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 (DAF) | 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% 1 Nonfinancial assets: 30% 1 |
Cash: 30% Publicly traded securities: 20% 1 Nonfinancial assets: 20% 1 |
| 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 income 2 | |
| None | 1.39% of net investment income |
| Required quarterly tax payments | |
| No | Yes |
| Required annual distribution | |
| No | Yes, 5% based on asset value |
| 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 rely upon both donor-advised funds and private foundations in executing on their charitable giving strategy.
Donor-advised fund (DAF) 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: Provided by donor-advised fund
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
- Restricted stock and closely held business interests 4
- Real estate timberland, farms and ranches 4
- Gas, oil and mineral rights 4
Support from grantmaking professionals: Comprehensive support available, based on account size, including strategic planning, grant making, mission development and family governance
Family involvement: Unlimited co-advisors
Succession: Unlimited
Private foundation offering:
Foundation management services 3
Client type: May be ideal for philanthropists who prioritize flexibility and control
Tax preparation: Available where the foundation is created in a trust form and our firm manages all foundation 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
- Restricted stock and closely held business interests 4
- Real estate timberland, farms and ranches 4
- Gas, oil and mineral rights 4
- Certain nonfinancial, tangible assets 4
Support from grantmaking professionals: Comprehensive support including strategic planning, grantmaking and administrative services, mission development, governance and compliance
Family involvement: Family members and other trusted advisors may be involved in roles such as trustee, director or advisor
Succession: Unlimited
Contact us at 888-703-2345 or email us.
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.
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.
