Private Foundations:
How We Compare

A Donor Advised Fund with us offers several benefits compared to private or family foundations and to commercial Donor Advised Funds.

Donor Advised Fund Setup Process

The Philadelphia Foundation

Quick and efficient – accomplished with a simple document, and usually one short meeting.

Administrative fees are 1% of the fund's annual market value. A 1% Gift Fee also applies.

Private or Family Foundations

Requires extensive legal, accounting and operational expenses on an on-going basis.

Costs vary.

Commercial Gift Funds

Process and costs vary.

Minimum Amount To Establish a Donor Advised Fund

The Philadelphia Foundation

$5,000

Private or Family Foundations

Varies, but some experts say $1 to $10 million

Commercial Gift Funds

Varies, but typically starts at $20,000

Ability to Grow For Long-Term Granting

The Philadelphia Foundation

Yes

Private or Family Foundations

Yes

Commercial Gift Funds

Yes

Tax Deduction: Cash Gifts

The Philadelphia Foundation

Up to 50% of Adjusted Gross Income

Private or Family Foundations

Up to 30% of Adjusted Gross Income

Commercial Gift Funds

Up to 50% of Adjusted Gross Income

Tax Deduction: Appreciated Publicly Traded Securities

The Philadelphia Foundation

100% of fair market value up to 30% of Adjusted Gross Income.

Private or Family Foundations

Fair market value up to 20% of Adjusted Gross Income.

Commercial Gift Funds

100% of fair market value up to 30% of Adjusted Gross Income .

Tax Deduction: Appreciated Closely Held Stock

The Philadelphia Foundation

100% of fair market value up to 30% of Adjusted Gross Income.

Private or Family Foundations

Limited to cost basis up to 20% of Adjusted Gross Income.

Commercial Gift Funds

Closely held stock usually not accepted.

Tax Deduction: Real Estate Gifts

The Philadelphia Foundation

100% of fair market value up to 30% of Adjusted Gross Income

Private or Family Foundations

Generally limited to cost basis up to 20% of Adjusted Gross Income.

Commercial Gift Funds

Real estate usually not accepted.

Tax Exempt Status of Fund Contributions

The Philadelphia Foundation

Fully tax exempt.

Private or Family Foundations

Subject to excise taxes.

Commercial Gift Funds

Varies: covered under nonprofit status of corporate entity’s charitable subsidiary.

Required Annual Payout

The Philadelphia Foundation

None – fund can grow until it is convenient for the advisor to make distributions.

Private or Family Foundations

5% of total assets

Commercial Gift Funds

Varies; some require a minimum of 5% of net assets on a five-year rolling basis.

Preparation of Annual Tax Returns

The Philadelphia Foundation

Filed for component funds by The Philadelphia Foundation.

Component fund accounting also is reviewed as part of The Philadelphia Foundation’s annual independent audit.

Private or Family Foundations

Must be filed by the private foundation: includes annual Federal 990-PF and supporting schedules, which indicate staff salaries, investment performance, fees, etc. Trustees must perform, contract or hire staff for these services.

Commercial Gift Funds

Filed by the commercial gift fund.

Investments

The Philadelphia Foundation

  • A diversified portfolio and economies of scale offer greater cost-efficiencies and minimize risks
  • Professional wealth managers and Board-appointed Investment Committee provide experienced oversight.
  • In some cases, donor’s investment advisor can manage assets.

Private or Family Foundations

Private foundation’s Board of Trustees must determine investment strategies and select professional fund advisors, which can be very time-consuming.

Commercial Gift Funds

Donors may choose from among firm’s  investment pools.

Financial and Administrative Expertise

The Philadelphia Foundation

Full-time professional staff provides expertise on:

  • Gift management
  • Finance and accounting
  • Fund administration
  • Building an enduring legacy 

Private or Family Foundations

Must hire staff or Board members to carry out administrative tasks on their own.

Commercial Gift Funds

Varies.

Grant Administration

The Philadelphia Foundation

Full-time professional staff assists with:

  • Grant administration
  • Nonprofit research
  • Program evaluation

This ensures maximum community impact and funding of effective nonprofits.

Private or Family Foundations

Requires extensive time to review proposals, investigate community needs, confirm status of grantees and evaluate previous distributions.

Commercial Gift Funds

Varies. Most do not have professional grantmaking experience and offer minimum due diligence on grant recipients.

Accountability

The Philadelphia Foundation

  • Independent audit each year.
  • Annual public disclosure of grants
  • Board of Managers provides oversight to ensure funds are used in the community’s best interests.
  • Meets the nation’s highest philanthropic standards for operational quality, integrity and accountability, according to the Community Foundations National Standards Board, a national accreditation organization.  

Private or Family Foundations

Laws and regulations governing private foundations may require expensive specialized legal and finance expertise.

Commercial Gift Funds

Varies.

Flexibility

The Philadelphia Foundation

Organizational structure is purposely designed to allow greatest flexibility to respond to and meet emerging community needs.

Private or Family Foundations

Expensive and lengthy legal proceedings may be required to change the purposes of a private foundation.

Commercial Gift Funds

Varies.

Local Ties

The Philadelphia Foundation

  • Administrative fees remain in the community to support employment
  • Majority of grants fund regional organizations

Private or Family Foundations

Varies.

Commercial Gift Funds

Varies.

Privacy Protection

The Philadelphia Foundation

  • Both individual donors or grants can be kept anonymous.
  • If the donor wishes, The Philadelphia Foundation can serve as a buffer between the donor and grantseekers.

Private or Family Foundations

Required tax returns on grants, investment fees and staff salaries are public records and are compiled into published grantseeker directories.

Commercial Gift Funds

Donors may remain anonymous.


Schedule a confidential conversation about our alternatives to private foundations.
Call 215-563-6417 or email us.

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