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Community vs. Private Funds

NBACF Private Foundation
     
Tax Status Derives “public charity” 501(c)(3) status, and qualifies for 170(b)(1)(A)(vi) “public support” requirements from its relationship with NBACF. Must apply to IRS for private foundation tax-exempt status. (Currently 18 months or more) Does not qualify as a “publicly supported” organization.
     
Start-Up Costs None Several thousand dollars for legal and accounting expenses and filing fees.
     
Start-Up Time None Form independent corporation (or trust). Must file for IRS approval as a tax-exempt entity
     
Minimum to Start a Fund $10,000 Many Advisors suggest more than $10 million to justify the cost.
     
Annual Expenses Varies depending on size of fund. Fees are normally covered by investment returns. Annual tax returns and audit required. Grantmaking and administrative support must be staffed independently. Separate investment and Directors and Officers insurance costs.
     
Annual Taxes None Excise tax of up to 2 percent of net investment income, including net capital gains. Other excise taxes may apply if certain annual tests are not met.
     
Annual Distribution Requirements None At least 5% of Net Asset Value is required to be distributed
     
Maximum Annual Income Tax Deduction cash Up to 50 percent of adjusted gross income. Can rollover excess deduction for the next 5 succeeding years. Up to 30 percent of adjusted gross income. Can rollover excess deduction for the next 5 succeeding years.
     
Anonymity Donors and grants from funds may remain anonymous. All donors and grants are public information and easily found via the internet.