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%1 Publicly traded securities: 30% Nonfinancial assets: 30% |
Cash: 30% Publicly traded securities: 20% Nonfinancial assets: 20% |
| Valuation of gifts for deduction | |
| Fair market value2 | Fair market value for publicly traded securities; cost basis for non-publicly traded securities or nonfinancial assets2 |
| Grantmaking | |
| Donor makes grant recommendations, which are restricted to US-based public charities or their equivalents | Donor has full control over and responsibility for grantmaking decisions in accordance with IRS regulations applicable to private foundations |
| Investments | |
| Donor can choose investment management as allowed by the DAF sponsor's guidelines | Donor manages investments directly in accordance with IRS regulations applicable to private foundations |
| Privacy | |
| Donor has discretion to grant anonymously | Grant activity is a matter of public record |
| Excise tax on net investment income3 | |
| None | 1.39% of net investment income annually |
| Required quarterly tax payments | |
| No | Yes |
| Required annual distribution | |
| None | 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
- Minimum grant: $250
- No ongoing minimum balance is required
Assets accepted:
- Cash
- Securities and mutual funds
- Restricted stock and closely held business interests4
- Hedge funds and private equity interest4
- Real estate, timberland, farms and ranches4
- Gas, oil and mineral rights4
- Other complex assets4
- Certain other nonfinancial tangible assets4
Support from grantmaking professionals: Comprehensive support available, based on account size, including strategic planning, grantmaking, mission development and family governance5
Family involvement: Unlimited advisors - clients may name co-Advisors and Successor Advisors to share in account privileges
Succession: Unlimited
Private foundation offering: Foundation management services6
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
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.
1 This limitation was increased from 50% to 60% for years 2018 through 2025, if all gifts are made in cash. It is scheduled to “sunset” and return to 50% in 2026. The limit was further increased to 100% for 2020 and 2021, and the ordering rules clarified so that not all gifts must be made in cash, that is, lower percentage category gifts may be made first, with cash gifts made on top to reach 100%.
2 Fair market value deductions generally subject to one-year holding period.
3 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.
4 Please note: additional fees may apply to some of these services.
5 Considered on a case-by-case basis.
6 Custom philanthropic strategy services are available for giving vehicle accounts > $10MM and/or households with investment assets > $25MM.
Donor-advised fund and private foundation management are provided by 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.
Institutional Investments & Philanthropic Solutions (also referred to as “Philanthropic Solutions” or “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, fiduciary, and investment management services are provided by wholly owned banking affiliates of BofA Corp., including Bank of America, N.A. and its agents.