Alternatives and Resources for Private Foundations
Individuals, families, and companies with existing private foundations or those seeking to open one can turn to CFMT for specific advice, support, and other collaborative opportunities.
Supporting Organizations
Supporting Organizations is an alternative to the cost and administrative burden of a private foundation. It is a separate nonprofit corporation or trust that operates under CFMT and qualifies as a public charity. A supporting organization can still have its own board, grantmaking priorities and processes yet maintain all the tax benefits of a Donor Advised Fund. Additionally, they offer a number of other benefits, including:
- Lower setup costs and administration expenses than a private foundation.
- Maximum tax benefits, including total deductions for contributions of real estate and closely held stock. There is no excise tax on investment income.
- No minimal annual distribution requirement.
- Beneficial structure to involve business leaders or next-generation family members in philanthropic leadership.
Donors can establish a new Supporting Organization with an initial $5 million gift. Note that an existing private foundation with $5 million or more can be converted or terminated into a Supporting Organization with CFMT. Supporting organizations pay an annual fee to CFMT for the work provided.
Comparing Philanthropic Giving Structures
| Comparing Options | Donor Advised Fund | Supporting Organization | Private Foundation |
|---|---|---|---|
| Creation | Established by agreement with CFMT. | Nonprofit corporation created with assistance from CFMT. | Nonprofit corporation or trust organized as a private foundation. |
| Tax Exempt Status | Shares CFMT’s 501c3. | 509(A) public charity. | 509(A) public charity. |
| Costs: Start-Up and Annual | None; Annual administrative fee. | Small start-up costs through the foundation; annual filing fees assessed to the supporting foundation. | Similar to corporate start-up. |
| Charitable Deductions | Tax deduction of up to 60% of AGI; maximum for donor allowed by law. | Tax deduction of up to 60% of AGI for cash gifts and 30% for stock gifts; maximum for donor allowed by law. | Tax deduction limited to 30% of AGI for cash gifts and 20% for stock gifts. |
| Payout Requirements | No required payout. | Spending policy determined at the establishment of the fund. | 5% of investment asset regardless of annual income. |
| Donor Control | Donor makes grant recommendations. | Donor may appoint Board members with CFMT appointing the majority. | Donor-appointed board with control over grantmaking. |
| Annual Taxes | None. | None. | General income is tax exempt but subject to excise tax of up to 2% of net investment gain including net capital gains. |
Private Foundation Services
Your private foundation is a critical piece of your philanthropic legacy. But, if yours is among the 2/3 of private foundations in the US without paid staff, many of the ongoing duties and responsibilities fall to the Board.
CFMT offers private foundation support services to help ease this challenge in the following ways:
- Vision and giving strategy development
- Succession planning
- Community grant programs, from application creation to final reports · Multigenerational engagement
- Board meeting facilitation
- Accounting and reporting for required distributions and tax filings
- Research and grant recommendations on nonprofit organizations and interest areas
You determine our level of involvement. We can work alongside board members, family members, and family offices behind the scenes to help manage daily activities. Any customized offering of private foundation services is provided on a fee-for-service basis.
Amy Fair
Senior Director of Philanthropic Partnerships
Middle Tennessee’s Philanthropy Expert at Your Service
CFMT has been a turnkey partner to private foundations for over 30 years, helping these foundations advance their charitable aspirations and impact. Contact Amy Fair, our Senior Director of Philanthropic Partnerships, to learn more.
