Mission History Leadership Employment Opportunities Privacy Policy
PJ Library Create a Jewish Legacy Sprout Women's Philanthropy Israel & Overseas
Granting Process
Community Campaign Foundation Giving Legacy Giving Signature Initiatives
Community Calendar Financial Assistance Professional Development Publications Photos j. Resource Guide For Advisors Foundation Donor Center
Staff Roster Subscribe

Resources

For Advisors

Comparisons with Private Foundations

A supporting family foundation functions very much like a private family foundation, but, because it is aligned with The Jewish Community Foundation, donors get additional tax considerations that would not be available with a private foundation. And Donor-Advised Philanthropic Funds are an even easier tax-advantaged way of enabling your client's enlightened philanthropy.

Grantmaking through a Donor Advised Philanthropic Fund or a Supporting Family Foundation instead of a private foundation can make your client a more effective philanthropist by:

Here are some additional comparisons between supporting foundations, donor-advised philanthropic funds and private foundations to consider when choosing a vehicle for charitable grantmaking.

Feature Supporting Family Foundation Donor Advised Philanthropic Fund Private Foundation
1. Typical Amount To Open $1,000,000 (Suggested) $5,000 $250,000 to $1,000,000
2. Annual Income Tax Deduction for Donors      
(a) For Cash Deductible to the extent of 50% of donor's "contribution base" (in general, adjusted gross income). Deductible to the extent of 50% of donor's "contribution base" (in general, adjusted gross income). Deductible to the extent of 30% of donor's "contribution base" (in general, adjusted gross income).
(b) For Ordinary Income Property, Short-Term Capital Gain Property and Other Special Categories Adjusted basis deductible to the extent of 30% of donor's "contribution base." Adjusted basis deductible to the extent of 30% of donor's "contribution base." Adjusted basis deductible to the extent of 20% of donor's "contribution base."
(c) For Appreciated Securities and Other Long-Term Capital Gain Property Fair market value deductible to the extent of 30% of donor's "contribution base." Fair market value deductible to the extent of 30% of donor's "contribution base." Fair market value, less 100% of gain, deductible to the extent of 20% of donor's "contribution base"; however, no reduction of gain for gifts of shares of stock for which quotations are readily available (referred to as "qualified appreciated stock"), but there is a limit on number of such shares that can be donated.
(d) Carryover of Deductions in Excess of Percentage Limitations 5 years 5 years 5 years
3. Tax on Investment Income None, but income from interests in partnerships operating active businesses and from direct business operations, if unrelated to exempt purposes, and debt- financed property is subject to unrelated business income tax. None, but income from interests in partnerships operating active businesses and from direct business operations, if unrelated to exempt purposes, and debt-financed property is subject to unrelated business income tax (for which The Foundation is responsible if the Donor-Advised Philanthropic Fund has insufficient cash to pay tax due). 2% excise tax on net investment income; tax can be reduced to 1% if distributions are increased to specified levels over prior years' charitable distributions; tax on unrelated business income from partnerships or debt financed property.
4. Penalty Taxes      
(a) On Organization Can be imposed only for disqualifying lobbying expenditures, political expenditures and failure to properly inform donors of deductible portion of "quid pro quo" contributions. Can be imposed on the Foundation (not individual donor-advised philanthropic fund) only for disqualifying lobbying expenditures, political expenditures and failure to properly inform donors of deductible portion of "quid pro quo" contributions. Can be imposed on a private foundation for: (i) failure to make minimum annual distributions; (ii) "excess business holdings"; (iii) "jeopardizing investments"; and (iv) "taxable expenditures." Additional penalty taxes can be imposed (up to all of the foundation's assets) for continuing violations. Penalty taxes can be imposed on failure to properly inform donors about deductible portion of "quid pro quo" contributions.
(b) On Management Can be imposed only on managers who knowingly, willfully and without reasonable cause agree to the making of "excess benefit" transactions, disqualifying lobbying expenditures or political expenditures. Can be imposed only on managers who knowingly, willfully and without reasonable cause agree to the making of "excess benefit" transactions, disqualifying lobbying expenditures or political expenditures. Can be imposed on foundation managers (trustees and officers) who knowingly, willfully and without reasonable cause participate in an act of "self-dealing" or approve the making of a "jeopardy investment" or a "taxable expenditure."
(c) On "Disqualified Persons" Can be imposed on trustees, officers, donor, members of donor's family and other related parties who engage in "excess benefit" transactions with the supporting foundation. Can be imposed on the Foundation's officers, donors of Donor-Advised Fund (if donor deemed to have substantial influence over supporting charity), members of donors' family and other related parties who engage in "excess benefit" transactions with the Foundation. Can be imposed on "disqualified persons" who participate in an act of "self-dealing."
5. Operating Restrictions      
(a) Donor's Role in Decisions Donor cannot control Board. Donor recommends grants; the Foundation approves. Grants that are not inconsistent with the general purposes of the Foundation are considered. Donor can control Board.
(b) Limits on "Self-Dealing" (Other than General IRC § 501(c)(3) and State Law Limitations) Limit on "excess benefit" transactions between the supporting foundation and trustees, officers, donor, members of donor's family and other related parties Limit on "excess benefit" transactions between the Foundation and donor, members of donor's family and other related parties, if donor deemed to have "substantial influence" over the Foundation. Because of potential penalty taxes, there can be no business transactions between a private foundation and its "disqualified persons"--trustees, officers, donors, who are "substantial contributors," members of their families and other related entities.
(c) Payout Requirements None. Income can be accumulated for a reasonable period for future charitable projects. The Foundation may choose to allow accumulation of income for donor-advised funds individually or as a whole. An amount equal to 5% of a private foundation's investment assets must be distributed annually to avoid penalty taxes. Accumulation for specific projects, with IRS approval, permitted under certain circumstances.
(d) Limits on "Business Holdings" No limit on amount or types of interests in business entities that can be held, aside from limits under State law rules governing investments by a charitable entity. Same as Supporting Foundation, except the Foundation may impose limits. Because of potential penalty taxes, divestiture required if the combined holdings of a private foundation and its "disqualified persons" are more than 20% of the voting stock of a corporation or 20% of the profits interest of a partnership; amounts held by "disqualified persons" reduce permitted holdings of the foundation; no holdings in unincorporated business permitted.
(e) Limits on Investments (Other than General IRC § 501(c)(3) Limitations and State Law Limitations) No limits. Same as Supporting Foundation, except the Foundation may impose limits. Because of potential penalty taxes, jeopardizing investments must be avoided, i.e., federal standard applied, requiring exercise of ordinary business care and prudence in making investments.
(f) Limits on Grants and Activities Grants and activities must be in furtherance of exempt purposes; non-charitable activities permitted if "insubstantial." Grants and activities must be in furtherance of exempt purposes of the Foundation. Grants and activities must be in furtherance of exempt purposes. Because of potential penalty taxes, improper expenditures ("taxable expenditures") must be avoided; these include grants to individuals or to other private foundations or non-charitable entities, unless special procedures are followed, and non-charitable expenditures, including unreasonable administrative expenses.
6. Reports to IRS Annual report on Form 990 (and Form 1023, exemption application) available for public inspection; no notice of availability required to be published; copies required to be furnished on request; however, donors do not have to be disclosed. Anonymous giving is possible. Same as Supporting Foundation; but all donations to, grants from, and investments of Donor-Advised Fund grouped with those of the Foundation. Annual report on Form 990-PF; more detailed reporting and allocation of expenditures required; Form 990-PF required to be filed with State Attorney General; donors not protected against public disclosure (i.e., anonymous giving not possible)
7. Succession at Death Voting members (or Board, if no voting members) name successors. The Jewish Community Foundation allows one successor generation. Voting members (or Board if no voting members) name successors.

Adapted from "Comparison of Supporting Foundations, Donor-Advised Funds and Private Foundations", Paul Feinberg 2003.