Benefits of Community Foundations
vs. Private Foundations
 
Community Foundations
Private/Family Foundations
Cash Gifts Tax deduction of up to 50% of Adjusted Gross Income (AGI). Tax deduction of up to 30% of Adjusted Gross Income (AGI).
Stock Publicly Traded
& Closely Held
 Tax deduction of 100% of fair market value up to 30% of AGI. Tax deduction limited to cost basis up to 20% of AGI.
Real Estate Tax deduction of 100% of fair market value up to 30% of AGI. Tax deduction limited to cost basis up to 20% of AGI.
Tax Exempt Status A Community Foundation is a 501(c)(3) public charity and is fully tax exempt. Private foundations are subject to excise taxes and 5% payout requirements.
Annual Tax Returns Individual funds are not required to file. A Community Foundation prepares and files all tax reports to the IRS. Must file annual Federal 990-PF and supporting schedules which indicate staff salaries, investment performance, fees, etc.
Establishing A Fund A Community Foundation fund can be established in one day with a simple document. Administrative fees are held to 1% of the fund's annual market value and a share of the money manager's fee. Establishing a new foundation requires extensive legal, accounting and operational expenses on an on-going basis.
Investments A diversified portfolio and economies of scale offer greater cost-efficiencies and minimize risks. A Community Foundation and its affiliate funds work with professional money managers. A Community Foundation's Finance Committee provides experienced oversight. Selection of investment strategies and professional fund advisors can become a very time consuming responsibility for a private foundation's Board of Trustees.
Expertise A Community Foundation provides expertise to donors on a wide range of gift management, finance and fund administration issues. Must hire staff or Board members carry out administrative tasks on their own.
Grantmaking Full-time professional staff are available to assist donors with grant administration, research and program evaluation to ensure maximum community impact. Requires extensive time to review proposals, investigate community needs, confirm status of grantees and evaluate previous distributions.
Accountability A Community Foundation conducts an independent audit each year. Publication of an annual report, public disclosure of grants and thoughtful selection of Board members ensures funds are used in the communities' best interests. Laws and regulations governing private foundations differ greatly from those of public charities and may require expensive specialized legal and finance expertise.
Flexibility As a public charity, a Community Foundation's organizational structure is purposely designed to allow greater flexibility to respond to and meet emerging needs in the community. Expensive and lengthy legal proceedings may be required to change the purposes of a private foundation.
Privacy Individual donors or grants can be kept private. If the donor wishes, the community foundation can serve as a buffer between the donor and grantseekers. Required to file tax returns on grants, investment fees, staff salaries, etc. These are public records and are compiled into grantseeker directories..