Benefits of Working with The Alaska Community Foundation
Photo credit: Oscar Edwin Avellaneda
Establishing a charitable fund at The Alaska Community Foundation offers advantages over creating a private foundation:
- A charitable fund 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
- A gift of cash to a charitable fund allows a deduction of up to 50% of a donor's Adjusted Gross Income (AGI). A gift of cash to a private foundation only allows a donor to deduct up to 30% of AGI.
- By creating a charitable fund, 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.
- No tax is imposed on the investment income of a charitable fund because it is a component of a public charity. Private foundations pay up to 2% federal excise tax on their investment income and net realized capital gain.
- A community foundation donor may remain anonymous. A private foundation must make available to the public the name and address of any substantial contributor.
- There are no minimum distribution requirements for a charitable fund at a community foundation. A
private foundation must annually distribute at least 5% of its net
investment assets, regardless of whether the amount is actually earned.
- There are fewer restrictions on a charitable fund. For
private foundations, however, there are strict regulations regarding
self-dealing between the foundation and those who manage, control, or
contribute to it and people or corporations closely related to them.
- There are fewer investment restrictions on a community foundation's funds. A private foundation may not make certain types of investments.
- There are fewer IRS reporting requirements on community foundation grants and funds, and requirements that do exist are handled by the foundation's staff at no extra charge to individual donors.
- Charitable gifts to a 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