Private foundations and donor-advised funds: Debunking three myths If you’ve been involved with charitable giving for a few years, you’ve no doubt become familiar with both private foundations and donor-advised funds and their popularity as charitable giving tools. As is often the case with tax and estate planningrelated topics, the differences between private foundations and donor-advised funds are sometimes the subject of confusion and misunderstanding. As you work with your advisors and the team at the FM Area Foundation to establish your immediate and long-term charitable giving plans, take a few minutes to check out how to debunk these three common myths. Myth #1: Donor advised funds are all the same, and only private foundations can be customized Private foundations will always differ from donor-advised funds in important ways not only because of their status as separate legal entities and the deductibility rules for gifts to these entities, but also because of the opportunities to customize governance. But it is a mistake to think that a donor-advised fund is a cookie cutter vehicle. Indeed, “donor-advised fund” is simply a term used to specify the structure of a fund and its relationship with a sponsoring organization such as a community foundation. The donor-advised fund vehicle itself is extremely flexible. –Donor-advised funds are popular because they allow a donor to make a tax-deductible transfer of cash or marketable securities that is immediately eligible for a charitable deduction. The donor can recommend gifts to favorite charities from the fund when the time is right. –A donor-advised fund at the FM Area Foundation is frequently a more effective choice than a donor-advised fund offered through a brokerage firm (such as Fidelity or Schwab). That’s because, at the FM Area Foundation, you and your family are part of a community of giving and have opportunities to collaborate with other donors with similar interests. –The FM Area Foundation can work with you and your family on a charitable giving plan that extends for multiple future generations. That is because the team at the FM Area Foundation areafoundation.org
409 7th St S. Fargo, ND 58103