Comparing Charitable Options
Your client has a plethora of options when it comes to charitable giving. A personal foundation, solicitations from organizations, local and nationwide requests for support. With a myriad of options, the Community Foundation is here to support you as you assist your client. Our goal is to make charitable giving simple and powerful.
Donor-advised funds are quickly becoming the most popular way to invest social capital. These funds are a great option for individuals and families who want to be involved in philanthropy but who do not want the cost, administrative and organizational burden of a private foundation.
Donor-advised funds provide more-generous tax breaks than family foundations and none of the legal, accounting and administrative hassles. For example, your client can deduct the value of cash gifts up to half of your adjusted gross income, compared with a deduction of up to 30% for cash gifts to charities from a private foundation. Gifts of stock and property also receive more favorable tax treatment: you can deduct the value of such gifts to DAFs up to 30% AGI, compared with up to 20% with a private foundation. Donor-advised fund also avoid an excise tax on net investment income levied annually on foundations.
Establishing a fund is easy
Establishing a Fund can be accomplished in less time than it takes to open a bank account. The Foundation takes care of all administrative and grantmaking activities, eliminating the need to set up a separate institution, hire legal and accounting expertise, formulate policies, file forms and monitor the status of grant recipients. We help your client accomplish their charitable goals while saving time and money.
Funds at the Community Foundation of Utah can be established with as little as $5,000. Funds can be named as the client desires, allowing for as much or little recognition as you and your family desire. The 1% administrative fee charged by the foundation stays in Utah to support our state’s nonprofit organizations.
The Community Foundation of Utah offers a variety of services and support to make giving even more satisfying.
- Our staff works directly with donors to make sure they always have the support and answers they need. Donors can advise gifts from their fund, review their investments and balances and review their giving history all on line. If they need help finding a charity that meets their objectives, the foundation does the research. Their expertise can lead your client to effective, innovative organizations and strategies they wish to support.
- The foundation is leading research into the needs of Utah's nonprofits, and can help identify where donations will do the most good in these challenging times.
- We conduct due diligence on all grantees and take care of all the necessary paperwork.
- The foundation places all funds into one investment pool, leveraging the fund’s investment power with others. Our Investment Committee is a volunteer group of some of the Utah’s most respected and experienced fund investors, dedicated to growing the assets of our community.
Giving is easy and straightforward with no surprises in the fine print. You can learn more about The Community Foundation of Utah at their web site www.utahcf.org, or by calling Fraser Nelson at (801) 559-3005.
Donors thinking of creating a private foundation are encouraged to consider the alternative of establishing a named fund within the Community Foundation of Utah. The Foundation is encumbered with far fewer regulations and tax liabilities than are private foundations. The rationale for this favored treatment is that the Foundation is controlled by representatives of the public it serves.
Legal Liabilities and Tax Consequences
Unlike a private foundation, the Community Foundation is classified as a public charity. Its 501(c)(3) status has the following consequences:
- Its funds are exempt from federal excise tax on income. Funds are not subject to the 5% payout requirement and other restrictions and penalties that apply to private foundations.
- Gifts to the Foundation are deductible to a greater extent than gifts to a private foundation.
- Trustee and officer liability insurance is provided.
There is no set-up fee to establish a fund within the Community Foundation. It can be done simply and efficiently while still meeting the full range of a donor's charitable goals.
A private foundation must make its tax return available to the public, but the Community Foundation of Utah, while publicly accountable, need not disclose financial information on individual funds. If desired, a donor's request for anonymity is honored.
Donors who wish to benefit from the tax-favored status and cost-saving services of the Community Foundation but also wish to participate in the grantmaking process can establish a Donor Advised Fund. The donor (and their heirs, if desired) makes distribution recommendations to the Board of Trustees who ultimately approve all qualifying grants. If preferred, donors may elect a Donor Designated Fund, naming specific recipient organization(s) to receive grants in perpetuity.
Stable and Cost Effective Management
Management is provided in perpetuity. This includes not only investment services, preparation of tax returns, reports, and audits, but also dealing with the public, responding to proposals, making and monitoring grants, and disbursing funds. The cost of administering a fund in the Community Foundation is just a fraction of the cost of managing a private foundation. The charge for the Foundation's services ranges between 1% and 2% annually depending on the type of fund established. In addition, fees charged by investment managers to the Foundation are prorated based on the size of each fund.
Economies of scale in terms of management enable the Community Foundation to establish a named fund with a modest sum. The Foundation currently requires a minimum of $5,000 to establish a Designated or Donor-Advised Fund.
Finally, if in the future unforeseen changes have made it difficult or impossible to honor the donor's designation, the Community Foundation's Board of Trustees has variance power to modify the original guidelines. For example, if an organization designated by the donor to receive grants goes out of existence, the Board of the Community Foundation of Utah will make grant disbursements to eligible charities that most nearly meet the donor's original intent.
The Community Foundation of Utah gives public recognition to the fund and to the programs it supports as the donor desires.Here are some helpful materials.