Private Foundations vs. Community Foundations
How is establishing an endowment fund at a community foundation more advantageous than setting up a private foundation?
Convenience
Creating a fund is quick, easy, and free. Establishing a private foundation takes months, significant legal expense, and filing fees.
Deductibility
Community foundations offer more favorable tax treatment than private foundations.
Payout
Community foundations are not subject to the minimum distribution rule that applies to private foundations, which helps endowment funds grow over time.
Administration
Community foundations have a staff, local financial advisors, a board of directors, and auditors available. Administrative services are all provided from a fund’s 1% annual fee. Private foundations must secure these services separately, apply for IRS tax-exempt status, file their own return, and pay for these costly services.
Anonymity
We can research a charity on the donor’s behalf, protecting the donor from direct solicitations.
Set-Up Procedures and Costs
Because of our economies of scale and our operating endowment, our costs are among the lowest of all nonprofit organizations.
Excise Taxes
At Marion Community Foundation, there is NO tax on investment income, while at a private foundation, excise taxes are assessed.
Liability & Insurance
With a private foundation, directors and officer’s liability insurance, employee bonding, and office insurance must be separately purchased; meanwhile, Marion Community Foundation automatically covers all liability insurance.
Grant Management
We manage the entire grants process—publicizing, receiving applications, reviewing applications, verifying charitable status, awarding the grants, and post-grant due-diligence—to ensure that grant monies are being used appropriately.
Privacy
Private foundations file detailed tax returns on grants, investment fees, trustee fees, staff salaries, etc. These are public records and are compiled into grantseeker directories, Internet files, and other widely distributed resources. At Marion Community Foundation, individual donors or grants can be kept private. If the donor wishes, the community foundation can serve as a buffer between the donor and grantseekers.
We Know Our Community
We know the Marion community’s nonprofits and have working relationships with them. We provide helpful, current, honest, reliable information.
