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Donor-Advised Fund vs. Private Foundation: What's the Difference?

June 30, 2022
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Donating directly to a charitable organization might be the simplest way to give, but there are also various philanthropic vehicles available for minimizing taxes and maximizing impact. Two of the better known structures are donor-advised funds (DAF) and private foundations.

Donor-Advised Fund vs. Private Foundation

While there are 1.4 million registered public charities in the United States, less than 1% are donor-advised funds. Likewise, private foundation numbers, at around 90,000, are relatively modest. The impact of these nonprofit organizations, on the other hand, can be considerable. Here are the key differences between donor-advised funds and private foundations.

What Is a Donor-Advised Fund?

The donor-advised fund (DAF) is a tax-advantaged personal giving account established at a public nonprofit sponsor organization. The account is opened in the donor’s name and contributions are made to the organization(s) chosen by the donor. That might be a charity, but it could also be a university, religious foundation or financial institution. DAFs are enjoying unprecedented popularity with donations jumping by 27% since 2019. Giving from DAFs topped $34.67 billion in 2020, with the five largest — Fidelity, National Philanthropic Trust, Schwab, Vanguard and Silicon Valley Community — accounting for $24.5 billion alone. That said, the size of the average fund is a lot less, at around $150,000. Donors can gift cash, stock, real estate or other assets to a donor-advised fund. Traditionally, DAFs have been viewed as a tax-efficient way to give over a longer period of time without any annual obligation to distribute funds (thus the nickname “zombie philanthropy”), but now Groundswell is empowering corporations to unlock the advantages through our Philanthropy-as-a-Service platform. Whereas DAFs have conventionally been the preserve of the ultra-rich and brokerages, we’re offering access starting at $1 million (the lowest minimum contribution in the industry) to help employees with meaningful giving that benefits communities.

What Is a Private Foundation?

A private foundation, on the other hand, is a legal entity established solely for charitable purposes. Usually launched as a family or organization’s legacy initiative, the private foundation is a long-term project whose influence can spread worldwide. That’s certainly true of three of the biggest three: the Bill and Melinda Gates, Ford and Getty foundations. Private foundations are administered by a board of directors and can receive funds via real estate, investment assets or charitable donations. Unlike public charities, however, they usually derive their financial support from a single source, whether it’s a person, family or organization.

Key Differences Between Donor-Advised Fund vs. Private Foundation

There are a few important distinctions to note between the two, particularly when it comes to the overarching mission and vision.


Most donor-advised funds are intended to support charitable giving during the philanthropist’s lifetime, although some do extend to a further generation or two. One of the criticisms of DAFs is that rather than distributing donations to non-profit organizations in need, they are used by the rich to “park” private wealth in a tax deductible fund. That’s not the Groundswell approach. Our platform is designed to establish a minimum annual distribution for DAFs to bring communities to life, not mothball zombie philanthropy funds. Private foundations, by contrast, focus firmly on the future legacy, and most are established as permanent entities that will outlive the founder.


The board of directors (which can include the founder) manages a private foundation. For a DAF, the sponsor organization has control, although the donor may give their recommendation or advice on how grants are distributed.


Private foundations often celebrate a particular goal or set of values, so concealing the founder’s identity is rarely a concern. DAFs do offer confidentiality, so they are a useful vehicle for benefactors who want to support a charitable organization anonymously.


There is a lower barrier to entry for donor-advised funds, some of which can be set up with as little as $5,000, although upwards of $100,000 is more common. Because all legal formalities are covered by the parent organization, DAFs are relatively easy to set up. By contrast, private foundations take longer to establish, and the legal, administrative and tax affairs require professional support. Private foundations usually start with funds of $10 million or more.

Tax Matters

Arguably the biggest difference between the two is in terms of tax regulation. For private foundations, the IRS dictates that a 5% minimum of net investment assets must be distributed annually in the form of grants or administrative expenses. To set up a private foundation, the founder(s) must apply for recognition of exemption under Section 501(c)(3) with the IRS, and will subsequently need to file detailed tax returns on board members’ compensation, fees and grants. All are a matter of public record. Donor-advised funds, on the other hand, do not require any annual grants to be administered but do offer immediate tax advantages, particularly if the donor is receiving a windfall, inheritance or revenue from a business or property sale. Neither do DAF donors have to file tax returns to the IRS, not least because ultimate control of the DAF is with the sponsor nonprofit organization.

We’re Here To Support Your Giving Efforts

Despite the “zombie” tag, DAFs are by no means evil by nature. In fact, they can be an effective way to drive meaningful giving that brings communities to life. To find out how we’re raising zombie philanthropy from the dead with an employee benefit that benefits the world, get in touch with us today.

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Unlocking Philanthropy: A Ready-to-Use Corporate Giving Policy for Modern Businesses

Sample Corporate Giving Policy You Can Use Today

In today’s socially conscious environment, more companies than ever are recognizing the value of corporate philanthropy. Not only can a robust giving policy boost a brand’s image and reputation, but it can also play a pivotal role in community development and global betterment. If your company is considering the establishment of a formal corporate giving policy or refining its existing strategy, this sample policy might be the perfect starting point for you.

Download Sample Policy

Pillars of a Strong Corporate Giving Policy

Corporate giving programs range from employer donation matching programs to full blown corporate social responsibility programs with grantmaking and volunteerism.  Many companies find somewhere in the middle that aligns with their size, budget, geographic presence and most importantly company values and commitment to diversity and inclusion. But what truly makes a corporate giving policy stand out? Let’s delve into the key features, from donation matching to the strategic use of platforms like Groundswell.

1. Donation Matching: Doubling the Impact

One of the most effective tools in a giving policy is donation matching. This is where companies match employee donations to eligible non-profits, effectively doubling the contribution. Such programs not only amplify the impact but also motivate employees to participate, knowing their chosen cause will receive twice the support.

2. Charitable Stipends: Encouraging Employee Choice

Charitable stipends are allowances given to employees to donate to a non-profit of their choice. This not only encourages a culture of giving but also empowers employees to support causes they’re passionate about. The stipends can be a fixed amount annually or can vary based on the employee’s role or tenure.

3. Dollars for Doers: Volunteering Translated to Contributions

“Dollars for Doers” programs convert volunteer hours into monetary donations. When employees volunteer their time for a cause, the company makes a donation equivalent to the hours spent. This fosters a culture of hands-on involvement and ensures that both time and money are being donated to valuable initiatives.

4. Corporate Grants: Sowing Seeds for Bigger Change

Beyond individual employee contributions, companies can set aside a dedicated fund for corporate grants. These grants can be given to non-profits, research initiatives, or community projects that align with the company’s CSR objectives. Such grants can lead to substantial, long-term changes and foster strong partnerships with community leaders and organizations.

Why Choose Groundswell for Your Giving Initiatives?

Incorporating these elements into a giving policy requires streamlined management, transparency, and ease of execution. This is where platforms like Groundswell come into the picture.

Groundswell offers an efficient and affordable solution for companies aiming to elevate their philanthropic endeavors. Here’s why it’s the ideal choice:

  • User-Friendly Interface: Groundswell’s platform is designed for both companies and employees, ensuring smooth navigation and straightforward donation processes.
  • Versatility: Whether it’s donation matching, handling charitable stipends, or managing corporate grants, Groundswell offers solutions tailored to each company’s unique needs.
  • Cost-Effective: Groundswell provides a comprehensive suite of tools at competitive prices, ensuring that more of your money goes towards the cause rather than platform fees.
  • Transparency: Track donations, monitor employee involvement, and generate detailed reports to measure the impact—all in one place.

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An effective corporate giving policy is a blend of structure, employee engagement, and impactful contributions. By incorporating elements like donation matching, charitable stipends, “Dollars for Doers,” and corporate grants, businesses can create a ripple effect of positive change. And with platforms like Groundswell, executing these initiatives becomes not just feasible but also highly efficient and cost-effective.

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5 Tips to Boost Engagement & Impact on Giving Tuesday

Leverage GivingTuesday to boost generosity

Every November, the Tuesday after Thanksgiving is known as GivingTuesday, which often serves as the unofficial start of end-of-year giving campaigns. This comes on the heels of holiday shopping deals on Black Friday, Small Business Saturday, and Cyber Monday. It is a worldwide phenomenon, inspiring millions to lean into the end-of-year holiday spirit with generosity and compassion. For many charities, GivingTuesday has become their biggest day for donations – and can help resource their ability to have an even greater impact in the year ahead.

For companies, GivingTuesday and the end-of-year giving season offers an opportunity to double down on their commitment to social responsibility, strengthen relationships with employees, and boost their impact in the community and broader world.

At Groundswell, we partner with companies all across the country to design and launch GivingTuesday campaigns – leveraging our easy-to-use platform that makes it easy for employees to participate and send donations to the causes and charities that they care most about. Below are some best practices to boost engagement and inspire generosity during the giving season.

1. Make Giving Easy:

A lot of giving platforms out there make it incredibly hard to donate. Some don’t have all 1.5 million IRS-approved charities listed. Others require employees to navigate through a web of intranet or sharepoint sites to find the giving program landing page. And others require that HR is notified of any donations an employee wants to make. At Groundswell – we are committed to removing all of the friction, and ensuring that employees can find charities easily, through a platform that is accessible from the palm of their hand, so they can give whenever they want to.

2. Launch a GivingTuesday Match Campaign:

Through Groundswell you can customize and launch a special GivingTuesday match campaign in a matter of minutes. Simply pick the nonprofits to include in the special campaign, select the start and end-date for the campaign, and then determine the match – 2x, 3x – along with any overall budget limits, then you’re done!

3. Boost engagement by involving ERGs:

Share nonprofit recommendations from Employee Resource Groups to provide inspiration around causes and nonprofits that matter to your employees. You can feature these nonprofits on dedicated ERG Corporate Spotlights and Campaigns that will be visible to all employees on their Groundswell dashboard.

4. Surprise (and Delight) Employees With A Gift to Give:

Consider sending a surprise “gift to give” to reward those already participating in your giving program (and to incentivize others to enroll). These gifts might be used to further maximize impact through the existing campaign, or to donate to other nonprofits your employees care about. Groundswell’s custom gift feature allows companies to easily schedule and send gifts with little to no administrative burden.

5. Level up with Volunteer Matching:

Groundswell’s Volunteer Matching program – sometimes known as Dollars for Doers – recognizes that some employees may not have funds to contribute, but have time – and rewards them in the same way. It’s an inclusive approach that invites everyone to participate in GivingTuesday, even those who may not be able to donate their own funds.

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12 Employee Benefits Survey Questions Modern Companies Should Ask

In today's business environment, having the right and highest performing talent is more critical than ever. With benefits packages playing a vital role in these decisions, how can companies truly gauge their effectiveness? By initiating regular employee benefits surveys.

Scroll down for a free survey template below.

Let's dive in to the importance of asking the following questions.

Is our workforce satisfied with the current employee benefits package?

Gaining insights from "how satisfied are you with our company’s benefits package?" can offer companies a quick pulse on the effectiveness of their benefits. A dip in satisfaction might signal a need for re-evaluation, especially if you're looking to maximize your budget.

How comprehensive are the employee benefits we offer?

Do employees feel that the organization covers a wide range of their needs? Asking, "do you feel our benefits package is comprehensive in its offering?" can shed light on any potential gaps in coverage.

Are we showing true commitment to Diversity, Equity, & Inclusion through our benefits?

Are the company's efforts in promoting DE&I resonating? This can be gauged by asking if the benefits genuinely support diversity and inclusion. If they aren't, here's an opportunity to collect ideas directly from your employees.

Read more about how to make sure your giving program is equitable and inclusive.

Do our benefits reflect our company culture and values?

The question, "do you feel our benefits package supports our cultural values?" will highlight any potential discrepancies in practicing what you're preaching.

Did you know? Two-thirds of employees say it’s important for a company to align to their values.

Are we catering to the needs of a remote or multi-location workforce?

With remote work on the rise, is the company adapting its benefits accordingly? It's essential to find out if employees feel supported, regardless of their work setting.

Would employees recommend the company based on our benefits?

This is an easy one to skip, but it's a great question to ask. See how influential your benefits package is for employee referrals. Determining if employees would advocate for the company based on its benefits can be a key metric for recruitment.

How do specific benefit categories fare?

By querying satisfaction levels across various benefits – physical health, social impact, mental health, financial health, and fringe benefits – can companies discern which areas are thriving and which need enhancement?

What additional benefits do employees desire?

Is there a particular benefit that could make a difference in employee satisfaction and retention? Discovering this can be as straightforward as asking, "if you could choose one benefit not currently offered, what would it be?"

If your workforce desires a more meaningful benefit, see why decentralizing your corporate philanthropy strategy can achieve greater impact at scale.

How often should I send an employee survey about our benefits?

While every business has their own set of unique needs, conducing a quarterly employee survey at minimum can help you get a pulse check.

There will be some natural and unplanned peaks in valleys throughout the year that can drastically affect employee morale and company culture. By proactively seeking feedback through surveys, companies can foster a culture of continuous improvement, ensuring they remain at the forefront of employee satisfaction.

What are some affordable benefit options we can provide employees?

Corporate matching or giving programs can be a low-cost addition to your benefit offering that supports your employees’ unique passions and perspectives through charitable giving and boosts your company’s commitment to social impact.  Groundswell offers a comprehensive solution with a simple implementation and nearly zero administration burden.

[Free Template] Employee Benefits Survey Questions

  1. How satisfied are you with our company’s benefits package?
  2. Do you feel our benefits package is comprehensive in its offering?
  3. Do you feel our benefits package supports our cultural values?
  4. Do you feel our benefits package supports our commitment to Diversity & Inclusion?
  5. Do you feel our benefits package supports our remote or multi-location workforce?
  6. How likely are you to recommend applying based on our benefits package?
  7. How satisfied are you with our physical health benefits (i.e. health care, sick leave, etc)?
  8. How satisfied are you with our social impact benefits (i.e. corporate matching, volunteering, etc)?
  9. How satisfied are you with our mental health benefits (i.e. vacation time, EAP, etc)?
  10. How satisfied are you with our financial health benefits? (i.e. retirement, student loan assistance, etc)
  11. How satisfied are you with our fringe benefits and perks? (i.e. fitness subsidies, stipends, etc)
  12. If you could choose one benefit not currently offered, what would it be?
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