A Legacy for Everyone: Named Funds

Family members walk together on beach

Sandra Lucasby Sandy Lucas, JD, Gift Planning Advisor, Cleveland Foundation

Contact Sandy at sLucas@clevefdn.org or 216.615.7174

Throughout our lives, many of us ponder the legacies we hope to leave for our families and our communities. How will we be remembered? What impact can we have in our community, even after we are gone?

A Named Fund is a convenient, flexible tool for creating a meaningful legacy. Generally speaking, a Named Fund is a permanent charitable vehicle designed to last “in perpetuity” to benefit one or more charities or areas of interest. Certain charitable organizations, such as community foundations, sponsor and administer Named Funds in accordance with individual donor (and family) charitable intent.

Many donors choose to donate to a Named Fund upon death through an estate gift or beneficiary designation. In other words, a donor may set up a Named Fund now but fund it with a future gift at no cost today. The sponsoring organization invests and administers the Named Fund according to the donor’s wishes. Because Named Funds are designed as permanent legacies, generally only a percentage (e.g., 5%) of assets may be distributed annually for charitable purposes. The remaining assets are invested, with the potential to grow over time for perpetual charitable benefit.

Named Funds come in many “flavors.” With an unrestricted fund, a donor allows the sponsoring organization, usually through its board of directors, to determine the best use of distributions. At the other end of the spectrum, a donor may instead create a designated fund, naming one or more specific charities, such as an alma mater, religious institution, or cultural organization, to receive annual distributions. Still another approach is a field-of-interest fund whereby the donor indicates a broader area of interest, such as arts and culture or youth and education. In this scenario, the donor gives the sponsoring organization discretion to make distributions to charities engaged in those fields. Because Named Funds last indefinitely, donors often select sponsoring organizations that have deep expertise in the needs of the community to ensure distributions will meet community needs years into the future.

Named Funds are incredibly versatile and meet a variety of donors’ needs. For example, a family may use a Named Fund to continue their annual gift to a favorite charity long after the original donor family members are gone. Named Funds can stand alone or be paired with another charitable vehicle, such as a donor advised fund. Because no charitable gift is required today, even a donor of more modest means may create a legacy using a Named Fund by designating life insurance proceeds or other assets not currently available.

A Named Fund is a flexible and easy option to be remembered and leave a lasting legacy.

To establish a Named Fund, contact a member of the Cleveland Foundation Advancement team or call 877-554-5054. You should always consult your own professional tax, legal and financial advisors to determine if a particular charitable giving strategy is appropriate for your personal situation.