Donor-advised funds and private foundations

Compare private foundations and donor-advised funds at a glance.

Costs

Costs

Costs	Private Foundation	Donor-Advised Fund (DAF)
Asset minimums	Generally recommended for those with millions in charitable assets	$0
Startup costs	May be substantial—legal documentation, tax filings, etc.	None
Ongoing annual expenses	Can be substantial	Comparatively low
Annual distribution requirements	5% distribution required annually	At donor’s discretion

Benefits

Benefits

Benefits	Private Foundation	Donor-Advised Fund (DAF)
Administration	Requires recordkeeping, asset management, review of grant solicitations, tax filings	All managed by donor-advised fund
Privacy	Public disclosure of contributions and grants in annual tax filings	Individual account activity can be private
Professional asset management options	Yes	Yes

Tax considerations

Tax considerations

Tax considerations	Private Foundation	Donor-Advised Fund (DAF)
Tax deduction limits for cash contributions	30% of adjusted gross income (AGI)	60% of AGI
Tax deduction limits for contributions of long-term held publicly traded securities	20% of AGI, deductible at fair market value (FMV)	30% of AGI, deductible at FMV
Tax deduction limits for contributions of long-term held real estate and private business interests	20% of AGI, deductible at the lesser of FMV or cost basis	30% of AGI, deductible at FMV
Reporting	Required annual state and federal tax returns	None at the account level
Taxes	Excise tax of 1.39% on net investment income	None