Private Foundation gives full control — your family board, your investment policy, your grantmaking, your name on the building. It also brings 5% mandatory annual distribution, 1.39% net-investment-income excise tax, $25K+ in annual administration, and lifetime compliance burden. The Donor-Advised Fund is cheaper, faster, anonymous-capable, and growing rapidly — but the sponsor controls distributions, and there is no multigenerational family board to grow into. This tool gives you the five-year cost comparison and the transition path most affluent families actually walk.
Both vehicles are eligible. The crossover where PF starts to make economic sense is usually around $3M+ of initial corpus, given fixed admin costs.
These five questions move the recommendation more than the cost arithmetic does.
Annual grant volume and types. PF must distribute 5% of average net investment assets annually (IRC §4942). DAF has no mandatory minimum but most sponsors expect activity to avoid "dormant fund" labels.
PF base administration runs $25K-$60K per year for a modest-size foundation; can scale to $200K+ for a full-staffed family foundation. DAF sponsor admin fees run 0.4%-1.0% on AUM, declining with size.
Side-by-side cost comparison + scored recommendation based on family priorities. Most affluent families end up running both vehicles — this tool tells you which to start with.
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Educational and informational purposes only. This calculator and any output it produces are intended solely for general educational and decision-support purposes. They do not constitute investment, tax, legal, accounting, or any other professional advice, and they do not create a fiduciary, attorney-client, or accountant-client relationship.
Estimates based on your inputs. Private Foundation operation is governed by IRC §§4940-4945 (excise tax on net investment income, self-dealing, minimum distribution, excess business holdings, jeopardy investments, taxable expenditures); DAF operation by §4966-4967 and sponsor agreement. Both vehicles are subject to evolving Treasury regulations and IRS guidance. The 1.39% PF excise rate, the 5% minimum distribution rule, the 30% / 20% / 60% / 30% AGI deduction ceilings — all can change with legislation. State charitable trust registration and reporting requirements vary materially.
Consult your own qualified professionals before establishment. Do not establish either vehicle without a trust/tax attorney experienced in private foundation or DAF design, a CPA who can advise on the deduction ceilings and the 990-PF / sponsor reporting, and an investment advisor who understands the §4944 jeopardy-investment rules (for PF).
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