Another important advantage of the private foundation is that the donor can time the gift according to the relevant fiscal year-end without having to select the charity or purpose to which the money will ultimately be applied. When donors are only giving amounts of several thousand dollars to an individual charity, they are willing to write a cheque based upon the imperative of making the gift before the end of December. Although they believe in the charity, there is a concern that the money will disappear into some operating deficit. They will often want to know if the gift will be segregated into an endowment or applied to some considered project which the donor has discussed with the charity. The donor's mindset changes significantly when the gift is not merely out of the donors' income but reduces their capital.
Donors giving out of capital want the gift to fundamentally impact the charity.
For the best possible motivations, donors giving capital want to do something which will enhance the organization or enable it to go in a new direction. Many charities are worried about the use of private foundations because it places another charity between them and the donors. They think that the donor's loyalty emanates from the issuance of the tax receipt for the donation. They do not realize that a private foundation not only creates the tax efficiency of the donation tax credit, but all income earned is tax exempt as well. Although donors have irrevocably given away the property in terms of beneficial ownership and personal use, they still have control of the assets through the foundation.