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Abstract: 

Ordinarily, a cash gift to a private foundation is deductible to the extent of 30% of the donor’s adjusted gross income (AGI). A gift of most types of capital gain property is deductible only to the extent of 20% of the donor’s AGI, and the amount of the deduction is the donor’s basis in the property, not the property’s fair market value (FMV) as of the date of contribution. In contrast, a cash gift to a public charity is deductible to the extent of 60% of the donor’s AGI. A gift of capital gain property is deductible to the extent of 30% of the donor’s AGI, based on the property’s FMV. For this reason, a gift to a public charity has the potential to provide a better tax advantage to the donor than does a gift to a private foundation. However, the tax result changes if a private foundation meets the “conduit foundation” requirements of IRC §170(b)(1)(F)(ii). An individual donor can claim a deduction up to 50% of his AGI for a donation to a conduit foundation, and use the FMV of property to determine the amount of the deduction.

Keywords: Qualifying as a Conduit Foundation; §170(b)(1)(F)(ii)

Affiliations:  1: Clark Hill Strasburger.