Two of the most common options for charitable giving are the donor advised fund, which we call the HCF Giving Fund, and the private foundation.  The first option, a Giving Fund, has many clear advantages over starting a private foundation.

1. Ease of set up.  You can set up a Fund in as little as a day.  With a private foundation, you must incorporate, and then apply for IRS approval to attain tax-exempt status.
    
2. Greater tax deduction for cash gifts.  When you have a Giving Fund, up to 50% of adjusted gross income (AGI) can be deducted, versus 30% or less of AGI with a private foundation.
    
3. Greater tax deduction for gifts of publicly traded stock.  When you have a Giving Fund, up to 30% of adjusted gross income (AGI) can be deducted, versus 20% or less of AGI with a private foundation. 
    
4. Greater tax deduction for gifts of closely held stock or other non-liquid assets.  You can take a deduction at fair market value when you have a Giving Fund, whereas your deduction is generally limited to a cost basis when you have a private foundation.
    
5. Greater anonymity.  Grants made from your Fund can be made anonymously.  Grants made from your private foundation typically identify your foundation as the source.  And annual tax returns filed for private foundations are open for public viewing.
    
6. Lighter administrative burden.  When you open a Fund, HCF coordinates all administration, distribution (grant-making), investment management, and record keeping.  When you operate a private foundation, you're responsible for managing assets, balancing books, keeping records, and preparing tax returns.
    
7. Lower initial costs.  A Giving Fund requires no set-up fees, and fees for gifts of real estate and other non-liquid assets are reasonable.  A private foundation brings set-up costs, plus accounting, legal, and tax-related costs. 
    
8. Lower ongoing costs.  The cost to maintain your Fund is low (1% or less of fund balance) because costs are pooled to keep overhead low.  When you operate a private foundation, you must pay for liability insurance, as well as administrative, tax, and accounting costs.
    
9. No excise taxes.  A Giving Fund requires no excise tax.  A private foundation requires you to pay up to 2% excise tax on investment income each year, and places restrictions on self dealing. 
    
10. More flexible distribution requirements.  With a Giving Fund, there's no minimum distribution (grant-making) requirements.  With a private foundation, you must distribute at least 5% of your fund annually.
     
11. HCF helps you verify charities' tax-exempt status.  HCF verifies the tax-exempt status of all charities receiving grants from your Fund.  With a private foundation, verification is up to you. 
     
12. Greater privacy.  Your HCF Giving Fund is confidential.  With a private foundation, all contributions and distributions are public record.
     
13. No annual reporting requirements.  With a Giving Fund, no annual reporting is required.  With a private foundation, you must file an Annual 990-PF with the IRS.