There are many reasons for your clients to set up a charitable fund at the Delaware Community Foundation rather than establishing their own private foundation. Here are ten good ones.

Ten Reasons to Set Up a Fund at the DCF rather than a Private Foundation

1. A fund at the Delaware Community Foundation is easy and inexpensive to establish. A private foundation requires a donor to create a new organization, apply for tax-exempt status, pay filing fees and incur legal and accounting expenses.

2. A gift of cash to a fund at the Delaware Community Foundation allows a deduction of up to 50% of a donor's Adjusted Gross Income (AGI). A gift of cash to a private foundation allows a donor to deduct up to 30% of AGI.

3. By creating a fund at the Delaware Community Foundation, a donor may deduct gifts of closely held long-term appreciated stock at its fair market value, up to 30% of AGI. If the same gift is given to a private foundation, deductibility may be limited to its cost basis up to 20% of AGI.

4. No tax is imposed on the investment income of a Delaware Community Foundation fund because the DCF is a public charity. A private foundation pays up to 2% federal excise tax on its investment income and net realized capital gain.

5. A donor to a DCF fund may remain anonymous. A private foundation must make available to the public the name and address of any substantial contributor.

6. There are no minimum distribution requirements for a Delaware Community Foundation fund. A private foundation must distribute annually at least 5% of its net investment assets, regardless of whether the amount is actually earned.

7. There are fewer restrictions on a Delaware Community Foundation fund. There are strict regulations regarding self-dealing between a private foundation and those who manage, control, or contribute to it and persons or corporations closely related to them. For example, a private foundation, along with its donor and other "disqualified persons" (including members of the board and staff), may not hold more than 20% of a related corporation's voting stock.

8. There are fewer investment restrictions on Delaware Community Foundation funds. A private foundation may not make certain types of investments. For example, the Community Foundation may hold more than a 20% ownership in a particular corporation, but private foundations may not.

9. There are fewer IRS reporting requirements on Delaware Community Foundation grants and funds.

10. Gifts from a Delaware Community Foundation fund are almost always considered "public support," thus helping the recipient charity retain its public charity status. A private foundation grant is usually not considered "public support" in its entirety and, thus, may not be as helpful to the recipient charity in retaining its public charity status.

For additional information, see the chart that compares charitable giving through a community foundation and a private foundation.

If your client already has a private foundation, they may want to examine the option of transferring the private foundation to a fund at the Delaware Community Foundation.

Please contact Jane Vincent, Senior Vice President for Development by calling 302.504.5237 or email jvincent@delcf.org to learn more about the benefits of a DCF fund for your client.