Convert Your Private Foundation

Private foundations allow individuals to be heavily involved in a large-scale charitable giving programs. But private foundations have a number of disadvantages when compared with public charities. Drawbacks include greater investment restrictions and reporting responsibilities, fewer tax benefits and the occasionally heavy burden of administering a private foundation.

There's a better way to make a charitable impact in your community. By partnering with The Lake County Community Foundation, you can establish a supporting organization or donor advised fund. Here's why you might want to consider one of these alternatives to a private foundation:

Better Income Tax Treatment

When you contribute cash to a private foundation, you may deduct up to 30% of your adjusted gross income. A property donation only qualifies for a 20% deduction. However, when you contribute to a supporting organization or donor advised fund at the Trust, you can deduct as much as 50% for cash gifts and 30% for property donations.

Fewer Restrictions

When you partner with the Foundation, you may contribute closely held stock (and deduct its fair market value up to 30% of your adjusted gross income). Your supporting organization or fund may also own more than 20% in any one corporation-an option not available to private foundations. Finally, while restrictions are placed on what other people can contribute to your private foundation and still receive a tax deduction, there is no limit on tax-deductible gifts made to a donor advised fund or supporting organization.

Easier Administration

The Foundation performs full administrative duties for donor advised funds. Separate boards of directors govern supporting organizations with administrative support from the Foundation. But supporting organizations have fewer administrative and tax-reporting responsibilities than do private foundations.

No Distribution Requirement

Donor advised funds and supporting organizations are not required to distribute a percentage of annual income, as are private foundations.

Anonymity or Recognition

You may make charitable contributions through the Foundation and remain anonymous. A private foundation, on the other hand, must make available the names of major donors.

Expert Advice and Support

When you work with the Foundation, you get access to our staff's expert advice about Lake County's greatest needs and the not-for-profit organizations that serve it. Guided by our informed opinions, you can design a strategic giving program that has a greater impact community-wide.

No Excise Taxes

Unlike private foundations, donor advised funds and supporting organizations are exempt from paying excise taxes on investment income.

Grant Making Input

When you convert your private foundation, you can still provide input about the issues and organizations your charitable gifts support. With a donor advised fund, you may define your fund's philanthropic objectives and make grant recommendations to the Foundation. If you set up a supporting organization, you may sit on its board of directors or recommend a number of directors to the board.

Minimal Start Up Costs

The costs are minimal to set up a donor advised fund with the Foundation. While there are costs associated with establishing a supporting organization, they are lower than the substantial legal and accounting fees associated with a private foundation.