The purpose of this article is to provide an introduction to the topic. There are several different kinds of private foundations and supporting organizations. Additionally, community foundations each have their own set of policies regarding donor advised funds. The following comparison is generally applicable to the common use of these terms. The donor must find the appropriate balance between control, tax benefits, economy, manageability and financial flexibility.
Control is the ability to influence policies and distributions.
Economy relates to establishment and ongoing management costs. Manageability is the ease of letting others attend to the operational details. Financial flexibility is the degree to which the donor can use the entity to accomplish family financial goals unrelated to its exempt purpose, such as receiving a gift of closely-held stock and selling it to the donor's heirs to maintain family management of the business. While these factors are somewhat subjective, the following table provides a useful comparison of the relative strengths of each choice. It is vital to involve competent counsel to evaluate the advantages and disadvantages of each option.