At the Charitable Foundation, we work with generous folks who often wrestle with the question of whether starting a private foundation or opening a donor-advised fund would best suit their charitable goals.
Should I open a private foundation, or a donor-advised fund?
If you are considering establishing a fund or a foundation with assets totaling less than $5 million, most experts agree that a donor-advised fund is a more effective and efficient way to give. Donor-advised funds at community foundations can help you get the most impact from your charitable giving, while letting you focus on the joy of that giving. With a donor-advised fund, you recommend grants to the nonprofits you want to support, while the Charitable Foundation does due diligence and staff with deep knowledge of the nonprofit sector and community needs can offer expert guidance. Donor-advised funds come in various sizes: they can be opened at the Foundation with $25,000, but some are considerably larger. (The Foundation’s Neil and Louise Tillotson Fund is a donor-advised fund and is also one of the largest rural philanthropies in the U.S., making about $3m in grants each year.)
That being said:
It’s not either/or…it’s yes, and…
I met recently with a generous man who has a private foundation through which he gives to causes that matter to him around the world. But he also wanted to give locally, to help New Hampshire families in need. He set up a donor-advised fund at the Foundation, and our community impact staff suggested several local organizations for him to consider supporting. Through the Charitable Foundation, he also had the opportunity to join with other fund-holders to support related nonprofit work. The result: Women and children are getting the support they need to live safely in their communities, and a generous person has made a big difference for people in New Hampshire.
A donor-advised fund at a community foundation makes sense when you want to:
- Concentrate on giving instead of administration
- Have a knowledgeable team ready to assist you
- Learn which local organizations are doing the most effective work in the area you care about most
- Be certain that an organization is in good standing with the IRS
- Remain anonymous in your giving
- Receive itemized reports of your annual giving
- Teach your children about giving
What if I already have a private foundation but would like the simplicity of a DAF?
Easy. Private foundations can be converted to DAFs. Dissolving the private foundation is a fairly straightforward and simple process. While the procedure for dissolution varies slightly from state to state, we can help you get started with some general guidelines. And a donor-advised fund can be established in less than an hour.
Partnerships with foundations = results for our communities
The Charitable Foundation also has a track record of working in partnership with private foundations to benefit New Hampshire communities. Through a partnership with the Mary Gale Foundation, we process applications and make grants to support housing, health and other in-home services and programs for women in need in the Manchester area who are 65 and older. Through a partnership with the Conrad N. Hilton Foundation, proven protocols were implemented statewide for health care providers to help prevent drug and alcohol use among young people. And a recent partnership with the Eastern Bank Charitable Foundation means that young people are getting scholarship help to get high-value credentials and degrees so they can succeed in New Hampshire’s workforce and communities.
Additional questions? Please do not hesitate to contact us!
The New Hampshire Charitable Foundation helps generous individuals, families and businesses maximize the power of their giving, connects donors with high-impact nonprofits and programs, and leads and invests on important initiatives for the state. To learn more, contact Laura Rauscher, director of development and philanthropy services, at 1-800-464-6641 ext. 274 or Laura.Rauscher@nhcf.org.