Fund Activity Policy
This policy defines fund activity as it relates to component funds of the Delaware County Foundation. If this policy ever conflicts with federal law or state law (including UPMIFA), the relevant law controls.
Acceptable Types of Fund Activity
A fund is considered active when there is regular communication between a donor (or named successors) and the Foundation regarding the existence and purpose of that fund. Examples of some of the activities that would deem a fund active include (but are not limited to):
- Regular Grant Recommendations: Fund advisor generally recommends grants at least annually to qualified charitable organizations. The amount of grantmaking can vary from year to year.
- Developing a Philanthropic Program: Fund advisor makes a substantial contribution to donor advised fund, for example, upon the sale of his or her business, and refrains from recommending grants for a given initial period while the fund advisor consults with the sponsoring charity and/or does his or her own research to determine what types of grants will best meet community needs and/or her philanthropic goals.
- Developing a Long-term Giving Plan: Fund advisor deliberately reduces the frequency or size of grant recommendations from fund, for example:
- During his or her working years with the intention of increasing the donor advised fund balance to support grantmaking during his or her retirement, when the advisor expects his or her income to change.
- A donor may want to build a fund over time so the donor’s children can make grants later (the idea being the donor is leaving a charitable legacy for the next generation to administer).
- Donor advisor refrains from recommending grants for a given period because the fund is invested in an illiquid or undervalued investment. Donor advisor intends to begin making grant recommendations when the investment can be sold at a reasonable price.
- Project Grants: Donor advisor makes a substantial contribution to a donor advised fund and determines to recommend grants to a specific qualified charitable organization over a period of 20 years so that the donor can monitor how the charitable organization performs, and to consider whether another organization would better achieve the donor’s charitable objectives.
- Starter Fund: Donor advised funds may need time to build the fund balance to make substantial grants to the community. Therefore, there may be no distributions made until the fund balance reaches an amount stated in the donor advised fund file.
- Specific Occasion Grant: Donor advisor refrains from recommending grants for a number of years with the specific charitable goal of recommending a grant upon a specific occasion. Examples may include:
- Donor is incapacitated with no successor advisor(s) named so the Foundation waits until the donor’s death to distribute the fund according to the donor’s original intent;
- Fund has transitioned to named successor advisors but they are minors and no adult representative is named to represent them (so grants resume when successor advisors are adults);
- Founders of fund who are also the donor advisors are getting divorced so that grants are suspended until both the husband and wife agree on grants, which may include splitting the fund into two separate funds, one for each spouse to advise or eventually dissolving the fund by the making of charitable grants;
- Grants are suspended during litigation involving a fund (e.g., the donor has left his/her estate to a fund, but the donor’s children are disputing the bequest so the foundation does not allow grants until the litigation is resolved);
- Donor leaves a bequest to a fund and distributions are made periodically to the fund during the estate settlement process, but grants are not made until the estate is fully settled.
For Donor Advised Funds
Should grant activity from a Donor Advised Fund stop for more than two calendar years after the last grant was made, and if none of the acceptable types of activity above are in place, the Foundation will take the following steps to activate that fund:
- The Foundation will notify the fund advisor(s) at least annually to encourage the fund advisor to activate the fund by grantmaking or another type of activity.
- The Foundation will notify the fund advisor(s) at least six months before the end of the third year of the potential steps to be taken if the fund is not activated.
- At the end of the third year, the Foundation will issue grants from the fund to qualified grant recipients that align with donor intent. If the Foundation determines such intent is unnecessary, incapable of fulfillment, or inconsistent with the charitable needs of the community or area served, then the Board of Directors may exercise variance power to enable the Foundation to continue to use those resources to meet the needs of the community and to address the charitable purposes for which the funds were committed, including distributions to the Foundation’s unrestricted endowment.
For All Other Fund Types
Should grant activity from a fund stop for more than one calendar year after the last grant was made, and if none of the acceptable types of activity above are in place, the Foundation will take the following steps to activate that fund:
- Foundation staff will review the fund at least annually to identify the possible steps to activate the fund. If a donor or other interested party is involved, the Foundation will consult that person if needed to align with the original purpose of the fund.
- Foundation staff will take action to identify and address the reason for fund inactivity through changes in process, outreach, or exercise of variance power.
- Starter Fund or other fund does not reach the fund minimum during the designated period of time, the Board of Directors will exercise variance power to enable the Foundation to continue to use those resources to meet the needs of the community and to address the charitable purposes for which the funds were committed. The fund balance will be transferred to the endowed portion of the Foundation’s unrestricted endowment to be used where the community need is greatest, unless the donor has identified an alternate qualifying endowment in the fund agreement. The donor or fund representative will be contacted at least six months prior to the Foundation taking action to transfer the balance.
Approved by Board of Directors 5-19-21