Private Foundations
The Ottawa Community Foundation (OCF) can serve as an efficient alternative to setting up your own private foundation, which requires the demanding process of establishing a registered charity and many additional responsibilities. If you are considering a private foundation or looking for an efficient alternative to your existing private foundation, our Philanthropic Services Team is happy to discuss the advantages of a donor-advised fund. We will be happy to share our experiences of helping other private foundation in their transition.
| Ottawa Community Foundation | Commercial Donor-Advised | Private Foundation | |
|---|---|---|---|
| Background | National network of close to 200 local foundations created by and for their communities. Strong connection with local charities. Community foundations pioneered donor-advised funds in Canada, establishing the first of its kind in 1952. | Led by financial institutions and investment management firms. Came to Canada in 2004. | More than 5,100 active foundations in Canada. |
| Start-up costs | None. | None. | Legal and accounting expenses. Filing fees. |
| Minimum contribution | Minimum of $5,000, which can be built up over 5 years. | Varies from $10,000 - $250,000 | No mandated minimum, but expert opinion varies from capital of $1M-$5M or more. |
| Fees | Pooled administration provides economy of scale, lowers annual fee to 1.5% for most funds. | Fees vary. Additional fees may be charged for grant distribution, reporting and trailer fees. | Administrative fees vary from .75% - 1.5% of assets, depending on size and staffing. |
| Governance | Arm’s-length Board of Directors and voluntary committees comprised of expert local community leaders. | Board membership varies but generally includes members of financial institution’s senior staff and board of directors. | Trustees/directors initially chosen by the donor. More than half of board may have direct relationship with donor. |
| Donor Involvement | Donor can recommend grants to qualified donees. Grants are approved by the Community Foundation’s Board of Directors. The Foundation can help donors develop focus and process for their granting. Opportunity for involvement in strategic initiatives. | Donor can recommend grants to charities and qualified donees. Grants are approved by trustees of the gift fund. | Donor can name foundation for family or other loved one and involve family in process. |
| Donor Options | A range of fund options available. Giving and granting tailored to donor’s needs and goals. Can coordinate giving and support entire range of charities. Gift agreements can take as little as 24 hours to complete. | Usually one fund offered with several investment options. Can coordinate giving. Some limits on number of grants per gift. Gift agreements can take as little as 24 hours to complete. | Donor sets up foundation according to their wishes. Can coordinate giving and support entire range of charities and qualified donees. Set up of foundation can take 6 – 12 months. |
| Tax implications for gifts of shares | Immediate tax savings for most gifts of shares | Immediate tax savings for most gifts of shares | Tax savings are deferred and may be denied. Donation receipt can only be issued at time of disposition, which must be within five years. |
| Grant Making Support | Staff can help identify and assess local grantees, provide input on changing community needs. Disburses grants, monitors impact and performance, reports to donors. Expertise and advice available in broad range of granting areas, including the arts, health, education, social services, and the environment. Understanding of issues and connections to community creates opportunities for innovative work on pressing issues. | Generally unequipped to offer recommendations based on community knowledge or insight. Foundation disburses grants and reports to donors. | Foundation board and/or staff arrange and support grantmaking and monitoring structure. Foundation can adopt innovative approach to grantmaking, based on chosen mandate. |
| Investment Management | Board sets investment policy. Investment Committee made up of volunteer investment and finance professionals recommend the hiring of investment managers and monitor their performance. | Participating financial institution sets investment policy in conjunction with public foundation. Financial institution’s investment arm manages the funds. | Trustees/directors set the investment policy. Trustees/directors manage the funds directly or hire professional investment managers and monitor their performance. |
