Creating a successful charitable giving plan begins with understanding the differences between various charitable vehicles. Here we compare two frequently employed charitable planning vehicles — the donor-advised fund (DAF) and private foundation to help you structure and plan your giving. For more detailed information about these solutions, please contact your advisor.
Donor-advised fund | Private foundation |
Maximum tax deductibility as a percentage of Adjusted Gross Income (excess may be carried over five years) |
Cash: 60%1 Publicly traded securities: 30% Nonfinancial assets: 30% | Cash: 30% Publicly traded securities: 20% Nonfinancial assets: 20% |
Valuation of gifts for deduction |
Fair market value2 | Fair market value for publicly traded securities; cost basis for non-publicly traded securities or nonfinancial assets2 |
Grantmaking |
Donor makes grant recommendations | Donor has full control over and responsibility for grantmaking decisions |
Investments |
Donor can choose to direct investment management consistent with the DAF sponsor's guidelines | Donors can choose to direct investment management |
Privacy |
Donor has discretion to grant anonymously | Grant activity is a matter of public record |
Excise tax on net investment income3 |
None | 1.39% of net investment income annually |
Required quarterly tax payments |
No | Yes |
Required annual distribution |
No | Yes, 5% of net asset value annually |
Donor IRS filing requirement |
No | Must file tax return (IRS Form 990-PF) |
Legal fees/start-up costs |
No | Yes, required to establish foundation |
Our offerings
Note: An increasing number of philanthropic individuals and families utilize both donor-advised funds and private foundations in a comprehensive charitable giving strategy.
Donor-advised fund offering: The Bank of America Charitable Gift Fund
Client type: May be ideal for emerging and experienced philanthropists — self-directed donors who desire privacy, administrative simplicity and maximum charitable impact
Tax preparation: Gift receipt provided for assets contributed
Administration: Provided by donor-advised fund
Account minimums:
- Initial contribution: $25,000
- Minimum grant: $250
- No ongoing minimum balance is required
Types of assets accepted:
- Cash, securities and mutual funds
- Crypto currency4
- Restricted stock and closely held business interests4
- Hedge funds and private equity interest4
- Real estate, timberland, farms and ranches4
- Gas, oil and mineral rights4
- Certain other nonfinancial tangible assets4
Support from grantmaking professionals: Comprehensive support available, based on account size, including strategic planning, grantmaking, mission development and family governance5
Family involvement: Unlimited advisors
Succession: Unlimited
Private foundation offering: Foundation management services6
Client type: May be ideal for philanthropists who prioritize flexibility and control
Tax preparation: Available to foundations provided our firm manages all assets
Administration: Broad range of administrative services available
Account minimums: Greater than $5 million is recommended, with no strict minimums
Types of assets accepted:
- Cash, securities and mutual funds
- Crypto currency4
- Restricted stock and closely held business interests4
- Hedge funds and private equity interest4
- Real estate, timberland, farms and ranches4
- Gas, oil and mineral rights4
- Certain other nonfinancial, tangible assets4
Support from grantmaking professionals: Comprehensive support including strategic planning, grantmaking and administrative services, mission development, governance and compliance5
Family involvement: Family members and other trusted advisors may be involved in roles such as trustee, director or advisor
Succession: Unlimited