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Donor Advised Funds Trump Smaller Foundations for Efficacy

December 02, 2004

“A new study by the Donors Forum of Chicago suggests that foundations with assets of $5 million to $9.9 million make the least efficient funding organizations. According to the survey, administrative costs at Chicago foundations in that asset range amounted to 22.2% of their grants in 2002, well above the 13.5% average of the city's foundations.”

This conclusion appeared in a November 29, 2004 article in Crain’s Chicago Business. Since smaller foundations have many of the same overhead costs of larger ones, although they have fewer assets and distribute fewer grants, they end up allocating a larger percentage of their assets to administrative expenses.

Thinking about starting a private foundation? A donor advised fund in the Long Island Community Foundation provides better tax benefits, fewer expenses, and more flexibility than a private foundation. Just another reason to consider opening a fund in the Long Island Community Foundation.