When you want to make a difference in your community by creating a private family foundation, consider using the Community Foundation of North Central Massachusetts instead. It will save you time and resources.

As a general rule, smaller private foundations can use a community foundation donor advised fund instead for the reduction of substantial administrative requirements. For larger private foundations, our community foundation has a separate supporting organization that is also a more efficient and economically effective option. Our supporting organization is a 501(c)(3) charity that is classified as a public charity rather than a private foundation. This is because it "supports" a public charity such as a community foundation or other types of public charities.

The following chart compares 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 FundPrivate Foundation
Donor InvolvementDonor recommends grants to qualified nonprofit groups. Grants are approved by community foundation board of directors.Donor appoints board, which controls investments and grantmaking.
Tax StatusPublic charity.Public charity.
Income Tax Deductions for Gifts of:
CashUp to 50% of adjusted gross income.Up to 30% of adjusted gross income.
Appreciated stockFair market value up to 30% of adjusted gross income.Fair market value up 20% of adjusted gross income.
Real estate and closely held stockFair market value up to 30% of adjusted gross income.Cost basis up to 20% adjusted gross income.
Grantmaking SupportProfessional 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 costsNone.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 costsPooled administration; annual fee.Several thousand dollars for legal and accounting expenses and filing fees.
ReportingCommunity Foundation handles reporting.Annual 990 tax form must be filed.

Should I Start my Own Foundation?

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 an option of a permanent endowment fund. 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 to do good work today and in the future.

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