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Charitable vehicles comparison

Donor-advised fund or private foundation

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 (DAF) Private foundation
Maximum tax deductibility as a percentage of Adjusted Gross Income
(excess may be carried over five years)
Cash: 60%
Publicly traded securities: 30% 1
Nonfinancial assets: 30% 1
Cash: 30%
Publicly traded securities: 20% 1
Nonfinancial assets: 20% 1
Grantmaking
Donor makes grant recommendations Donor has full control over and responsibility for grantmaking decisions
Investments
Donor can choose to direct investment portfolio options managed by the DAF sponsor 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 income 2
None 1% or 2% net investment income
Required quarterly tax payments
No Yes
Required annual distribution
No Yes, 5% based on asset value
Donor IRS filing requirement
No Must file tax return (IRS Form 990-PF)
Legal fees/start-up costs
No Yes, required to establish foundation

 

Bank of America's 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 (DAF) offering:
The Bank of America Charitable Gift Fund

Administration: Provided by donor-advised fund


Tax preparation: Provided by donor-advised fund


Client type: May be ideal for emerging and experienced philanthropists — self directed donors who desire privacy and maximum charitable impact


Account minimums:

  • Initial contribution: $25,000
  • Ongoing contribution: $250
  • Minimum grant: $250
  • Minimum investable balance: $25,000 4
  • No maximum

Types of assets accepted:

  • Cash, securities and mutual funds
  • Restricted stock and closely held business interests 5
  • Real estate timberland, farms and ranches 5
  • Gas, oil and mineral rights 5

Support from grantmaking professionals: Self-directed; limited support available in developing a charitable giving plan


Family involvement: Unlimited co-advisors


Succession: Unlimited


 

Private foundation offering:
Foundation management services 3

Administration: Broad range of administrative services available


Tax preparation: Only available if foundation is created in a trust form and our firm manages all assets


Client type: May be ideal for philanthropists who prioritize flexibility and control


Account minimums: Greater than $5 million is recommended


Types of assets accepted:

  • Cash, securities and mutual funds
  • Restricted stock and closely held business interests 5
  • Real estate timberland, farms and ranches 5
  • Gas, oil and mineral rights 5
  • Certain nonfinancial, tangible assets 5

Support from grantmaking professionals: Comprehensive support including strategic planning, grantmaking and administrative services, mission development, governance and compliance


Family involvement: Family members and other trusted advisors may be involved in roles such as trustee, director or advisor


Succession: Unlimited


 

Contact us at 888-703-2345 or email us.

1 Deductions for contributions are based on fair market value if held for more than one year. Contributions of non-publicly traded securities or nonfinancial assets to a private foundation are limited to cost basis.

2 Income received from investment assets (before taxes) such as bonds, stocks, mutual funds, loans and other investments (less related expenses).

3 Please note: additional fees may apply to some of these services.

4 If the account balance falls below $25,000 at the end of any quarter, the account will be placed into the Principle Preservation allocation.

5 Considered on a case-by-case basis.

Global Wealth & Investment Management (GWIM) is a division of Bank of America Corporation. The Chief Investment Office, which provides investment strategies, due diligence, portfolio construction guidance and wealth management solutions for GWIM clients, is part of the Investment Solutions Group (ISG) of GWIM.

Merrill Lynch, Pierce, Fenner & Smith Incorporated (also referred to as “MLPF&S” or “Merrill”) makes available certain investment products sponsored, managed, distributed or provided by companies that are affiliates of Bank of America Corporation (“BofA Corp.”). MLPF&S is a registered broker-dealer, Member SIPC, and a wholly-owned subsidiary of BofA Corp.

Institutional Investments & Philanthropic Solutions (“II&PS”) is part of Bank of America Private Bank, a division of Bank of America, N.A., Member FDIC, and a wholly-owned subsidiary of Bank of America Corporation (“BofA Corp.”). Trust and fiduciary services and other banking products are provided by wholly-owned banking affiliates of BofA Corp., including Bank of America, N.A

Certain Bank of America Private Bank associates are registered representatives with MLPF&S and may assist you with investment products and services provided through MLPF&S and other nonbank investment affiliates. MLPF&S is a registered broker-dealer, Member SIPC, and a wholly-owned subsidiary of BofA Corp.

Bank of America Merrill Lynch is a marketing name for the Retirement Services business of BofA Corp.

Merrill Private Wealth Management is a division of MLPF&S that offers a broad array of personalized wealth management products and services. Both brokerage and investment advisory services (including financial planning) are offered by the Private Wealth Advisors through MLPF&S. The nature and degree of advice and assistance provided, the fees charged, and client rights and Merrill’s obligations will differ among these services. The banking, credit and trust services sold by the Private Wealth Advisors are offered by licensed banks and trust companies, including Bank of America, N.A., Member FDIC, and other affiliated banks.

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