Tax Advantages of a Community Foundation

Many people create a Fund within the Community Foundation instead of creating a private or family foundation. There are numerous benefits:

  • You may take the maximum tax deduction allowed by law at the time the fund is established, or carry the deduction forward over the next five years if necessary.
  • You gain a higher deduction for cash: up to 50 percent of your adjusted gross income (AGI) compared to 30 percent for a private foundation.
  • You gain a higher deduction for appreciated securities: up to 30 percent of AGI compared to 20 percent for a private foundation.
  • You gain a fair market value deduction for other appreciated property (e.g. real estate) compared to only the cost basis for a private foundation.
  • You pay no start–up costs.
  • Annual costs are minimal. Our Board of Directors is committed to keeping costs as low as possible.
  • There is no minimum payout, compared to the 5 percent distribution requirement for a private or family foundation.
  • You pay no excise tax compared to the 2 percent excise tax for a private or family foundation.
  • You avoid the expense of costly tax returns and other IRS filing requirements that apply to private and family foundations.
  • You avoid the complicated self-dealing and conflict-of-interest regulations that are imposed on private and family foundations.

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