Comparison of
Foundation Formats

A solid foundation will flourish in posterity.

Component Family Foundation
A charitable account at The American Foundation of Utah
(Public Charity Status)

Example:
A couple wants to start a foundation that will make annual grants to charities they recommend.  They want to be involved with this "charitable direction" for their lifetimes and then pass this same "charitable direction" on to their heirs. Their family foundation will make annual grants to family-selected charities in perpetuity. They would like to begin immediately and want the process to be as easy and inexpensive as possible so that their funds can be put to use doing good in the world.

Benefits:
The American Foundation of Utah does all accounting, tax filing, and makes grants to family-selected charities.  The donors get the "public charity" tax deduction, which means that all contributions are 100% tax deductible at the rate of 50% of the donor's adjusted gross income for contributions of cash and to 30% of adjusted gross income for contributions of stock or other property, both with a five-year carry-over. *

Best For:

• Anyone who needs additional income tax deductions for any reason. Also, anyone who wants to reduce his or her estate to avoid estate taxes.
• And, of course, anyone who wants to create an ongoing charitable account at little to no cost.
• Families that want to build "Family Charitable Legacies"

Support Organization
A family foundation established as an independent corporation
(Public Charity Status)

Example:
An individual with large assets creates an organization with a Board and its own tax status, to benefit one or more charities.

Benefits:
This structure is more independent and has added management responsibilities. A support organization has its own governing structure and tax ID number. It may raise money as an independent entity, apply for grants and have its own offices, officers, employees, and programs.
A support organization enjoys a “public charity” status because of its affiliation with The American Foundation of Utah, so all contributions to it receive the higher "public" charity deductions. Donors receive an income tax deduction for 100% of the fair market value of property transferred directly to this type of foundation. The amount of the deduction that can be used in any given year is the more favorable 50% of the donor's adjusted gross income for contributions of cash and 30% of adjusted gross income for contributions of stock or other property, both with a five-year carry-over. *

Best For:

• Those who want to be more involved with the actual administration and management of their family foundation. In this format, the donor can be part of the actual controlling Board of the foundation.
• Most appropriate for corporations, charities, associations, and very large family foundations (typically $1 million plus). Popular with hospitals, museums and universities.

Private Foundation
(Does not have public charity status)

Example:
A family wants to help a cause in its own way with no ties to any other organization. They would like some tax deductions but the most important issue is complete and independent administration unattached from any other public charity.

Benefits:
This type of foundation is similar to a support organization in that a private foundation may raise money as an independent entity, apply for grants, and have its own offices, officers, employees, and programs. In a private foundation, the donor(s) has complete and independent administration and managerial responsibilities. However, since it is "private" and not a "public charity," the tax benefits are less-the income tax deduction for most property gifts to a private foundation is limited to the cost basis in most cases. The limitation on how much of the deduction that can be used in any given year is also lower -30% of adjusted gross income for gifts of cash and 20% for gifts of assets with a five-year carry-over. *

Best For:

• Best for individuals and organizations that do not need the maximum tax deductibility but would like complete and independent administration of their organization.
• There are other restrictions that prevent the donor from achieving many tax and financial objectives obtained with the above-listed public charity types of family foundations.
• Typically applied in select cases with assets of over $10 million.

* Please consult a qualified legal, financial and tax professional regarding the application of these rules to your individual circumstance.

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