Community foundations give donors benefits not available through private foundations. The chart below briefly summarizes the key differences between community foundations (using examples of two different fund types) and private foundations.
The Cleveland Foundation vs. Private Foundations
| Private Foundation | Donor Advised Fund of the Cleveland Foundation | Supporting Organization of the Cleveland Foundation | |
|---|---|---|---|
| Legal Identity | Separate nonprofit entity | [Donor’s Choice of Name] Fund of the Cleveland Foundation | [Donor’s Choice of Name] Fund of the Cleveland Foundation (separate nonprofit entity affiliated with the Cleveland Foundation) |
| Tax Status | Private foundation | Public charity | Public charity |
| Taxation of Investment Income | 2% annually | None | None |
| Payout Requirement | Grants must equal 5% of corpus annually | None | None |
| Deductibility of Gifts | Deductibility: 20% AGI* for appreciated property and 30% AGI* for cash | Deductibility: 30% AGI* for appreciated property and 60% AGI* for cash | Deductibility: 30% AGI* for appreciated property and 60% AGI* for cash |
| Administration | Detailed annual filing with IRS | All record-keeping and accounting carried out by the Cleveland Foundation | All record-keeping and accounting carried out by the Cleveland Foundation |
| Grantmaking Expertise | Professional staff, if any (unusual for a small foundation) | The Cleveland Foundation staff assistance to review and monitor proposals. | The Cleveland Foundation staff assistance to review and monitor proposals |
| Control | Trustees have complete control of distributions and responsibility for asset management | Donor-advisor may make grant recommendations. | Own board of directors, a majority of whom are appointed by the Cleveland Foundation |
| Cost | Costs include legal and accounting fees, insurance, office space, staff and miscellaneous expenses. | No cost to establish, $10,000 minimum. Annual fees assessed are: 90 basis points for funds between $10,000 and $1 million ($250 min.); 50 basis points for funds $1,000,001-$5,000,000; and 40 basis points for funds up to $10,000,000. Anything over $10,000,000 is based upon services | No cost to establish. Annual fees are 75 basis points for funds with assets from $5 million to $7 million, and 50 basis points for funds with assets greater than $7 million on market value of fund plus investment fee |
* Adjusted Gross Income