Giving and Private Foundations

When it comes to giving and grants, a private foundation is the most common way that people consider sharing their resources. A private foundation is a great way to give generously to the charitable causes close to the heart; however there are downsides to running a private foundations. Many private foundation owners discover that they are overburdened by all the administrative hassles, growing costs, and increasing public scrutiny. This is why many givers are turning to Capstone solutions like a Donor Advised Fund, which accomplishes your giving goals while reducing the burden, give greater tax advantages maximize your gifts while protecting the privacy of your family and efforts. This diagram compares a private foundation to a donor advised fund.


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Benefits of Capstone Legacy Donor Advised Fund V. Private Foundation
Feature
Capstone Legacy Donor Advised Fund
Private/Family Foundations
Cash Gifts

Tax deduction of up to 50% of Adjusted Gross Income (AGI).

Tax deduction of up to 30% of Adjusted Gross Income (AGI).

Required Distributions

No requirement on distributions

Foundation must distribute at least 5% of corpus each year

Publicly Traded Stock

Tax deduction at fair market value up to 30% of AGI.

Tax deduction at fair market value up to 20% of AGI.

Closely-Held Stock

Tax deduction at fair market value up to 30% of AGI.

Tax deduction for your basis in the stock up to 30% of AGI.

Real Estate

Tax deduction of 100% of fair market value up to 30% of AGI.

Tax deduction limited to cost basis up to 20% of AGI.

Excise Tax Status

No excise tax as Capstone Legacy Foundation.

Private foundations are subject to excise taxes.

Annual Tax Returns

Individual funds are not required to file. Capstone Legacy Foundation prepares and files all tax reports to the IRS.

Must file annual Federal income tax return Form 990-PF.

Establishing A Fund

A Capstone Legacy Foundation fund can be established in one day with a simple document.

Establishing a new foundation requires extensive legal, accounting and operational expenses on an on-going basis.

Investments

Capstone Legacy Foundation and its affiliate funds work with professional money managers to invest Capstone funds. A donor may retain their own financial advisor if the fund is greater than $50,000.

Selection of investment strategies and professional fund advisors can become a very time consuming responsibility for a private foundation's Board of Trustees.

Expertise

Capstone Legacy Foundation’s experienced board and staff can provide expertise to donors on a wide range of gift management, finance, and fund administration issues.

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

Grant Making

The Capstone staff assists donors with grant administration, research, and program evaluation and compliance to ensure maximum community and Kingdom impact.

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

Accountability

Capstone Legacy Foundation conducts an independent audit each year. Publication of an annual report, public disclosure of grants and thoughtful selection of board members ensures funds are used in the communities' best interests.

Laws and regulations governing private foundations differ greatly from those of public charities and may require expensive specialized legal and finance expertise.

Privacy

Individual donors or grants can be kept anonymous if the donor wishes. Capstone Legacy Foundation can serve as a buffer between the donor and grant-seekers.

Private Foundations are not private. All information about your Foundation is a matter of public record and can be accessed on the internet. This includes such things as salaries paid, names of Board members, and total income, distributions, and assets.

Ease of Administration

All donations and grants can be done on-line, thus reducing your need to prepare check, affix postage, and mail the grants.

All check writing and letters to go with the check must be prepared by someone in the Foundation.