The two best legal/tax benefits of working with a community foundation include avoiding annual taxes of investment income and having no payout requirements. There are also no upfront costs to establishing a fund with La Crosse Community Foundation, and no ongoing operational costs apart from the nominal annual management fee assessed by the Foundation to administer the funds.
This table displays the individual tax benefit and legal detail distinctions between different kinds of charitable giving vehicles or options. You’ll notice several benefits to establishing a fund or funds with a community foundation vs. starting your own private foundation.
| Private Foundation | LCF Community Impact or Designated Funds | LCF Donor Advised Fund | LCF Supporting Organization | |
|---|---|---|---|---|
| Administration | Detail annual filing with IRS | LCF carries out all record-keeping and accounting | LCF carries out all record-keeping and accounting | LCF carries out all record-keeping and accounting |
| Grantmaking Expertise | For larger foundations, a professional staff | LCF staff assistance to review and monitor proposals | LCF staff assistance to review and monitor proposals | LCF staff assistance to review and monitor proposals |
| Control | Trustees have complete control of distributions and responsibility for asset management | LCF Board of Directors responsible for grantmaking to carry out donor's intent and asset management | Donor advisors recommend grant recipients to LCF Board for approval; Board responsible for managing assets | Own Board of Directors responsible for grantmaking and asset management |
| Cost | Legal and accounting fees, insurance, office space, staff and operational costs | No cost to establish; investment and management fees | No cost to establish; investment and management fees | Cost to establish; investment and management fees |
| Legal Identity | Separate nonprofit entity | (Donor's choice of name) Fund of LCF | (Donor's choice of name) Fund of LCF | Donor's choice of name; separate nonprofit entity affiliated with LCF |
| Tax Status | Private Foundation | Public Charity | Public Charity | Public Charity |
| Taxation of Investment Income | 2% Annually | None | None | None |
| Payout Requirement | Annual grants must equal 5% of corpus | None | None | None |
| Deductibility of Gifts | Deductible up to 30% of adjusted gross income; gifts of appreciated property deductible at fair market value (up to 20% of AGI) | Deductible up to 50% of adjusted gross income; gifts of appreciated property deductible at fair market value (up to 30% of AGI) | Deductible up to 50% of adjusted gross income; gifts of appreciated property deductible at fair market value (up to 30% of AGI) | Deductible up to 50% of adjusted gross income; gifts of appreciated property deductible at fair market value (up to 30% of AGI) |
