From Private Foundation to Donor-Advised Fund: A Five-Point Checklist
Written by Jennifer Turner, CICF Vice President of Philanthropy
Many families established private foundations because they wanted to make a lasting difference, involve family members in giving, and create a charitable legacy. Over time, however, circumstances can change. Board meetings become harder to schedule, family members may live across the country, and tax filings, investment oversight, recordkeeping, and compliance can become burdensome.
That can be a good time to ask: Would a donor-advised fund better serve our family’s charitable goals? There is no one-size-fits-all answer, but these five steps can help frame the conversation.
1. Be realistic about what is working – and what is not
Take an honest look at how the private foundation functions today. Is it still helping your family accomplish what you hoped? Are family members actively engaged, or has the responsibility fallen to one or two people? Sometimes the foundation has not failed; your family’s needs have simply evolved.
2. Consult the specialists
Talk with your attorney, CPA, and financial advisors. Transitioning from a private foundation to a donor-advised fund involves legal, tax, and financial considerations, and your advisors can help determine whether it makes sense for your circumstances.
Bring our team into the conversation early as well. We can explain how a donor-advised fund works, discuss the transition process, and help you preserve the identity and charitable purpose your family has built. In many cases, a new fund can continue under a familiar name.
3. Identify decision-makers
Consider who should advise the new fund. Family members can recommend grants today, and successor advisors can help involve future generations. This can preserve meaningful family participation with less administrative responsibility.
4. Move carefully into implementation
If your family decides to proceed, the private foundation generally distributes its remaining assets to establish or add to the donor-advised fund after reserving enough for final accounting, legal, tax-preparation, and closing expenses. Your advisors can then complete the final tax return and required filings.
5. Carry on with the work that matters
Once the transition is complete, your family can continue supporting the organizations and causes you care about – often with significantly less paperwork and compliance responsibility. That means more time for what likely inspired the foundation in the first place: making a difference.
Every family’s situation is unique, and moving from a private foundation to a donor-advised fund is an important decision. If you are wondering whether it could be the right fit, we would be glad to talk with you and your advisors about your options and how to continue the charitable legacy you have built.
About the Author
Jennifer Turner has a passion for creating partnerships and connections within the community to create meaningful impact. As vice president of philanthropy at CICF, she helps support more than 1,300 families, companies, and not-for-profits design philanthropic plans that are both meaningful and impactful. With expertise in fundraising, capital campaigns, planned giving, and more, Jennifer helps organizations of all kinds maximize their missions and ensure their long-term sustainability.
