Have you ever wondered whether a private foundation or a donor-advised fund (DAF) is the right fit for your family’s giving? Both offer powerful ways to make an impact, but each comes with its own considerations. Learning more about the differences between DAFs and private foundations can help you choose which structure best supports your calling to give generously.
For some families, a private foundation can be a strategic way to give. For others, the ongoing administration responsibilities – board meetings, tax filings, and recordkeeping – can make it harder to focus on the joy and purpose behind their generosity.
That’s why an increasing number of generous families are turning to donor-advised funds (DAFs, or Giving Funds at NCF) as an alternative or in addition to their private foundation, one that aligns with their priorities of simplicity and flexibility, so they can focus their energy on the causes they care about.
With a Giving Fund, you also gain a local team to walk with you through your giving decisions, access to our team of charitable professionals who can provide guidance on complex asset gifts, and a network of generosity partners to help fulfill your giving goals.
Less complexity, more joy
A Giving Fund can be opened in minutes, without the start-up costs or legal complexities of a foundation, and you can begin recommending grants right away. And if you want to take your time discerning where to give, your fund balance can grow tax free – with no required annual distribution – while you prayerfully consider where God is leading you to give.
Many of the benefits of a private foundation and a Giving Fund are the same – the ability to give strategically, invest for future impact, and share in giving decisions with your family. 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 and freeing you to spend your time and energy on the causes and people you love.
Giving Funds also have 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.
And, by setting up a succession plan, you can designate how the balance in your Giving Fund is used after your lifetime, ensuring your legacy of generosity continues without need of a board of directors to make those decisions.
These advantages don’t just make giving easier; they make it more joyful. They help keep your focus on the purpose behind your generosity, not the paperwork required for it.
Pairing a foundation with a Giving Fund
For some families, it’s not a question of either/or. It’s both/and. A Giving Fund can be a powerful complement to an existing private foundation. Many families with private foundations use a Giving Fund to make anonymous grants, navigate complex asset giving, or reduce the administrative burden of their foundation.
Because Giving Funds allow for higher deduction limits – up to 60 percent of adjusted gross income (AGI) for cash and 30 percent for appreciated assets (compared to 30 percent cash and 20 percent appreciated assets for foundations) – a Giving Fund can also maximize the tax efficiency of larger gifts better than a private foundation. Using a Giving Fund alongside a private foundation allows families to keep the foundation’s vision alive while increasing their flexibility and impact.
Transitioning from a foundation to a Giving Fund
Sometimes, families reach a point where the burden of a foundation outweighs the benefit of having one. Now, in the middle of the Great Wealth Transfer, many families are wanting 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 history and future impact.
It’s a straightforward process, and we can help you navigate it. Many families have found that this step brings renewed energy to their giving and a fresh sense of joy to what God has called them.
Generosity that reflects your values
With a Giving Fund with NCF, you don’t just get simplicity and flexibility – you become part of a community of people who share your values and can walk with and encourage you on your giving journey.
As you consider which of these is right for you, take some time to answer these key questions for yourself or with your family:
- How important is flexibility in terms of when and how much I give?
- Do I need help navigating gifts of complex assets?
- Do I want to be able 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’re starting fresh, complementing a foundation, or transitioning from one, a Giving Fund is a highly effective tool that can help ensure your giving aligns with your values – today and for generations to come.
Compare the benefits of Giving Funds and private foundations.
