What is a Donor Advised Fund?
A Donor Advised Fund at the Community Foundation gives individuals, families and corporations great flexibility in their charitable giving, with minimal cost. Donor advised funds permit donors to participate in the funding process by suggesting grants to nonprofit organizations. This type of fund provides convenience and flexibility by allowing donors to support various charitable organizations over time through one initial donation. For some, this is an attractive alternative to a private foundation.
The Community Foundation helps maximize the joy of giving while minimizing the effort. Our staff is available to work with any donor to think strategically about opportunities to invest in issues that matter to them, to determine how to get the greatest charitable “bang for the buck” and/or how to make their charitable vision a reality.
There are no setup fees, legal expenses or cumbersome paperwork involved in establishing an Advised Fund. You can be up and running in a matter of minutes; there is no need to get IRS approval. The only requirements are a three page fill-in-the-blank document and initial contribution to the Fund of at least $5,000.
Once in place, people can make gifts of any size, at any time to their Donor Advised Fund. They can choose the amount of their gifts, the type of gift and the timing of any gift to maximize their convenience and tax benefits. Gifts of cash, publicly traded or closely held securities, insurance, IRAs, interests in Remainder or Lead Trusts, real property, etc., are welcome.
The money in an Donor Advised Fund is never used for grants without the written request of the donor. While the Community Foundation must own the Fund in order for the donor to qualify for a tax deduction, grants are made only at the donor’s request. The donor can ask that grants be made from the Fund at any time in accordance with the establishing document. Grants can go to support charitable organizations working in many areas ranging from “arts to zoology” — in other words, the broadest range of charitable needs.
The corpus of the Fund is invested by the Foundation Board in an effort to ensure that it can do the most good for the longest time. Virtually all of the Funds at the Foundation are invested in a diversified portfolio designed to manage market risk, dampen market volatility and ensure steady growth over time. Donors receive semi-annual statements detailing the activities of their Fund and giving them a target for prudent use of the endowments they have created.
