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% or 2% 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 utilize both donor-advised funds and private foundations in a comprehensive charitable giving strategy.
Donor-advised fund (DAF) offering:
The Bank of America Charitable Gift Fund
Administration: Provided by donor-advised fund
Tax preparation: Provided by donor-advised fund
Client type: May be ideal for emerging and experienced philanthropists — self directed donors who desire privacy and maximum charitable impact
Account minimums:
- Initial contribution: $25,000
- Ongoing contribution: $250
- Minimum grant: $250
- Minimum investable balance: $25,000 4
- No maximum
Types of assets accepted:
- Cash, securities and mutual funds
- Restricted stock and closely held business interests 5
- Real estate timberland, farms and ranches 5
- Gas, oil and mineral rights 5
Support from grantmaking professionals: Self-directed; limited support available in developing a charitable giving plan
Family involvement: Unlimited co-advisors
Succession: Unlimited
Private foundation offering:
Foundation management services 3
Administration: Broad range of administrative services available
Tax preparation: Only available if foundation is created in a trust form and our firm manages all assets
Client type: May be ideal for philanthropists who prioritize flexibility and control
Account minimums: Greater than $5 million is recommended
Types of assets accepted:
- Cash, securities and mutual funds
- Restricted stock and closely held business interests 5
- Real estate timberland, farms and ranches 5
- Gas, oil and mineral rights 5
- Certain nonfinancial, tangible assets 5
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).
3 Please note: additional fees may apply to some of these services.
4 If the account balance falls below $25,000 at the end of any quarter, the account will be placed into the Principle Preservation allocation.
5 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
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, Member SIPC, and a wholly-owned subsidiary of BofA Corp.
