For Professional Advisors
Types of Funds
Your client may choose from the following fund types:
Unrestricted Funds: This type of fund offers the broadest option. By and large, these funds are created by those who care about the community beyond their own lifetimes. An unrestricted fund enables The Foundation to respond to the community’s changing needs and emergencies, to support the creation of innovative responses to community problems, and to enhance the quality of community life. By creating unrestricted funds, donors create a living legacy that will grow and change as the community does. The donor may choose to make a gift to support the service programs of The Foundation and to meet the most pressing community needs as they arise. Income from these funds is used for grants to nonprofit organizations serving communities throughout Middle Tennessee.
- Make the broadest impact on the community over time.
- Recognize that community agencies and community needs change over time and allow the fund to remain flexible to respond to those changes.
Field-of-Interest Funds: This fund allows donors to support broad areas of concern, such as education, scholarships, the arts, environment, youth services or the aged. The Foundation then makes grants to the most appropriate programs or organizations within the specified field of interest. Donors may also direct that grants be made only to a specific geographic area within the state – for example, a fund for Maury County.
- Focus a significant contribution on a certain area that is meaningful to the donor, such as support for the elderly, children, health care, or a geographic area.
- Make a timeless impact on that aspect of the community by leaving specific grant-making decisions to the civic leaders of the future.
Designated Funds: This fund type ensures that support will be provided to specific eligible organizations that donors name. Donors may establish a designated fund to endow the charitable giving that they’ve enjoyed throughout their lifetimes. If any of the named organizations cease to exist or change the purpose of its activities, The Community Foundation of Middle Tennessee will ensure that donors’ charitable goals are continued.
- Support in perpetuity, those organizations that donors have cared about most during their lifetimes.
- Allow donors to establish one fund to support several organizations in the future. Donors may designate percentages of fund earnings to specific organizations.
- Ensure that if an organization goes out of business or changes its purpose, the fund will not be spent but will instead continue to carry out the donor’s charitable intentions.
Agency Endowment Funds: This fund type is created by a non-profit as a means of protecting charitable dollars for the future of their work and their mission. Through an endowment within The Community Foundation, a non-profit seeks to build and secure endowment funds and to receive prudent stewardship of their funds. Although an Agency Endowment Fund can only be established by the non-profit agency itself, donations by others to these funds are welcome.
- Protect an organization’s endowed monies to meet its future needs.
- Provide a relatively constant source of annual income.
- Demonstrate the organization’s security, stability, and long-range financial planning.
- Decrease the administrative burden of the beneficiary’s staff.
- Increase investment yield, since the endowment is grouped with other funds at The Foundation to receive maximum return and lower fees due to the size of the total investment.
- Allow the organization to take advantage of planned giving and other technical assistance offered by The Foundation.
Scholarship Funds: This fund enables students to pursue academic goals and can be established by companies, organizations, families, and individuals. These funds may have broad merit or need based criteria or be designed to address students of a certain school, a certain neighborhood, and/or those undertaking certain fields of study. A scholarship fund can be created with a gift of $10,000 or more.
- Help students to afford the high price of continuing their education.
- Provide support to graduates of specific high schools or students of particular colleges or universities.
- Allow donors to set up guidelines for scholarship recipients including academic merit, leadership, motivation, financial need, community involvement, or a demonstrated or potential talent.
Donor-Advised Funds: This type of fund provides maximum convenience and flexibility by enabling donors to make contributions to charitable organizations in both lean and profitable years. Through the creation of this fund, donors can make suggestions for distributions to specific charities. Grant advice and recommendations cannot be binding on The Foundation Board, but are valued as an additional source of information about community priorities. A donor-advised fund allows donors to make suggestions about distributions of income and principal. It is especially useful for donors who want to take a charitable deduction one year and make distributions over several years. This fund allows donors to support numerous charities of their choice through one simple donation.
- Simplify charitable giving.
- Secure maximum tax benefits for all of your charitable gifts.
- Allow donors to support numerous charities of their choice through one simple donation.
- Simplify tax reporting of charitable contributions.
- Offer maximum flexibility to give to varying charities or to change beneficiaries over time. Can involve spouses, children, or associates in charitable giving.
- Offer a way to maintain a steady manner of giving through both profitable and leaner times.
- Give donors the satisfaction, flexibility, and personal involvement similar to having their own private foundation without incurring the administrative burdens.