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Research Summary

  • Charitable Giving

Private Foundations and Donor-Advised Funds: Making the Best Use of Your Philanthropic Vehicle(s)

December 01, 2013

Numerous documents compare private foundations with donor-advised funds, but many of them were published by organizations with a vested interest in one structure or the other. We researched the relative advantages and disadvantages of the two structures to develop an unbiased comparison that can help charitably inclined individuals choose the vehicle (or vehicles) that will serve them best.

The private foundation and donor-advised fund offer specific advantages in such areas as control, flexibility, operating costs, tax benefits, and perpetuity. Donors concerned primarily about control and perpetuity may favor a private foundation. On the other hand, those more focused on reducing costs and having the option to maintain anonymity will probably be more comfortable with a donor-advised fund. But the two vehicles can also be combined. In a low-return investment environment, donors can integrate a private foundation and a donor-advised fund in order to keep the level of their giving in step with their investment results.

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