A Donor Advised Fund Allows You to Engage in Grantmaking
Donor-advised funds are charitable funds for donors seeking active involvement in grantmaking. Donors – and their children, if desired – advise or recommend grants from their fund to support nonprofit organizations. Donors can learn about community needs from the foundation’s donor-focused educational seminars and information and work with foundation staff to create a lasting, impactful philanthropic legacy. Here are some frequently asked questions about donor-advised funds:
- Who should I contact if I have questions?
Please contact the Advancement team at 216.861.3810 or toll-free 877.554.5054.
- How do I open a donor-advised fund?
You can initiate the process by completing and returning a donor-advised fund application form to the foundation’s Advancement team.
The minimum contribution needed to establish a donor-advised fund is $10,000, which can be made in cash, stocks, and a variety of other assets that your banker, broker, or financial advisor may transfer directly to the foundation at your request.
You may receive a charitable deduction for the full amount of the gift in the year of the contributions, subject to appropriate tax deduction limitations. You can make additional contributions to the fund in any amount at any time. Others can also contribute to your fund, perhaps to mark a special occasion or support a special project that interests you.
To request more information about donor-advised funds, contact the Advancement team at GiveNow@CleveFdn.org, or call 216.861.3810.
- Is there a minimum or maximum size for a fund?
The minimum size at which grants can be made from a fund is $10,000. There is no maximum.
- Will my grant requests always be honored?
As a fund advisor, you may recommend grants to public charities. To comply with applicable IRS regulations, however, the Cleveland Foundation’s board of directors retains the final responsibility for approving distributions from funds. Grants are generally made to organizations recognized under Section 501(c)(3) of the Internal Revenue Code.
- Are my grant recommendations limited to a certain amount?
Donor-advised funds are extremely flexible. Depending on how the fund is set up, you can recommend grants based on an overall percentage of the fund’s fair market value (applying a spending policy) or a larger proportion of the fund’s assets even into the fund principal. Individual grant recommendations must be at least $250.
- What is a spending policy?
It is a formula for grantmaking based on a designated percentage of the fund’s fair market value. The foundation’s current spending policy is 6 percent of the fund’s value and is designed to allow grants to be made from the fund during your lifetime as well as in perpetuity.
- What kind of assets can I contribute?
The foundation can accept many types of assets including cash, stocks and bonds, real estate, and life insurance policies.
- What are the costs involved in establishing a fund?
Establishing a fund at the foundation is free of charge. The foundation files the federal and state tax returns, provides an independent audit, processes disbursements, mails checks to recipients, administers and invests the assets of the fund, and issues regular financial reports on the status of the fund to the donor.
For these services, the foundation assesses a modest annual fee on the fund; administrative fees are tiered depending on fund size.
- Is the fund I establish permanent?
If you would like to design the fund to exist in perpetuity, it will continue to grow and meet the needs of your community forever. In some cases, donors with donor-advised funds may choose to spend principal
- Can other people contribute to the fund I establish?
- How are the funds invested?
The Investment Committee of the foundation’s board of directors is responsible for managing and overseeing the funds. Our overall investment strategy is to provide prudent management of the capital while still producing income for grantmaking and growth. Additionally, foundation funds are held in perpetuity, ensuring that your gift benefits your community forever.
- Who can act as a fund advisor?
Throughout your lifetime, you can advise on the grantmaking activities of the fund. You may also choose to designate your spouse or partner, your child, another member of your family, or a friend as an advisor to your fund.
- Can I name a successor to my donor-advised fund?
Yes, you can name successors to your fund. If you do not name a successor, or after your successors’ death, the foundation’s board of directors will continue to use your funds in accordance with your wishes.
- Can you help me find effective charities to support?
Your donor relations advisor can work with you to identify organizations involved in the causes that interest you.
- What can I name the fund?
Many donors use their personal name for funds, which will appear in foundation publications such as our annual report. You can also choose a name that is representative of the types of programs you want to support, or you may maintain anonymity.
- Can I get a refund of a gift made to the foundation?
All contributions, once accepted by the board of directors, represent an irrevocable contribution to the Cleveland Foundation and are not refundable.
- Are there other types of funds I can establish at the foundation?
Yes. See a list of the various types of funds offered by the Cleveland Foundation.