Today’s consumers expect the brands with which they do business to embrace giving back to the community. The ways business leaders can engage in charitable giving are plentiful, ranging from corporate foundations, matching gift programs, giving cards and disaster relief efforts and donations. Given the different ways available for developing and executing a corporate philanthropic program, doing the most good with your donations requires comparing options against needs and expectations.
Often, establishing a textbook-definition of a corporate foundation feels like a natural and best step toward fulfilling your company’s charitable mission. However, legal obligations and tax rules are attached to a corporate foundation, making them cumbersome to administer even for larger companies. Without getting too into the weeds, a corporate foundation can be a lot to manage since:
- It must be a separate legal entity and have its board members acting in its best interest
- It must have its financial reports filed annually with the IRS
- It might be required to register and renew annually to solicit charitable contributions in a majority of states in order to fundraise
- It must register with and file financial statements at the state level
- It must abide carefully by the IRS’s self-dealing rules
Corporate social responsibility (CSR) certainly comes with much legal responsibility should a charitable foundation be part of your practices. For those seeking an alternative that is just as, if not more, effective and efficient at meeting charitable goals, there is a corporate donor-advised fund, which can act as a company’s corporate foundation.
In addition to the social advantages of corporate philanthropy, there are tax benefits that can be maximized with a corporate donor-advised fund, including:
- Higher AGI tax deduction limitations
- A fair market value deduction for gifts of real estate and closely held stock
- Avoiding annual excise tax payments
- Avoiding excise taxes on the sale of highly appreciated gifts
Compared to private corporate charitable foundations, corporate donor-advised funds are far less expensive without the costs of dealing with the registrations, renewals, filings and careful compliance oversight. Reducing those costs and time burdens eliminates the need for additional staff or work hours. Also, a corporate donor-advised fund streamlines your corporate giving under one account with one year-end statement for tax purposes.
LEARN MORE: How to Establish a Corporate Giving Program
Interested in opening a corporate donor-advised fund?
Greater Horizons has helped hundreds of companies across the U.S. establish corporate donor-advised funds with fees starting at just $21 a month. Our dedicated team can perform all the administrative work, as well as guide you through strategic planning, trends in corporate giving, engaging employees, IRS compliance, matching gifts, making grants and whatever else you need to fulfill your company’s charitable mission.
To set up a corporate donor-advised fund, contact us at info@greaterhorizons.org. You can also review our sample Corporate Donor-Advised Fund Agreement to see the information we will need to create your fund.
If you would like a Greater Horizons representative to guide you through the process, contact corporategiving@greaterhorizons.org.