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Should you convert your private foundation to a donor advised fund at Berkshire Taconic?
The chart below gives you an overview of the differences and potential advantages of having a donor advised fund at Berkshire Taconic versus a private foundation. For more information, we invite you to contact Jennifer Dowley, president, at jd@berkshiretaconic.org or 413.528.8039.
Donor Advised Funds |
Private Foundations |
|
| Creation of Fund | Established at Berkshire Taconic at no cost to donor | Not-for-profit corporation or trust independently organized as a private foundation |
| Tax-Exempt Status | Shares public charity status of Berkshire Taconic | Must apply for private foundation tax exempt status from the IRS |
| Minimum Size | $10,000 | $5-8 million |
| Charitable Deductions of Cash Gifts | Tax deduction of up to 50% of adjusted gross income | Tax deduction up to 30% of adjusted gross income |
| Charitable Deductions of Appreciated Property | Tax deduction available for full fair market value, up to 30% of adjusted gross income | Tax deduction available for full fair market value, up to 20% of adjusted gross income |
| Donor Control | Donor recommends grants to Berkshire Taconic, whose Board holds final discretion | Donor retains complete control over investments and grant making, subject to IRS requirements |
| Annual Payout Requirements | None | Grants must equal 5% of asset value annually |
| Grantmaking Program Management | Provided by Berkshire Taconic | Must establish and/or obtain these services |
| Annual Costs | 1.5 % per year charged quarterly based on the average daily balance of the fund or 3% of grants given out in a quarter, whichever is higher | Include legal and accountant fees, insurance and possibly office space, staff and miscellaneous expenses |
| Annual Taxes | None | Subject to excise tax of up to 2% of net investment gain including net capital gains |
| Annual Tax Filings and Returns | Not required | Must be filed by the private foundation with required supporting schedules |
| Investments | Fund assets are professionally invested through Berkshire Taconic | Must research and secure its own investment vehicles |