Private vs. Community Foundation

A community foundation, such as Taos Community Foundation, is supported by the public and governed by a Board of area residents who represent the public interest. It is different from a private foundation in that it is not subject to the control of an individual family or group, and because of this distinction, a community foundation is classified by the Internal Revenue Service as "not a private foundation" but "a public charity".

Public charity status entitles a community foundation's donors to tax deductions that are superior to those accorded to a private foundation's donors. It is also not subject to tax on its investment income, certain public disclosure requirements, and restrictions on making certain types of grants, holding certain kinds of property, and engaging in certain charitable activities as are private foundations.  

For these reasons, many individuals, families, and businesses are better able to achieve their charitable goals with a fund at a community foundation than by establishing or maintaining a private foundation. A family or group can establish an Affiliated Fund within Taos Community Foundation, which acts much like a private or family foundation. It is named by the donor and can have its own Board of Directors and customized investment and grant making policies.

Here are a few of the important distinctions between a community foundation and a private foundation:

For gifts of cash, deduct up to 50% of annual income.	For gifts of cash, deduction limited to 30% of adjusted gross income.
100% of market value of appreciated property is deductible from income up to 30% of taxpayer's annual income (or 50% of income if amount is limited to property's cost). Carry forward unused deduction for 5 years.	Deduct only the cost of appreciated property, up to a maximum of 20% of adjusted gross income.
No tax on investment income.	2% excise tax on investment income. 1% tax if certain payout standards are met.
Anonymity when preferred.	Detailed public reporting required. Includes investments, grants, fees, salaries.
No minimum payout required, therefore more flexibility in accepting non-productive assets.	5% of asset value must be paid out each year.
No separate IRS application.	IRS application needed.
Administration is in place.	Administration must be hired, paid, and supervised.
Community and non-profit knowledge exists; due diligence done.	Must learn about community and its needs, and do due diligence on non-profits.
Permanent	Must provide for succession.