As you seek to steward your resources wisely in today’s complex charitable landscape, it’s helpful to understand two of the most common giving vehicles: a donor-advised fund (Giving Fund at NCF) and a private foundation. Let’s explore how they compare and can even complement one another.
For some families, a private foundation provides the structure and control they value. Others carefully consider the ongoing administrative commitments, such as tax filings and oversight, and opt to use a Giving Fund as a simpler, more flexible alternative, or as a strategic complement.
A simple structure for charitable giving
The ability to give strategically, invest for future impact, and share in giving decisions with your family are all possible with both a private foundation and a Giving Fund.
But with a Giving Fund, we handle the administrative work for you, providing you with a single receipt at the end of the year for tax purposes. The simplicity of this structure keeps the focus on your generosity, not the paperwork required for it.
Without the start-up costs or legal complexities of a foundation, you can open a Giving Fund in minutes and begin recommending grants right away. And if you want to take your time discerning where to give, your fund balance can grow tax free while you prayerfully consider where God is leading you to give.
A Giving Fund also has higher tax-deduction limits on assets like stock or real estate than a private foundation. You have the option to make grants anonymously, and there are no insurance requirements, since NCF holds the assets while you focus on giving.
You can designate how the balance in your Giving Fund is used after your lifetime by setting up a succession plan, ensuring your legacy of generosity continues without requiring a board of directors to make those decisions.
And with a Giving Fund, you gain a local team to walk with you through stewardship decisions, access to our highly experienced team of asset giving professionals, and connection to a broader generosity ecosystem for all your giving needs.
Pairing a private foundation with a Giving Fund
Many families today are discovering that private foundations and Giving Funds can work in partnership to advance their giving strategy. Rather than seeing them as mutually exclusive, hundreds of families use their Giving Fund and private foundation together, leveraging each vehicle’s strengths to create a more holistic and flexible charitable plan.
Using a Giving Fund alongside your private foundation allows you to keep the foundation’s vision alive while increasing your flexibility and impact.
For example, if you wish to maintain your private foundation, you could open a Giving Fund to make anonymous grants, navigate asset giving, or reduce the administrative burden of your foundation.
And because a Giving Fund allows for higher deduction limits – up to 60 percent of adjusted gross income for cash and 30 percent for appreciated assets (compared to 30 percent cash and 20 percent appreciated assets for foundations) – it can help you maximize the tax efficiency of larger gifts better than your private foundation.
Transitioning from a foundation to a Giving Fund
If you have a private foundation, you may reach a point where the burden of running it outweighs the benefits. In preparation for the Great Wealth Transfer, you may want to simplify giving for a surviving spouse or the next generation.
That’s when transitioning to a Giving Fund can offer a way forward that honors both your history and future impact. It’s a straightforward process, and we help you navigate every step.
Finding a structure that fits your giving style
To help you decide the best way to manage your giving, here are some key questions to consider:
- How important is flexibility in terms of when and how much I give?
- Do I need help navigating gifts of appreciated assets?
- Do I want to make charitable gifts anonymously?
- Am I looking for ways to simplify tax reporting?
- Do I want my giving to continue beyond my lifetime?
- How much time and energy do I want to spend on administration versus actual giving?
- Would I benefit from connection, collaboration, and encouragement along my giving journey?
Whether you decide to use a private foundation, a Giving Fund, or a combination of both, we can help you create a structure that ensures your generosity aligns with your unique needs and values – today and for generations to come.
Compare the benefits of a Giving Fund and a private foundation.
