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 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 stocks; cost basis for publicly traded bonds and any non-publicly traded securities or nonfinancial assets2
Grantmaking
Donor makes grant recommendations, which are restricted to US-based public charities or their equivalents Donor has full control over and responsibility for grantmaking decisions in accordance with IRS regulations applicable to private foundations
Investments
Donor can choose investment management as allowed by the DAF sponsor's guidelines Donor manages investments directly in accordance with IRS regulations applicable to private foundations 
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
None 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
  • Minimum account balance: $250 
  • Contributions are irrevocable

Assets accepted:

  • Cash
  • Securities and mutual funds
  • 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
  • Other complex 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  - clients may name co-Advisors and Successor Advisors to share in account privileges

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

Assets accepted:

  • Cash
  • Securities and mutual funds
  • 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
  • Other complex 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

 

For donor-advised fund questions contact the Charitable Gift Fund at 888-703-3436 or email us at charitablegiftfund@bofa.com.

 

For private foundation questions or general philanthropic solution inquiries, email us at philanthropyteam@bofa.com.

1 This limitation was increased from 50% to 60% for years 2018 through 2025, if all gifts are made in cash. It is scheduled to “sunset” and return to 50% in 2026. 

2 Fair market value deductions generally subject to one-year holding period.

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

4 Please note: additional fees may apply to taking in and managing these assets.

5 Custom philanthropic strategy services are available for giving vehicle accounts > $10MM and/or households with investment assets > $25MM.

6 Additional fees may apply to some of these services.

 

Donor-advised fund and private foundation management are provided by 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.

 

Institutional Investments & Philanthropic Solutions (also referred to as “Philanthropic Solutions” or “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, fiduciary, and investment management services are provided by wholly owned banking affiliates of BofA Corp., including Bank of America, N.A. and its agents.

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Investment, insurance and annuity products:

Are Not FDIC Insured Are Not Bank Guaranteed May Lose Value
Are Not Deposits Are Not Insured by Any Federal Government Agency Are Not a Condition to Any Banking Service or Activity

Investing involves risk. There is always the potential of losing money when you invest in securities. Past performance does not guarantee future results. Asset allocation, rebalancing and diversification do not guarantee against risk in broadly declining markets.

Merrill, its affiliates, and financial advisors do not provide legal, tax, or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.

This material is not intended as a recommendation, offer or solicitation for the purchase or sale of any security or investment strategy. Merrill offers a broad range of brokerage, investment advisory (including financial planning) and other services. Additional information is available in our Client Relationship Summary. 

This material does not take into account a client’s particular investment objectives, financial situations, or needs and is not intended as a recommendation, offer, or solicitation for the purchase or sale of any security or investment strategy. Merrill offers a broad range of brokerage, investment advisory (including financial planning) and other services. There are important differences between brokerage and investment advisory services, including the type of advice and assistance provided, the fees charged, and the rights and obligations of the parties. It is important to understand the differences, particularly when determining which service or services to select. For more information about these services and their differences, speak with your Merrill financial advisor.

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, registered investment adviser, Member SIPC and a wholly owned subsidiary of BofA Corp.

Insurance and annuity products are offered through Merrill Lynch Life Agency Inc., a licensed insurance agency and wholly owned subsidiary of Bank of America Corporation.

Trust, fiduciary and investment management services, including assets managed by the Specialty Asset Management team, are provided by Bank of America, N.A., Member FDIC and wholly owned subsidiary of Bank of America Corporation (“BofA Corp.”), and its agents.

Bank of America Private Bank is a division of Bank of America, N.A.

U.S. Trust Company of Delaware is a wholly owned subsidiary of Bank of America Corporation.

Banking products are provided by Bank of America, N.A. and affiliated banks, Members FDIC and wholly owned subsidiaries of Bank of America Corporation.

© Bank of America Corporation. All rights reserved.

Patent: patents.bankofamerica.com

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