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PRIVATE FOUNDATION
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COMMUNITY FOUNDATION
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| Ease of Creation | Involves creation of a new organization, application for tax-exempt status, and expenditure of time and money. | Execution of simple Fund Agreement is all that is required. |
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| Tax Benefits | Cash gift deduction is limited to 30% of adjusted gross income. Only the cost basis of certain types of appreciated property is deductible, and deduction is limited to 20% of adjusted gross income. | Taxpayer can deduct up to 60% of adjusted gross income for cash gifts. Full market value of gifts of appreciated property is deductible up to 30% of adjusted gross income. (Consult your tax advisor concerning alternative minimum tax implications.) |
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| Accounting and Tax Preparation | Detailed reporting required. | No separate tax return to file, and assets are audited as part of the Foundation’s annual audit. |
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| Excise Taxes | A 1-2% federal excise tax must be paid on net investment income. | No excise tax to pay. |
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| Investments | Certain types of investments prohibited, and the Foundation may not own more than 20% equity interest in a business. | No federal investment requirements, and no equity concentration restrictions other than those established through prudent guidelines. (Information on the Foundation’s investment policies, managers, consultants, fees and performance is available upon request.) |
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| Distributions | Approximately 5% of net asset value must be paid out for charitable purposes annually. | Currently, there is no minimum pay-out requirement. |
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| Anonymity | Names and addresses of contributors must be made available to the public. | Donors’ names are revealed only to the IRS. |
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| Perpetuity | Over time, oversight will change and your wishes may be forgotten. | Carrying out the donor’s charitable intent is an important hallmark of community foundations. |
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| Staffing | Any staffing must occur within federally mandated self-dealing rules. | Professional staff can screen giving opportunities and stay abreast of community needs with maximum convenience and low cost. |