The Conduit Election, an election that can be made by a private foundation in any taxable year, permits donors to treat contributions to their foundation made in an election year as though they had been made to a public charity instead. Treating contributions as though they had been made to a public charity, rather than to the private foundation, provides two key advantages:
- Higher adjusted gross income (AGI) percentage caps; and
- A fair market value deduction for contributions of appreciated, long-term capital assets. This includes, but is not limited to, privately held stock, real property, notes, bonds and partnership interests.
As illustrated below, a donor of non-cash property to a private foundation is usually limited to a cost basis deduction, unless the property donated is publicly traded stock held by the donor for over a year (qualified appreciated stock).