Greater Toledo Community Foundation vs. Private Foundation

Your client may enjoy overseeing a private family foundation, but private foundations have a number of financial and administrative disadvantages when compared to public charities. These drawbacks include greater investment restrictions, mandatory distribution and reporting responsibilities, fewer tax benefits and the sometimes-heavy burden of personally administering a private foundation.

Comparison of Greater Toledo Community Foundation versus a Private Foundation

CompareGreater Toledo Community FoundationPrivate Foundation
Tax treatment of cash gifts Deductible up to 50 percent of Adjusted Gross Income (AGI) Deductible up to 30 percent of AGI
Tax treatment of gifts of appreciated publicly-traded
securities
Full market value deduction up to 30 percent of AGI Full market value deduction up to 20 percent of AGI
Tax treatment of closely-held stock or real estate Full market value deduction up to 30 percent of AGI Deduction limited to donor’s cost basis, up to 20 percent of AGI
Excess business
holdings
No restrictionCan hold no more than 20 percent of a business
Excise taxes No excise taxes Excise tax of 1-2 percent of net investment income annually
Required payout No required payout. Can accumulate income toward a sizable project or grant. Has flexibility to hold low-yield property Required to expend 5 percent of asset value annually, whether or not the Foundation’s investments earn that amount
Incorporation and tax
exemption
Automatically covered by Greater Toledo Community Foundation (GTCF) Must create corporation and apply for tax exemption
Privacy Individual donors or grants can be kept private. If donor wishes, GTCF can serve as a buffer between donor and grant-seekers, allowing donors to remain anonymous. Foundation required to file detailed tax returns on grants, investment fees, trustee fees, staff salaries, etc. These are public records and are compiled into directories for grant-seekers.
Liability and insuranceAutomatically covered by GTCF’s liability and office insurance policies Any directors and officer’s liability insurance, employee bonding, and office
insurance must be separately purchased
Investment, accounting, audit and tax returns GTCF handles all investments and accounting.  GTCF files annual tax return and provides annual independent audit.
Trustees must perform, contract or hire staff for these services.
General administration GTCF handles all financial and administrative management Trustees must perform, contract or hire staff for these services.
Grant administration including new
Patriot Act requirements
If donor wishes, GTCF can assist in establishing grant making guidelines and philanthropic goals, identifying potential recipients, investigating applicants, making grant payments and monitoring performance.
Trustees must perform, contract or hire staff for these services.
Costs There are no fees to establish a fund at GTCF; however, there is an annual administrative fee ranging from .40 to 1.45% based on fund type plus a bank/investment fee of .25%.   Recent figures show that private foundations of under $5 million had average costs of 6.27% of assets and the average administrative cost of private foundations was 1.4% of assets. 

Click here for complete discussion of creating a fund with Greater Toledo Community Foundation.

What type of fund can your client create? 
What type of gift options can your client use to create a fund with Greater Toledo Community Foundation?
Click here to review Gift Options.

Does your client already have a fund and would like to make a gift?  Go to Give Today with this click.

Click here to review Fund Types.