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Donor Advised Fund Policy

Establishment and Purpose

The intent in establishing these policies and procedures is to provide guidance as to the acceptance, establishment, operation, and succession of Donor-Advised Funds at the Delaware County Foundation (the “Foundation”).

Establishment of Funds

Donor-advised funds may be established by an individual, family, corporation, trust, or estate (the “donor”) who wishes to create a named fund, serve as an advisor and make requests for grants to charitable organizations. Nonprofit and tax-exempt organizations are not eligible to establish a donor-advised fund.

Funds may be established as either non-endowed, meaning that both the principal and any fund earnings may be distributed at any time, or endowed, meaning that distributions can be made based on an annual payout approved by Foundation’s Board (typically 5% based on a 12-quarter rolling balance).  

Donor-Advised funds may be started as endowments-in-progress. Donors are strongly encouraged to build the fund to the capital minimum outlined in the Foundation’s Community Reinvestment Fee Schedule over a five-year period. If the fund has not reached the capital minimum after five years, the entirety of the fund will become non-endowed with the full balance available for grantmaking.

Publication and Confidentiality

All donors establishing funds may be published in Foundation publication unless otherwise requested by the donor in writing.

Fund Holders

The donor(s) establishing the account are required to designate an individual to serve as the primary Fund Holder at the creation of the fund. This individual will serve as the principal point of contact for the foundation relationship and receive all print and electronic correspondence relating to the fund.

The Primary Fund Holder may name up to four additional individuals to serve as fund holders on the fund. Each fund holder will have full and equal privileges to recommend grants, change investment fund pools, to name and remove additional fund holders, and to name and remove successors to the fund. Fund Holders being named or removed must provide written consent to their addition or removal. 

Donor Restrictions 

Federal tax laws prohibit donors from imposing any “material restrictions” (a term defined in the Treasury Regulations), which prevents the Foundation from freely and effectively employing the contributed assets and income in furtherance of its charitable purposes. Any restriction (beyond the specified charitable purposes stated in the fund agreement) sought to be imposed by a Donor is subject to review and approval by the Foundation Board.

In its sole discretion, the Foundation may modify or remove any restriction or condition it deems unnecessary, incapable of fulfillment, or inconsistent with the charitable needs of the community or area served.  

Inactive Funds

If a donor-advised fund has gone for more than two years without any activity (contributions and grants), The Foundation will attempt to contact the donor advisor. If the donor advisor cannot be located within twelve months, the Foundation may close the fund and distribute the proceeds to the Foundation’s unrestricted endowment.

Contributing to a Fund

Gifts to a fund are irrevocable. The assets of donor-advised funds are owned and controlled by the Foundation. Contributions to a fund may be made in any amount and at any time using cash, publicly traded securities, or other property, including closely-held stock, partnership interests, real estate, personal property, trusts, and life insurance. Contributions should be clearly designated by fund name: “The XYZ Fund of the Delaware County Foundation.”

Acceptance of Funds

All contributions are subject to the review and approval prior to acceptance in accordance with the Foundation’s Gift Acceptance Policy. In its sole discretion and for any reason, the Foundation reserves the right not to accept any contribution.

Contributions of property that may not have immediate liquidity are accepted at the Foundation President’s discretion and subject to the completion of due diligence procedures. Donors considering a gift in any form other than cash should contact the Foundation to discuss its appropriateness and obtain delivery instructions.

Contributions that would violate the excess business holdings rule for donor-advised funds under the Pension Protection Act of 2006 are generally prohibited but may be accepted if reviewed and approved by the Foundation Board. Any interest in an entity owned by a donor or advisor to a donor-advised fund, by a family member, or by an entity in which any of the foregoing persons has an interest shall be referred to the Foundation Board and legal counsel for an opinion on the possible application of Code section 4943.

Minimum Initial Contributions

There is no minimum amount to establish a donor-advised fund with the Delaware County Foundation. 

Funds established with an initial gift of less than $5,000 will be accessed a one-time new fund fee. Additional fees may apply for funds created with securities and real property. (See Community Reinvestment Fee Schedule) 

Endowed funds must reach a capital minimum outlined in the Foundation’s Community Reinvestment Fee Schedule and have one year of earnings before grant distributions can be made.

Deductibility of Contributions

Donors are encouraged to consult a tax advisor for guidance on the effect of applicable federal, state, and local tax law on their financial situation. The deductibility of a contribution will depend, in part, on the type of asset contributed and the Adjusted Gross Income (AGI) contribution limits. Generally, the amount a donor may deduct for charitable contributions cannot exceed 60% of their AGI. A 30% limit applies to contributions of property subject to long-term capital gains (e.g., appreciated securities held for more than one year).

Under IRS regulations, the donor is responsible for determining the contribution date and the fair market value for donated securities. To assist donors in gift valuation, the Foundation will provide donors with the high and low prices reported on the date the contribution is made to determine the fair market value. The deduction for assets held for more than a year is generally equal to the fair market value of the asset, while the deduction for assets held for less than a year is generally limited to the lower of the cost basis or the fair market value on the date the asset is contributed.

The IRS requires donors seeking to claim a deduction to obtain a qualified appraisal for donated property valued in excess of:

• $5,000 for all property other than publicly traded stock, vehicles, intellectual property, or inventory

• $10,000 for shares of non-publicly traded stock

Donors claiming a tax deduction for charitable contributions are not eligible for additional deductions when making grants to other organizations. Any increases or decreases in fund balance after assets have been contributed to the Foundation, whether due to market fluctuations or assessed fees, are not eligible for additional deductions by the donor and should not be reported on individual tax returns. Transfers from another donor-advised fund or private Foundation into a fund at the Delaware County Foundation are not eligible for additional tax deductions.

The value of the contribution for tax deduction purposes may vary from the net proceeds realized by the Foundation upon the sale of the contributed property. 

Investment of Assets

Donor-Advised Funds are component funds of The Delaware County Foundation. As such, the Foundation’s Investment Committee and Board determine how the funds are invested and managed. Donors with non-endowed funds can choose from the following investment pools based on their philanthropic goals, time horizon, and risk tolerance.

  • Cash (0-3 years)

The primary investment objective of this Pool is the stability of principal. This Pool will invest exclusively in cash and cash equivalents and will have no risk of loss of capital. Donors with immediate liquidity needs or no expectations of growth of capital should consider this strategy.

  • Conservative Growth & Income Pool (3+ years)

The primary investment objective of this Pool is to provide modest growth while limiting fluctuation to less than the overall stock market. This Pool will invest primarily in a fixed income, with some equity, cash, and cash equivalent assets. This Pool is appropriate for donors who have a time horizon of more than three years.

  • Moderate Growth & income Pool (4+ years)

The primary investment objective of this Pool is to provide a moderate level of risk and a mixture of equities, fixed income, and an occasional allocation to cash. This Pool may experience moderate year to year volatility. This Pool is generally appropriate for donors with an intermediate time horizon of more than three years.

  • Growth Pool (7+ years)

The primary investment objective of this Pool is capital appreciation. There will be some inevitable volatility in principal value in this Pool, but it may offer the potential for higher returns over the long term. This Pool is appropriate for donors with a time horizon of more than seven years.

When no investment allocation is recommended for the initial contribution at the time of the establishment of the fund, the proceeds will be invested in the Cash Pool. 

Donor Recommended Investment Managers

Donors initially contributing more than $200,000 may recommend an investment advisor to manage the assets of their donor-advised fund in accordance with the Foundation’s Investment Policy.  Non-endowed funds that fall below $200,000 for a period greater than one year may be consolidated into one of the Foundation’s existing pooled accounts.

Policy to Sell Contributed Property

The general policy of the Foundation is to sell all contributed property as soon as practical after receipt so as to minimize market risk. For non-publicly traded securities or other assets for which no readily liquid market exists, the President will exercise discretion regarding the timing and price of sales. Closely held stock or other assets for which no readily liquid market exists that are retained for any reason and that are valued in excess of $1,000,000 (or, in the aggregate, are of material value compared to the other assets of the Foundation), shall be revalued using a qualified appraisal every three (3) years from the date of the gift. The cost of the qualified appraisal shall be an expense of the fund.

Any costs incurred for the disposition of securities and other assets (i.e., legal and appraisal fees) and for the management of such assets prior to disposition will be an expense of the fund.

Recommending Grants

Fund holders and their authorized representatives may submit grant recommendations online, by phone, or by submitting a completed grant recommendation form. 

Grants may be recommended to qualified charitable organizations including:

  • tax-exempt scientific, religious, environmental, and arts organizations under section 501(c)3 and classified as public charities under section 509(a). (Certain 509(a)3 supporting organizations are disqualified)
  • government units described in section 170(c)1 of the code such as public schools, colleges and universities, town and municipal governments, and police departments.

Grant recommendations are not binding and are subject to review and approval by the Foundation board or its designee. The Foundation does not make grants to charities outside of the United States and its territories.

Grant Guidelines

The Foundation has adopted procedures and safeguards for grantmaking that ensure funds are used for qualified charitable purposes. 

All grant recommendations must meet the following due diligence requirements:

  • No tangible benefit will be provided to the donor or other fund holder associated with the fund, such as goods or services including meals, event tickets, or membership benefits.* 
  • The donor or fund advisors have not made a pledge or commitment of support.
  • IRS regulations prohibit Donor Advised funds from making distributions to individuals (including scholarships), private foundations, or supporting organizations. 

In the event that a grant recommendation is not approved, the Foundation President will notify the Primary Fund Holder.

*According to IRS rules, goods or services that are considered to be of a “de minimis” value are excluded. (i.e. coffee mug, bumper sticker, hat)

Grant Amounts

Grants from non-endowed funds can be made of $250 or more, up to and including the fund’s balance less applicable fees. If a grant leads to a zero balance in the fund, any outstanding portion of the annual administrative fees due to the Foundation will be deducted from the grant amount. Donors are encouraged to maintain a minimum balance of $500 in their account.

Grant Designations

Fund Holders may recommend that a grant be used by the charitable organization for a designated purpose such as a capital project, a specific program, or in honor of an individual. The Foundation reserves the right to modify grant designations as it deems necessary.

Grant Opportunities

From time to time, the Foundation may bring to the Fund Holder’s attention grantmaking opportunities in which they may have an interest. The advisors are not obligated to recommend a grant for the identified program.

Grant Time Frame

The time required to process and approve a grant recommendation varies depending on the due diligence required, the grant amount, purpose, and the time of the year. Grants under $10,000 may be approved by the Foundation President, and subject to the availability of funds, are typically executed within one week. Grants over $10,000 require the approval of the Foundation Board and are usually completed within three weeks.

Recurring and future grants  

Fund Advisors may recommend recurring grants or a pre-set number of grants to be issued annually, quarterly, or monthly on a date of the advisor’s choosing. 

While reoccurring, all grants are subject to the same review and approval process as a single grant. Recurring grants may be declined based on the availability of funds, changes in the recipient organization’s status, statute, or other similar reason.

Donor acknowledgment 

When recommending a grant, Fund Holders may choose to be identified by the name of the donor-advised fund or to remain anonymous and to not be identified.

The Foundation will not release the Fund Holder’s name or contact information to any recipient charity without their explicit consent.

Recordkeeping and Reporting

Fund Holders can access fund activity including quarterly fund statements, fund balance, contributions, and grant history from the Fund Advisor portal on the Foundation’s website. The Fund Advisor Portal can also be used to recommend grants from non-endowed funds.

Fees and Expenses

Administrative Fees 

Each donor-advised fund is assessed an annual administrative fee as outlined in the Foundation’s Community Reinvestment Fee Schedule. The administrative fee supports the Foundation’s general operating costs, including legal, accounting, fundraising, and programmatic expenses. Additional fees may apply for additional programs such as corporate advised funds and other services or investment options.

Investment expenses

Each investment pool invests in mutual funds that are subject to varying operating and management expenses. The Foundation does not charge investment fees; expense ratios are assessed by the underlying funds and vary based on allocation and account status. 

Operating and management expenses of investment pools are subject to variations and are reviewed annually by the Foundation’s Investment Committee to ensure the cost for services are reasonable and competitive.

Other Fees

While the need to do so is rare, the Foundation reserves the right to deduct extraordinary costs incurred due to an account’s activity. This may include legal and professional expenses, taxes, or transaction costs.

Successors Option

Fund Holders have the option of continuing their charitable legacy beyond their lifetime by naming individual successor(s) or directing the balance of their fund to the Foundation’s endowment for the ongoing benefit of the community.

Successor plans are implemented at the death or disqualification of the last remaining Fund Holder and are not available for organizational or corporate funds. Fund Holders are encouraged to regularly review successor information to ensure that it remains consistent with their wishes and to verify that contact information is correct. Successor recommendations can be changed by any Fund Holder at any time before the death of the last remaining Fund Holder.

If no successor election is made, upon notification of the death of the last remaining Fund Holder, the fund’s balance will be added to the Foundation’s unrestricted endowment fund.

Individual Successors

Fund Holders may name one or more individual(s) who will assume all fund privileges upon the death of the last remaining Fund Holder. Subsequently, upon assuming Fund privileges, the successor(s) may name their own successor(s) on a newly opened Fund Account, essentially passing a charitable legacy from one generation to the next.

Fund Holders may name any individual(s), including a spouse, child, other descendant, heir, or representative. If the donor-advised fund has multiple Fund Holders, succession applies only after the death of all the Fund Holders. Therefore, if one Fund Holder dies, the remaining Fund Holder(s) retains all privileges to recommend grants and name successors. Upon the last remaining Fund Holder’s

death, the Foundation must be provided with written notification and proof of the Fund Holder’s death. A new donor-advised fund will be established for each individual named as a successor. Individual successors may not access or receive a deceased Fund Holder’s personal information or transaction history with respect to the Fund Holder’s donor-advised fund.

Amended 3.17.21