)(3) Status

Must establish with IRS (6-8

Funds Required $25,000 minimum plus $250 set-up fee Experts recommend $10
million minimum
Selection of Grantees Donor, family or his/her
advisory committee
recommends grantees
Donor specifies grantees
Tax Deductibility of Gifts

a) Up to 30% of donor's
Adjusted Gross Income (50%
with cash donation)
b) Excess may be carried over
for five years

Limited to 20% of donor's adjusted gross income
(30% with cash donation)
Federal Approvals, Restrictions,
and Special Taxes
a) Approved by IRS
b) No payout requirement
c) No federal excise tax
a) Must receive IRS approval
b) IRS requires 5% of assets to
be paid out annually
c) Fund is charged 2% federal
excise tax on income unless
strict requirements are met
d) Greater incidence of IRS
field audit
Legal Documents for Creation
of Foundation, Designation of
funds and Grant Awards
In place Must create
Office In place May need to obtain
Staffing In place May need to obtain
Accounting In place Must obtain
Tax Return (state and federal) Foundation reports Must prepare
Public Report Report to public made
annually if desired by donor
Must prepare reports for the
general public
Knowledge of Potential
Provided by Community Foundation Must develop
Grant Evaluation Process to
Ensure Donor's Intent
Community Foundation
develops, if desired by donor
Must develop
Grants Not limited to 5% Grants must be at least 5% in order to
avoid 2% tax rate
Public Recognition for Donor  Fund may be named or
anonymous - SFCF publicizes
grants made from funds,
if desired
 Must provide or rely on
grantee organization
Director/Officer Liability
In place Must obtain
Investment of Assets

Finance Committee oversees
investment policies. Donor
may recommend an
investment manager
for invested funds over $1 million.

 Must establish policies and
select investments
Organization Overhead 1.5% fee on first $2 million;
1% from $2 - $5 million;
.5% over $5 million
Substantial costs; plus 2%
federal excise tax on income