Donors
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 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. |
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].
For More Information
Erin Thomason
Director of Philanthropy 978-345-8383 Ext. 105