Giving Compass’ Take:
• Joe Williams compares the practical differences between donor advised funds and private foundations to help donors choose the right vehicle for their giving.
• What are your top priorities for your giving vehicle?
• Read advice about donor advised funds.
Two of the most popular charitable vehicles are donor advised funds and private foundations, but which is best to use in your generosity journey? That depends. Nearly $70 billion in grants to charity came through private foundations and donor advised funds (DAFs) in 2017. Understanding the differences between these two vehicles is crucial in deciding which is most appropriate for you and your family’s giving.
Here are eight key comparisons to consider:
DAFs: Can be established immediately at a low or no cost. Most sponsors require an initial minimum contribution of $5,000 or more, but you can open a DAF at The Signatry with no minimum balance.
Private Foundations: May take months to establish and often require a significant investment of both time and capital.
DAFs: Charitable sponsors (i.e., The Signatry) carry most of the administrative burden (managing investments, recordkeeping, writing checks, tax receipting, administering grants)
Private Foundations: Often must hire their own staff or use third-party contractors to manage their administrative work.
DAFs: Once assets are contributed to a fund; the charitable sponsor becomes the legal owner. Donors retain advisory privileges to grant funds as they choose, but the charitable sponsor has the final say in whether the grant is approved or denied.
Private Foundations: Allow donors full control over assets and grants.
Read the full article about donor advised funds and private foundations by Joe Williams at The Signatry.
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