Your client can create a permanent, named gift fund with a tax-deductible contribution of $25,000 or more. A "named" fund means he or she can do just that: name the fund, after family members, after a cause, after a nonprofit, etc. The $25,000 minimum also allows your client to choose the type of fund and its purpose.
If your client prefers not to create a fund, he or she has many other choices for creative giving within the community foundation, as outlined in New Ideas for Giving.
As a 501(c)(3), Hampton Roads Community Foundation can accept nearly any gift that a nonprofit can, plus more: cash, securities, real estate, retirement accounts, insurance policies and interests in privately-held corporations and limited partnerships. Even less common items, such as stamp collections, can be donated, assessed and sold to establish a fund.
Your client has lots of options, even if he or she can't start a fund right now.
First, visit New Ideas for Giving. The page offers a dozen or more ideas for making smaller donations that matter. Your client can give to one of our community funds, for example. Or to an existing fund that matches your client's interests.
Second, your client can consider different charitable giving instruments, such as charitable gift annuities. Some provide income during your client's lifetime and create a fund when he or she passes.
Third, in the same vein, the community foundation can work with you and your client on any necessary estate planning, e.g. providing the best language for a will, arranging for transfer of an IRA, insurance policy or other asset.
Whichever your client's choice, we think over the long term, too. We don't charge for the conversations, even if they last for years.
The community foundation – and most of the nation's universities and foundations – utilize a "spending policy". Studies have proven that careful spending/grantmaking and diversified investment will provide steady grants through bad times and inflation.
Hampton Roads Community Foundation bases all its grants on 4.5% of an average of the 12 previous quarters of each fund's assets.
Assume, for example, that a designated fund for your client's church has been in place for three years (12 quarters), and it has averaged $100,000 in value. The church would receive a $4,500 grant. If the church fund's investment returns were greater than 4.5%, they would be "returned" to the fund, in reserve for a "rainy day" when investment returns were below 4.5%. As a result, the church could depend on somewhat predictably-sized grants, even during bear markets. The fundholder could depend on the promise that the church would receive grants for as long as it was in existence, in his or her name.
Non-endowed donor-advised funds, when the donor doesn't expect to leave a legacy, need not follow the spending rule. If the donor advisor spends more than 4.5% for many years, the fund will eventually eat away its principal.
There are advantages to both, as you can see from this chart comparing donor-advised funds to private foundations.
Most professional advisors seem to agree that you need assets of at least $2-3 million to justify the set-up and maintenance costs of a private foundation. On the other hand, your client can establish a donor-advised fund at the Hampton Roads Community Foundation in a day with minimum paperwork and at no cost. Our staff handles the details of administering your fund, filing tax returns and meeting annual pay-out requirements. Your client recommends grants; we ratify and deliver them.
A private foundation gives the donor control over – and responsibility for – staffing, due diligence, avoiding conflicts of interest, family involvement, choice of grantees, etc.
Absolutely, and not only now, but after the original fundholder is no longer involved. Your client can name specific family members and/or friends as additional donor advisors who may recommend grants from his or her fund. Your client may also name one (and only one) generation to succeed him/her as donor advisors.
People in Hampton Roads believe in the power of a good education, and they've created scholarship funds at the community foundation to prove it. As a result, we've become the largest scholarship provider in southeast Virginia.
Students (and parents) can apply to our very-friendly website. We also work with school guidance counselors and Access College Foundation advisors to help identify students who scholarship assistance.
Many, if not most, fundholders established specific criteria for their scholarships: high school attended and proposed major, for example. In addition, the community foundation almost always selects recipients on the basis of financial need, academic achievement and initiative.
We send the scholarship checks directly to the colleges and universities, earmarked for the recipients. Most scholarships are renewable.
No problem. While the community foundation must know the identity of every donor, for legal reasons, we can ensure anonymity in virtually every other way. He or she can name the fund "Anonymous" or with an unrelated title, e.g. "The Building Fund". Awards from the fund may be accompanied by language like, "This grant made possible by the Anonymous Fund; the donor wishes to remain unknown."
Anonymity can extend to being left off mailing and invitation lists, emails, and requests for meetings.