|
A private foundation may set up a donor advised fund at ARCF. The Community Foundation’s status as a public charity means that grants made to it by the private foundation constitute qualifying distributions which fulfill the private foundation’s expenditure responsibility. The trustees of the private foundation reserve the right to make specific recommendations regarding the charitable distribution from the fund. The private foundation will receive recognition for grants disbursed from the fund or, if the trustees prefer, can remain anonymous.
Year End Tax Planning – The private foundation determines that, with some additional qualifying distributions, the excise tax may be reduced from 2% to 1%. However, no specific charitable organization has been approved. The private foundation may contribute those additional qualifying distributions to a donor advised fund at ARCF. Those funds can then be distributed in the future to approved organizations.
Level the private foundation’s peaks and valleys in grantmaking – In years of low qualifying distributions, a private foundation may want to add more to its fund as a way of maintaining the favorable 1% excise tax rate. In years of high grant activity, the private foundation may utilize the donor advised fund to supplement its foundation's grant disbursement activity, without dramatically increasing the foundation’s payout ratio.
Grants from a donor advised fund may be made anonymously in the name of the Community Foundation – This may be helpful if the trustees desire to fund charitable causes without fanfare. |
