Comparing different charitable vehicles
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This document compares different types of charitable giving accounts, including community foundations, donor advised funds through financial institutions, personal/family foundation accounts, and private foundations. It outlines the key differences between each type of account in areas such as set-up costs, minimum funding amounts, personal administration requirements, investment management, granting policies, and other features. The document provides a high-level overview to help donors determine which type of charitable giving vehicle is the best fit based on their philanthropic goals and preferences.
Comparing different charitable vehicles
- 1. COMPARING DISBURSEMENT ACCOUNTS FOR CHARITABLE GIVING DONOR ADVISED FUNDS AND PRIVATE FOUNDATIONS Sources: Canada Gives – http://www.CanadaGives.ca, Plangiv – http://www.PlanGiv.com, Scotia Private Client Group – Aqueduct Foundation, The Calgary Community Foundation – http://www.thecalgaryfoundation.org, The Toronto Community Foundation – http://www.tcf.ca COMMUNITY FOUNDATION FINANCIAL INSTITUTIONS PERSONAL AND FAMILY FOUNDATION ACCOUNTS PRIVATE FOUNDATIONS SET-UP COSTS (TIME AND FEES) Varies No legal fees 24 hrs. No legal fees Immediate No legal fees Charitable registration can take up to 9 mos. Legal costs range from $5K-$150K+ MINIMUM AMOUNT $10K-$25K $10K-$250K $100K At least $1 Million PERSONAL ADMIN Reports issued by Community Foundation Donor attends events & fundraisers Donor selects charities Institution issues reports Donor selects the charities and giving guidelines Foundation issues quarterly reports Donor selects charities Donor holds board meetings, manages assets, keeps records, selects charities, sets giving guidelines and administers grants ANNUAL REPORTING None None None File annual return Manage surplus/deficit INVESTMENT MANAGEMENT Foundation selects portfolio manager Use the financial institutions brokers Donor can use his/her own broker Committee of the board selects broker. Committee is responsible for the monitoring and performance of funds PHILANTHROPIC ADVISING Limited to those charities that the foundation knows about. Some community foundations provide donor advising services. Donor can hire outside counsel for advice. Limited to those charities that the financial institution knows about. Up to the donor to do his/her due diligence aside for checking charitable registration. Donor can hire outside counsel for advice. Donor hires outside counsel for advice. Committee of the board sets giving guidelines and application policies. Up to the committee to do their due diligence in funding charities. Can hire outside counsel for advice or hire a full-time employee to manage the selection process ANNUAL EXPENSES 1.5 - 4% incl. investment management fees 1.75 – 4% incl. investment management fees 0.75 – 2.5% plus investment management fees Legal, tax, insurance, record keeping, staff and investment management CHOICES OF CHARITIES Primarily local community; Donor may select other registered charities. Donations on unregistered or non-profit organizations prohibited. Donor advises on which charities and registered non- profits. Cannot donate through this fund to unregistered organizations or ones that do not have an agency agreement in place with a Canadian charity. Donor selects charities and registered non-profits. Cannot donate through this fund to organizations that are not registered in Canada or do not have an agency agreement in place with a Canadian charity. Founding donor selects charities at the creation of the foundation. Granting committee can amend these recommendations as per the bi-laws of the foundation. AMOUNTS OF GRANTS Community foundation determines the amount to grant. Financial institution determines the amount to grant (min. annual payout 3.5%) Min. annual payout 5% to unlimited (depending on the company that is managing the account) Board determines amount to grant (min. annual payout 3.5%) LONG-TERM GRANTING OPTIONS Endowment gifts Endowment gifts Depends on the company managing the account Endowment gifts ONE-TIME GRANTING OPTIONS Foundation chooses amount of allocation. Annual giving is separate from this account. Financial institution chooses allocation amount (up to 5%) Donor chooses how much to allocate. New contributions are usually added to the endowment. GIFTS OF PROPERTY (SIMPLE OR COMPLEX) Most community foundations do not accept gifts of property, however they will accept gifts of stocks and insurance. May accept gifts of property (additional fees will be levied to process this request) Not available Will accept donations of stocks, insurance, etc. but typically cannot accept complex assets GRANTING OF CAPITAL Capital can be granted to the foundation to close the account or to another charity (to be determined by the community foundation). Capital can be granted to another Canadian registered foundation. If account is closed funds can be transferred to another registered charity or foundation. Capital stays permanently with foundation. Bi-laws cover the regulations around closing the foundation. PRIVACY Anonymous giving if desired Anonymous giving if desired Anonymous giving if desired On public record LEGACY PLANNING Full recognition optional with each donation. Full recognition optional with each donation. Full recognition optional with each donation. Full recognition (on public record). SECURITY Security and privacy policies are stated on the websites of the community foundations. Financial institution has regulated security measures. Security and privacy policies are stated on the websites of the community foundations. Depends on the foundation. Canadian law regulates the minimum security measures.