Making an investment in tomorrow, today...

Fund Vs. Private Foundation       

Selecting the appropriate vehicle for your philanthropic giving is as important as the issue(s) you decide to support.

Have you ever wished you could reduce cost, simplify the paperwork and reporting of your private foundation without sacrificing the effectiveness of your grantmaking? Then establishing a fund in the Long Island Community Foundation may be worth your consideration.

Here are some of the advantages of giving through a fund in a community foundation:

  • Funds are flexible and enable you to select your level of involvement in the grantmaking process
  • Eliminates annual preparation and filing of IRS tax returns and the expense of an independent audit
  • Investment income is not subject to 1% - 2% excise tax
  • Eliminates the annual 5% net worth minimum distribution requirement
  • Affords the option to give anonymously
  • Provides privacy concerning the value of your fund; your charitable distributions are not required to be listed publicly
  • Offers full access to a professional staff that is responsive to your needs
  • Supplies opportunities to engage in learning modules that provide information on specific issues to improve the impact and effectiveness of your charitable giving
  • Presents occasion to collaborate with other donors with a common interest or cause
  • Establishes a permanent legacy that will be well managed into perpetuity
  • Grants the highest available tax deductions for charitable contributions, including the donation of long term appreciated assets at fair market value with no capital gains tax
  • No penalty taxes for excess business holdings or self dealing

Establishing a fund at your local community foundation is easier and can be more cost effective than operating a private foundation. The Long Island Community Foundation, a division of The New York Community Trust, handles the research, evaluation, recordkeeping, accounting, investment management and more. You can rest assured that your fund is invested and managed wisely by The New York Community Trust—one of the oldest and largest community foundations in the country with more than $2 billion in assets.

If you are interested in learning more about the benefits a fund can offer, please feel free to contact David Okorn at (631) 991-8800, ext. 226 or dmokorn@licf.org.

Fund vs. Foundation Benefits Comparison

Private Foundation

X Takes months to establish
X Expensive to establish, plus ongoing accounting and recordkeeping costs
X Typically established with substantial assets
X Annual tax return must be prepared and filed
X Annual audit must be performed
X Requires 5% of assets to be paid out annually
X 1%-2% annual excise tax on net investment income
X Income Tax Deductions

X Up to 30% adjusted gross income for cash
X Fair market value up to 20% of adjusted gross income for publicly traded securities
X Cost basis up to 20% of adjusted gross income for appreciated property
X Costly ongoing administration and management fees
= Foundation name chosen by donor
= Donor can involve family and heirs in grantmaking
X Requires public disclosure
X Penalty taxes may be imposed for excess business holdings or self dealing
X May need to obtain expert advice for effective grantmaking
= Can be established during lifetime or through trust or estate

 

 

 Fund in the LICF

√ Fund can be established in less than a day
√ Inexpensive to establish and administer
√ Appropriate for any size assets
√ No annual tax return
√ No annual audit
√ No annual payout requirements
√ No excise tax
√ Income Tax Deductions

√ Up to 50% of adjusted gross income for cash
√ Fair market value up to 30% of adjusted gross income for publicly traded securities
√ Fair market value up to 30% of adjusted gross income for appreciated property
√ Low annual administration and management fees
= Fund name chosen by donor
= Donor can involve family and heirs in grantmaking
√ Anonymity can be maintained, if desired
√ No penalty taxes
√ Professional staff available for grantmaking consultation
= Can be established during lifetime or through trust or estate

 

Long Island Community Foundation | A Division of The New York Community Trust
900 Walt Whitman Road | (Rt. 110) Suite 205 | Melville, NY 11747
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