Philanthropic giving to organizations and causes important to you can be among the most satisfying and life-enhancing activities. Some studies indicate the feeling of satisfaction and accomplishment associated with philanthrophy may even produce health benefits for the giver. Certainly, philanthrophic giving is a tangible expression of your values and your interests.
After you decide to make a philanthrophic gift, your next big decision is how to structure your gift to provide maximum benefit to organizations or causes you support.
You can create your own private foundation or trust to accomplish your desires, but the use of the San Angelo Area Foundation offers significant advantages over a private foundation or trust. Some of these advantages include:
- A fund at the San Angelo Area Foundation is easy and inexpensive to establish. A private foundation requires a donor to create a new organization, apply for tax-exempt status, pay filing fees, and incur legal and accounting expenses.
- A gift of cash to a fund at the San Angelo Area Foundation allows a deduction of up to 50% of a donor’s Adjusted Gross Income (AGI). A gift of cash to a private foundation allows a donor to deduct only up to 30% of AGI.
- By creating a fund at the Foundation, a donor may deduct gifts of closely held, long-term appreciated stock at its fair market value, up to 30% of AGI. If the same gift is given to a private foundation, deductibility may be limited to its cost basis up to 20% of AGI.
- No tax is imposed on the investment income of a San Angelo Area Foundation fund because it is a public charity. A private foundation pays up to 2% federal excise tax on its investment income and net realized capital gain.
- A donor may remain anonymous. A private foundation must make public the name and address of any substantial contributor.
- There are no minimum distribution requirements for a San Angelo Area Foundation fund. A private foundation must distribute at least 5% of its net investment assets each year, regardless of whether the amount is actually earned.
- There are fewer restrictions on a San Angelo Area Foundation fund. There are strict regulations regarding self-dealing between a private foundation and those who manage, control, or contribute to it and persons or corporations closely related to them. For example, a private foundation, along with its donor and other “disqualified persons” (including members of the board and staff), may not hold more than 20% of a related corporation’s voting stock.
- There are fewer investment restrictions on San Angelo Area Foundation funds. A private foundation may not make certain types of investments. For example, the Community Foundation may hold more than a 20% ownership in a particular corporation, but private foundations may not.
- There are fewer IRS reporting requirements on San Angelo Area Foundation grants and funds.
- Gifts from a San Angelo Area Foundation fund almost always are considered “public support,” thus helping the recipient charity retain its public charity status. A private foundation grant is usually not considered “public support” in its entirety and, thus, may not be as helpful to the recipient charity in retaining its public charity status.
