Charitable vehicles comparison

Donor-advised fund or private foundation

 

Creating a successful charitable giving plan begins with understanding the differences between various charitable vehicles. Here we compare two frequently employed charitable planning vehicles — the donor-advised fund (DAF) and private foundation to help you structure and plan your giving. For more detailed information about these solutions, please contact your advisor.

 

Donor-advised fund Private foundation
Maximum tax deductibility as a percentage of Adjusted Gross Income
(excess may be carried over five years)
Cash: 60%
Publicly traded securities: 30%
Nonfinancial assets: 30%		 Cash: 30%
Publicly traded securities: 20%
Nonfinancial assets: 20%
Valuation of gifts for deduction
Fair market value1 Fair market value for publicly traded securities; cost basis for non-publicly traded securities or nonfinancial assets1
Grantmaking
Donor makes grant recommendations Donor has full control over and responsibility for grantmaking decisions
Investments
Donor can choose to direct investment portfolio options managed by the DAF sponsor Donors can choose to direct investment management
Privacy
Donor has discretion to grant anonymously Grant activity is a matter of public record
Excise tax on net investment income2
None 1.39% of net investment income annually
Required quarterly tax payments
No Yes
Required annual distribution
No Yes, 5% of net asset value annually
Donor IRS filing requirement
No Must file tax return (IRS Form 990-PF)
Legal fees/start-up costs
No Yes, required to establish foundation

 

Our offerings

Note: An increasing number of philanthropic individuals and families utilize both donor-advised funds and private foundations in a comprehensive charitable giving strategy.

 

Donor-advised fund offering: The Bank of America Charitable Gift Fund

Client type: May be ideal for emerging and experienced philanthropists — self-directed donors who desire privacy, administrative simplicity and maximum charitable impact

Tax preparation: Gift receipt provided for assets contributed

Administration: Provided by donor-advised fund

Account minimums:

  • Initial contribution: $25,000
  • Ongoing contribution: $250
  • Minimum grant: $250
  • No ongoing minimum balance is required

Types of assets accepted:

  • Cash, securities and mutual funds
  • Crypto currency4
  • Restricted stock and closely held business interests4
  • Hedge funds and private equity interest4
  • Real estate, timberland, farms and ranches4
  • Gas, oil and mineral rights4
  • Certain other nonfinancial tangible assets4

Support from grantmaking professionals: Comprehensive support available, based on account size, including strategic planning, grant making, mission development and family governance5

Family involvement: Unlimited advisors

Succession: Unlimited

 

Private foundation offering: Foundation management services3

Client type: May be ideal for philanthropists who prioritize flexibility and control

Tax preparation: Available to foundations provided our firm manages all assets

Administration: Broad range of administrative services available

Account minimums: Greater than $5 million is recommended, with no strict minimums

Types of assets accepted:

  • Cash, securities and mutual funds
  • Crypto currency4
  • Restricted stock and closely held business interest4
  • Real estate, timberland, farms and ranches4
  • Gas, oil and mineral rights4
  • Certain other nonfinancial, tangible assets4

Support from grantmaking professionals: Comprehensive support including strategic planning, grantmaking and administrative services, mission development, governance and compliance5

Family involvement: Family members and other trusted advisors may be involved in roles such as trustee, director or advisor

Succession: Unlimited

 

Contact us at 888-703-3436 or email us.

A private wealth advisor can help you get started.

Our advisors can help you follow your passions, build a legacy and have a positive impact on others.

 

 

1 Deductions for contributions are based on fair market value if held for more than one year. Contributions of non-publicly traded securities or nonfinancial assets to a private foundation are limited to cost basis.

2 Income received from investment assets (before taxes) such as bonds, stocks, mutual funds, loans and other investments (less related expenses). For tax years beginning on or before Dec. 20, 2019, the excise tax is 2 percent of net investment income, but is reduced to 1 percent in certain cases. For tax years beginning after Dec. 20, 2019, the excise tax is 1.39% of net investment income, and there is no reduced 1 percent tax rate.

3 Please note: additional fees may apply to some of these services.

4 Considered on a case-by-case basis.

5 Custom philanthropic strategy services are available for giving vehicle accounts > $10MM and/or households with investment assets > $25MM.

Institutional Investments & Philanthropic Solutions (“II&PS”) is part of Bank of America Private Bank, a division of Bank of America, N.A., Member FDIC, and a wholly owned subsidiary of Bank of America Corporation (“BofA Corp.”). Trust and fiduciary services and other banking products are provided by wholly owned banking affiliates of BofA Corp., including Bank of America, N.A. Brokerage services may be performed by wholly owned brokerage affiliates of BofA Corp., including Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S”).

Certain Bank of America Private Bank associates are registered representatives with MLPF&S and may assist you with investment products and services provided through MLPF&S and other nonbank investment affiliates. MLPF&S is a registered broker-dealer, registered investment adviser, Member SIPC, and a wholly owned subsidiary of BofA Corp.

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