CF vs. Family Foundation

When people want to make a difference in their community and create a family legacy, a range of options are available–from creating a private foundation to the public-charity alternatives offered by a community foundation, namely a donor-advised fund or supporting organization. 

While private foundations may allow for greater donor control, the administrative requirements and operating costs can be substantial.

The following chart compares some of the key features of a private foundation with those of a donor-advised or supporting organization of the Community Foundation of North Central Massachusetts.

Discover the Benefits of Working Through Your Community Foundation

  Community Foundation Donor Advised Fund Private Foundation
Donor Involvement Donor recommends grants to qualified nonprofit groups. Grants are approved by community foundation board of directors. Donor appoints board, which controls investments and grantmaking.
Tax Status Public charity. Public charity.
Income Tax Deductions for Gifts of:    
Cash Up to 50% of adjusted gross income. Up to 30% of adjusted gross income.
Appreciated stock Fair market value up to 30% of adjusted gross income. Fair market value up 20% of adjusted gross income.
Real estate and closely held stock Fair market value up to 30% of adjusted gross income. Cost basis up to 20% adjusted gross income.
Grantmaking Support Professional staff is available to help identify and assess grantees, provide input on community needs, and verify nonprofit status of groups. Donors must arrange and support their own grantmaking and monitoring structure.
Start-up Costs    
Initial costs None. Several thousand dollars for legal and accounting expenses and filing fees.
Minimum contribution $10,000 payable over four-years. Typically millions of dollars.
Administrative Requirements    
Ongoing costs Pooled administration; annual fee. Several thousand dollars for legal and accounting expenses and filing fees.
Reporting Community Foundation handles reporting. Annual 990 tax form must be filed.

Comparing Two Approaches of Giving

Items to consider when establishing a fund.

Should I Start my Own Foundation?

A father and daughter.If you have less than $10 million, a community foundation is usually a more efficient and economically effective option. Other perks: Greater tax advantages and less administrative work.

What is an endowment? When you create a charitable fund through your community foundation, you have the opportunity to benefit the community forever with a permanent endowment. Your gift is invested over time. Earnings from your fund are used to make grants addressing community needs. Your gift—and all future earnings from your gift—is a permanent source of community capital, helping do good work today and in the future.

Learn more about the advantages of working through the Foundation [PDF].

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