Foundation Source Survey: Donors Weigh In on Charitable Giving Rules

A recent survey conducted by Foundation
Source reveals strong interest from high-net-worth donors and
individuals in having a more level regulatory playing field for the two
most popular charitable giving vehicles, private foundations and
donor-advised funds. Currently, private foundations are subject to
stricter regulations, and donor-advised funds receive more favorable tax
incentives.

“The differences in regulatory and tax treatment between these two
charitable vehicles has been the topic of considerable
media interest,” said Page Snow, chief philanthropic officer of
Foundation Source. “Until now, however, the opinions of individuals who
have first-hand experience donating via these vehicles, or are actively
considering establishing one, have been absent from the conversation.
Their answers about what they consider appropriate can provide helpful
insight to inform this discussion.”

Foundation Source polled private foundation donors, donor-advised fund
owners as well as other high-net-worth individuals who are considering
establishing one or both of the two vehicles.

Here are some of the survey’s most significant findings:

• The vast majority of all respondents (86%) said that donations to
  private foundations and donor-advised funds should enjoy the same tax
  treatment.
• Sixty-five percent (65%) of all respondents deemed the 5% Minimum
  Distribution Requirement for private foundations “just right,” and 57%
  said donor-advised funds should be subject to a similar requirement.
• Seventy-two percent (72%) of all respondents approve of the fact that
  private foundations are required to publicly disclose the names of
  their major contributors and grant recipients. Forty-seven percent
  (47%) of all respondents said the same regulation should also apply to
  donor-advised funds.
• Sixty-six percent (66%) of all respondents support the current rule
  that permits donating funds from a private foundation to a
  donor-advised fund. Conversely, although presently disallowed, 46%
  said they should be able to donate funds from a donor-advised fund to
  a private foundation.

“Although donor-advised funds and private foundations allow for
different degrees of philanthropic flexibility and control, many
individuals and advisors see them as almost interchangeable,” said Ms.
Snow. “Both vehicles facilitate a planned approach to giving, enable
charitable funds to grow in a tax-advantaged environment, and provide
for a same-year income tax deduction for contributions. Perhaps these
similarities explain why survey respondents favored comparable
regulation and tax treatment.”

Survey Methodology

Foundation Source conducted its survey online. Of the 205 U.S.-based
respondents, 151 individuals had either a private foundation, a
donor-advised fund, or both, and 54 individuals had neither charitable
vehicle.

The full report of this survey may be downloaded here.

About Foundation Source (www.foundationsource.com)

Foundation Source is the nation’s largest provider of comprehensive
support services for private foundations. Our complete outsourced
solution includes foundation creation (as needed), administrative
support, active compliance monitoring, philanthropic advisory, tax and
legal expertise, and online foundation management tools.

Now in our second decade, Foundation Source provides its services to
nearly 1,500 family, corporate, and professionally staffed foundations,
of all sizes, nationwide. We work in partnership with wealth management
firms, law firms, accounting firms, and family offices as well as
directly with individuals and families. Foundation Source is
headquartered in Fairfield, Connecticut.

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