Donor Advised Funds v. Family Foundation

October 25, 2010 at 10:04 am Leave a comment

Do you know the difference? Do your donors? Some simple info you can use:

Family Foundation

  • Registered with the IRS as a nonprofit corporation or trust
  • Governed by Board of Directors (can include a donor and/or family members)
  • Assets are held at a bank, trust company or investment firm and invested at the direction of the Board and subject to IRS restrictions
  • Must grant a minimum of five percent of its assets annually
  • Board has discretion where money is donated
  • Good for branding philanthropy, creating multi-generational involvement or philanthropic assets in excess of $10 million

Donor Advised Fund (DAF)

  • Created when a donor makes a contribution to a public host charity (community fund) that deposits money in a separate investment account
  • Donors may also establish DAF through their financial investment firm, i.e. Fidelity etc.
  • While money is held by others, donor makes recommendations where gifts are to be made
  • Donor receives tax deduction when DAF is established and whenever an additional contribution is made to the fund
  • Currently there is no annual IRS payout requirement

Donors should always check with their financial and legal advisors when deciding what instrument to use. Nonprofit professionals should work their legal counsel and financial advisors.

Entry filed under: Resources You Can Use!. Tags: , , , , .

Robbie Q. Telfer – Storytelling for Nonprofits Net Worth = Size of a Major Gift?

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