Private Donor vs. Donor Advised
| Comparisons | Donor-Advised Fund | Private Foundation |
| Creating the Foundation | Established at the Austin Community Foundation (ACF) | Non-profit corporation or trust organized as a private foundation |
| Tax-exempt Status | Shares the public charity tax- exempt status of ACF | Must apply for tax-exempt status from the IRS |
| Start-Up Cost | No cost to donor | Similar to corporate start-up requiring substantial legal, accounting and operational start-up costs |
| Recommended Size | $25,000 or more | Substantial assets required |
| Charitable Deductions-cash gifts and appreciated stock | Tax deduction of up to 50% of adjusted income. Stock is deductible at its fair market value as of the date it is received by ACF | Tax deduction is limited to 30% of adjusted gross income |
| Charitable Deductions-appreciated real property | Tax deduction available for full market value. Tax deduction available up to 30% of adjusted gross income | Tax deduction may be taken for fair market value of marketable securities. Tax deduction for other property is limited to the lower of cost or fair market value and is limited to 20% of adjusted income. |
| Donor Control | Donor makes grant recommendations--to protect tax deductibility, final oversight rests with ACF | Donor retains complete control over investments and grant-making, subject to IRS requirements |
| Public Disclosure | No required public disclosure; anonymity available | Annual tax returns and filings must be open for public inspection |
| Self-Dealing Rules | Private foundation self-dealing rules do not apply | Strict regulations prohibit most transactions between a private foundation and its donors (including related persons or corporations) |
| Pay-Out Requirements | Do not apply | Must pay out for charitable purposes at least 5% of its asset value regardless of its annual income |
| Administrative Concerns (personnel, facility, gift and grant management) | Services provided by ACF | Must establish and/or obtain these services |
| Annual costs | Depends on type of fund established: Endowment fund pays 1% of the fair market value of the fund each year; Pass-through Funds pay 1.5% of deposits, plus $100 annually. | Administration can be costly |
| Annual Taxes | None | Generally exempt from income tax is but subject to excise tax of up to 2% of net investment gain including net capital gains |
| Annual Tax Filings and Returns | Not required (included as part of ACF's annual reporting) | Generally exempt from income tax is but subject to excise tax of up to 2% of net investment gain including net capital gains |
| Investments | Fund assets are professionally invested through ACF as part of more than $130 million in funds | Must be filed by the private foundation with required supporting schedules |
| Fiduciary Responsibility | ACF fulfills the associated fiduciary responsibilities | The private foundation board has full fiduciary responsibility |
| Liability & Risk Insurance | Provided by ACF | Must be purchased by the private foundation |
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