Elk County Community Foundation

COMMUNITY FOUNDATION VS. PRIVATE FOUNDATION

Finding What’s Best for You

Increasingly donors are asking whether it makes sense to create a private foundation for their charitable giving or whether a more effective and cost efficient alternative exists. While a private foundation can be an attractive vehicle in the right circumstances, most experts in foundation law and administration believe that since the 1969 Tax Reform Act and subsequent tax laws, private foundations are not financially viable unless assets exceed $10 million.

An endowed fund at the Elk County Community Foundation is an attractive alternative that offers donors significant tax benefits and substantial tax and administrative differences.

Effective and Cost Efficient Alternative

The Elk County Community Foundation	Private Foundation
Endowed funds can be established with an initial $5,000 contribution*	$5 –10 Million for the fund to be cost effective
Fund can be established in a day	Takes months to establish
Inexpensive to establish and administer	Expensive to establish, costing thousands
Equally appropriate for any size assets	Typically established with substantial assets
No requirements for annual payouts	Requires 5% charitable payout of its asset value annually

*A minimum contribution of $5,000 is enough to establish a named or endowed fund. Funds can be launched with smaller gifts, however, with plans to build to the $5,000 minimum.

Tax Benefits

The Elk County Community Foundation	Private Foundation
No Excise Tax	Subject to annual excise tax of up to 2% on net investment income
Full market value deduction for gifts of appreciated property	Full market value deduction for gifts of appreciated publicly-traded stock
Deduct up to 30% AGI for appreciated property; 50% for cash	Deduct up to 20% AGI for appreciated property; 30% for cash gifts
No penalty taxes	Penalty taxes may be imposed for excess business holdings or self-dealing

Tax Administration Differences

The Elk County Community Foundation	Private Foundation
No start up costs	Legal and accounting fees as start up costs
Fund can be established in a day	Takes months to establish
Inexpensive to establish and administer	Expensive to establish, costing thousands
No restrictions on grant scholarships	Restrictions on grant scholarships
No requirements for annual payouts	Requires 5% charitable payout of its asset value annually
Low annual administration/management fees	Costly ongoing administration
Anonymity can be maintained, if desired	Required public disclosure
Professional staff can provide consultation for grant-making	May need to obtain expert advice for effective grant-making

Your hometown advantage is what sets the Elk County Community Foundation apart from commercially sponsored gift funds offered by financial investment companies.

Your community foundation offers face-to-face service, more investment flexibility, community involvement and recognition and, if needed, advice on grant-making.

Your community foundation has the local awareness and experience to help you accomplish your charitable giving goals.

The Elk County Community Foundation will work with you to make your giving to Elk County as easy as possible.

To transfer assets from a commercially sponsored gift fund, simply recommend that the balance of you fund be granted to the Elk County Community Foundation.

Transferring assets from a private foundation to the Elk County Community Foundation is also very easy.

If you are interest in learning more about setting up an endowed fund or transferring assets to the Elk County Community Foundation Contact Us.

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Elk County Community Foundation
111 Erie Avenue
PO BOX 934
St. Marys, PA 15857
Email: info@elkcountyfoundation.com
Tel: 814.834.2125
Fax: 814.834.2126

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