Donor-Advised Fund Guidelines 2017

Transcription

1 Donor-Advised Fund Guidelines

2 Hartford Foundation for Public Giving Donor-Advised Fund Guidelines Table of Contents Staff Contact Information 3 Hartford Foundation Mission Statement..4 Role Of Fund Advisors.5 Making Grant Recommendations.5 Types Of Organizations To Recommend For Grants...6 Timing And Amounts Of Your Grants.6 Protecting Your Charitable Deduction: Board Approval.7 Compliance...8 Tracking Fund Activity 8 Increasing Your Knowledge About Grantmaking 9 Including Your Family..9 Information/Education Sessions 9 Making Additions To Your Fund: Now Or In The Future...10 Gift Structure Options...10 Common Types Of Grants...11 Alternatives Or Converting A Donor-Advised Fund...12 Consider These Other Giving Options...12 Additional Resources On Philanthropy

3 STAFF CONTACT INFORMATION Your staff liaison is your primary contact for any questions you may have about your fund, grants, or general information about the Hartford Foundation. We will receive your grant recommendations, follow them through the research and grantmaking process, and contact you with the results of our review. Please feel free to contact us with any questions about your fund. Sally Weisman, J.D. Senior Development Officer and Manager of the Donor Advised Fund Program (860) x 1028 sweisman@hfpg.org Francesca Borges Gordon Senior Development Officer (860) x 1046 fborgesgorden@hfpg.org Betty Ann Grady Development Officer (860) x 1055 bagrady@hfpg.org 3

4 MISSION STATEMENT: Putting philanthropy into action to create lasting solutions that result in vibrant communities within the Greater Hartford region. As Greater Hartford s community-wide charitable endowment, the Hartford Foundation for Public Giving is committed to improving the quality of life for residents throughout the region. Our core values define how we will live our mission and the principles we believe in: Leadership: We give voice to the voiceless and fully utilize our unique ability to convene, connect, catalyze and employ a broad continuum of public policy tools to have lasting significant impact. Responsiveness: Building on lessons learned, we support the creation of new ideas and new ways of working as we respond to the highest, most pressing needs in the communities we serve. Equality, Diversity and Inclusion: We are committed to encouraging and modeling equity and diversity among our constituents, and set the highest standards for inclusive representation that reflects the individuals in every town we serve. Collaboration: We cannot do this work alone, and thus join together with the nonprofit, private and public sectors and accept the mantle of contribution over attribution. Learning-focused: We embrace the notion of life-long learning and are committed to serving as a resource as well as to providing opportunities for those who value it. Outcome-driven: We use measures of success to set expectations and guide action. 4

5 ROLE OF FUND ADVISORS As an active partner in philanthropy with the Foundation, you play a critical role in enriching people s lives in our community. We suggest that your giving plan will be most effective if you embrace the following responsibilities for the fund, with the assistance of Foundation staff: Evaluate your own philanthropic goals annually Seek out the best organizations to accomplish your fund s goals Talk to Foundation staff periodically and especially if your charitable interests change MAKING GRANT RECOMMENDATIONS There are several ways you may make your grant recommendations: You may choose a charity you want to support, and recommend the amount and purpose of the grant. You may want to advance a particular cause but are unsure about which agency, which type of grant, or in what amount you would like to provide support. Your staff liaison can assist you. Hartford Foundation staff can initiate the process by calling you with grantmaking suggestions based on your interests and the organization s needs. The Foundation also publishes a list of suggested grant opportunities called GRANTS EXPRESS. This list is available online at myhfpg.org. updates and printed newsletters are also sent out several times a year. Grant recommendations can be made by using the online form at myhfpg.org. If you are unsure of your password, please contact your fund liaison. Click on For Donors on the green banner. Then click on Grant Recommendation Form. You may also recommend a grant by calling or ing your staff advisor. The following information should be included with each grant recommendation: Name and address of nonprofit organization and contact person Recommended amount of the grant Purpose (specific program or general operating support) Once we receive your recommendation, we will check each organization to make sure it is qualified for a grant from your fund. When the grantee is known to the Foundation, the normal process of review, decision and notification takes approximately one to two weeks. If the organization is new to the Foundation, we will contact them and request copies of a recent audited financial statement, tax returns, program descriptions, and documentation of tax-exempt status. In 5

6 these cases or if special research is required, time for grant approval will depend on the potential grantee s response. If there is information we think you should know before the grant moves forward, we will notify you. An expedited review process of a few days is available under special circumstances. If you would like the charity to know a grant is from your donor-advised fund, we will include that information along with any restrictions on the grant and instructions as to how the charity should acknowledge the gift. If you prefer anonymity, no mention will be made of your name or the fund name and all communications with the grantee will go through your staff liaison. You will receive copies of all correspondence. For most grants, a payment letter and check will be sent to the organization within two weeks following the recommendation. For grants that contain special conditions, grantees sign and return a copy of the letter as their promise to comply with the terms of the award. TYPES OF ORGANIZATIONS TO RECOMMEND FOR GRANTS All grant recipients must be tax-exempt charities as recognized by the Internal Revenue Service. Though the Foundation s primary mission is to support charities in Greater Hartford, you may recommend grants to charities anywhere in the United States. Grants may be made to international charities that have a U.S. affiliate or fiscal agent. TIMING AND AMOUNTS OF YOUR GRANTS You can recommend a grant at any time during the year. Receiving these by December 15 th will ensure that they are processed by year end. We encourage you to recommend grants on a regular basis. Many advisors choose to do this annually. You may recommend a multi-year grant. Please indicate that the distribution is to be made in increments. We will administer the distribution and payment schedule. Multi-year grants are deducted in full at the time the grant is recommended. A minimum recommendation of $500 is required in order to make the most efficient use of the Hartford Foundation s resources and keep administrative fees low. Should grant activity stop for more than a three-year period, steps will be taken by the staff to 6

7 activate that fund. These steps may include such activities as: Notifying the fund advisor regularly and to encourage the fund advisor to activate the fund. Distributing grants from the fund to qualified grant recipients that align with donor intent, but if the community foundation determines such intent is obsolete, incapable of being fulfilled, impractical, or inconsistent with the community s charitable needs, then exercise of the Foundation s overriding variance power to enable the community foundation to continue to use its resources to meet the needs of the community and to address the charitable purposes for which the funds were committed. Closing of a starter fund if the starter fund balance does not reach the Foundation s required minimum amount within a stated period of time, and, for example but not limited to, re-allocating of the fund proceeds to the Hartford Foundation unrestricted fund or issuing the balance as a charitable grant to a qualified recipient. PROTECTING YOUR CHARITABLE DEDUCTION: WHY OUR BOARD MUST APPROVE GRANTS FROM YOUR FUND We take seriously our responsibility to serve the community and protect the interests of donors by abiding by the laws and regulations governing all charitable giving and, specifically, donor-advised funds. The law expressly recognizes both the privilege of advised fund donors to make grant recommendations and the responsibility of the Foundation s Board of Directors to exercise final discretion over all grant decisions. There is a logical basis for this separation of powers in the law. You, the donor, receive an income tax deduction for the full value of the assets that you give to your fund. In order to qualify for this tax benefit, your gift must be complete. This means you cannot retain absolute control over how donated funds are invested or distributed. Equally important, the Foundation s Board of Directors and staff share your desire to provide funds to charities that will put them to good use. One of the greatest benefits of a donor-advised fund is your access to our staff s experience. Our ongoing communication with you, coupled with our grant research services and extensive knowledge of the community, will help you achieve your goals and make it unlikely that you would recommend a grant that would be turned down by our Board. 7

8 COMPLIANCE All grant recipients must be recognized as tax-exempt charities by the Internal Revenue Service. It is the policy of the Foundation that no portion of any grant may be used to pay compensation, reimburse expenses or provide any loan or other economic benefit to the donor(s) or fund advisor(s) who have advisory privileges with respect to the grant, or any related party 1 of such donor(s) or fund advisor(s). Grants made from donor-advised funds will not legally qualify the donor(s) or fund advisor(s) who had or have advisory privileges with respect to grants from the Fund or any related party of such donor(s) or fund advisor(s) for any benefits or services from the Foundation and/or any third party, such as, but not limited to, memberships, dinners or tickets. Grants from donor-advised funds at the Hartford Foundation may not be used to satisfy a personal pledge or to make a political contribution. To ensure that all grants made from donor-advised funds comply with the Pension Protection Act of 2006, fund advisors to donor-advised funds are asked to certify compliance with the above statement in writing on an annual basis. Grants will only be made from a donor-advised fund upon receipt of this signed form. 1 Related party includes (i) a donor s or fund advisor s spouse, ancestors, children, grandchildren, great grandchildren, brothers, and sisters (whether by the whole or half blood), and the spouses of children, grandchildren, great grandchildren, brothers and sisters, and (ii) entities in which donors, donor advisors or their respective family members described above own more than 35 percent of the (x) combined voting power if the entity is a corporation, (y) profits interest if the entity is a partnership, or (z) beneficial interest if the entity is a trust or estate. TRACKING FUND ACTIVITY Our staff will handle all of the administrative aspects of the fund s management. We will provide you with gift receipts for additions to your fund, file the required forms and reports with state and federal agencies, communicate with grantees, and maintain records. Your updated fund report will be available quarterly at myhfpg.org. The fund statements detail the activity of the fund including the amount that is available for you to recommend in grants. A brief description of the fund you have established will be published in the Foundation s Conversations in the first year. Thereafter, your fund will be included in the Annual Report in a list of funds. If you wish to remain anonymous, please let your fund liaison know your preference. 8

9 INCREASING YOUR KNOWLEDGE ABOUT GRANTMAKING The Hartford Foundation s professional staff is skilled in grantmaking, program development, finance, administration and planned giving. We are available to work with you to identify organizations that meet your charitable goals. We can design targeted grant programs, help you identify worthy agencies in a given field, research agencies, or provide background information on specific issues. We are also available to help you structure your giving, develop a plan for your philanthropy, and to plan how and if you wish to make additions to your fund. It may be helpful for us to talk with your advisors, family, or others. INCLUDING YOUR FAMILY Many donors are encouraging their children to carry on their own tradition of philanthropy. If provided for in your fund agreement, your donor-advised fund allows you and your children to encourage and promote those community values that you support. When the time is right for your family, Hartford Foundation staff can meet with you to help you clarify shared family values and goals. We can help you develop a value statement and a set of goals that will guide grantmaking from your fund. INFORMATION/EDUCATION SESSIONS As a donor, you will be invited to several events each year hosted by the Foundation, such as the annual Celebration of Giving, and special events for donor advisors. These sessions will help to familiarize you with the needs of the community, and the resources available to address those needs. In addition, sessions will include information that may help inform your overall grantmaking approach. These gatherings are also a good time to meet other donor advisors and learn about their grantmaking. In addition, you will receive the Foundation s publications, such as our Annual Report, newsletter, and other items designed to help you maximize the benefits of your philanthropy. An ongoing list of small grant opportunities called GRANTS EXPRESS will be posted online at myhfpg.org or mailed to you at your request. 9

10 MAKING ADDITIONS TO YOUR FUND: NOW OR IN THE FUTURE Creating a fund with the Hartford Foundation for Public Giving allows you to sustain an endowed legacy of philanthropy in Greater Hartford. You or anyone else may make additional tax-deductible contributions at any time, including by will or trust. Significant tax benefits may be realized through gifts of appreciated stock, real estate or other assets. The Foundation also offers planned gift arrangements that provide you with income during your life and add to the donor-advised fund upon your death. We encourage you to discuss any gift you may be considering with our Development and Donor Engagement staff. For information on adding to your fund, you may contact our funds manager Sue Seney directly at (860) , x 1025 or sseney@hfpg.org. You may donate online by going to and clicking Donate in the upper right hand corner. Choose which fund you wish to give to, complete the necessary information, and click on Proceed to PayPal at the bottom of the page to finalize your donation. You will receive an immediate confirmation, as well as a personalized letter with a tax receipt in the mail a few days later. You may also want to add your fund to your estate planning. Your legacy can support specific causes and organizations, or provide for the community at large. It can include what you wish to accomplish for yourself, your family, and your charitable interests within the context of your overall estate plan. By including the Hartford Foundation in your estate planning you can ensure that you leave a lasting impression on the community and your deepest intentions for charitable giving becomes fulfilled. GIFT STRUCTURE OPTIONS Bequest Naming the Hartford Foundation in your will or trust is a popular way to support the community and carry out your charitable interests. A bequest can be designed to establish or add to an endowment fund, and can designate a specific amount or percentage of your estate. Bequests are revocable if circumstances change. Retirement Assets Retirement plan assets are ideal to give to charities when you are gone because they are so heavily taxed if left to heirs. By naming the Foundation as a remainder beneficiary of these assets, you can leave a very efficient legacy. Charitable Remainder Trusts Create a charitable remainder trust, and you and a spouse or loved one* will receive income payments for life, or a specific number of years. Remaining assets go to your Foundation fund to benefit area nonprofits forever. Tax benefits include an immediate 10

11 income tax deduction and removal of the asset from your estate. Charitable gift annuities Give a gift of $10,000 or more, and increase your income while leaving a gift to the Foundation. You (and a spouse or loved one*) will receive income for life, based on your ages at the time of the gift, or you can choose to defer payments to a later time such as retirement. Tax advantages include: an immediate income-tax deduction; and potentially beneficial treatment of the annuity payments. Charitable Lead Trusts Support area nonprofits now and your family later with a charitable lead trust. Your trust pays income to your Foundation fund for a period of years and then passes the assets, often appreciated, to your children or grandchildren with minimal or no gift or estate taxes. *Please consult your tax advisor for tax implications of different beneficiary choices. COMMON TYPES OF GRANTS Here is a list of the most common types of grants made to nonprofit organizations and what they typically mean to the organizations. Unrestricted, operating or general support An unrestricted grant allows the nonprofit to use the dollars to support the organization where most needed, often for the day-to-day costs of running the nonprofit organization. Capital or capital campaign A capital grant provides support for the purchase of property, the construction of a facility, remodeling/expansion of a facility or purchase of equipment. Endowment Some nonprofit organizations have endowment funds. The endowment fund is a permanent annual source of income for the operating or project expenses of the organization. Project A project grant supports a specific activity. Seed A seed grant helps to jump-start a new organization, a new project or launch a capital campaign. Challenge or matching A challenge or matching grant helps a nonprofit organization leverage additional dollars through a 11

12 fundraising campaign. ALTERNATIVES OR CONVERTING A DONOR-ADVISED FUND In the future, you may decide to convert a Donor-Advised Fund into one of the other types of funds described below, or you may wish to start a new fund. Discretionary Funds (also called unrestricted funds) give the Hartford Foundation maximum flexibility to use the fund s income for grants, wherever the greatest needs arise. Minimum initial gift: $10,000 Field of Interest Funds restrict the use of income to a broad charitable goal or purpose, such as improving the quality of health care or the region s cultural life. Minimum initial gift: $10,000 Designated Funds specify one or more charities to receive all or a portion of the annual income from the fund. In the unlikely event that the designated organization ceases to exist or substantially changes its mission, the Foundation will redirect the annual distributions to an effective organization most closely matching the donor s original charitable intent. Minimum initial gift: $10,000 Scholarship Funds may be established in several ways, from gifts to the Hartford Foundation General Scholarship Endowment Fund ($10,000 minimum) to individual named funds with specified selection criteria and external selection committees ($50,000 minimum.) CONSIDER THESE OTHER GIVING OPTIONS Catalyst Endowment Fund is a giving circle comprised of individual members who come together to study a topic for the year and then vote to recommend annual grants to nonprofit agencies to address the issue. Minimum annual gift: $500 Latino Endowment Fund is comprised of individuals (Latinos and others) interested in supporting the Latino community. Annual gifts are pooled in an endowed fund, and members vote to recommend grants. Minimum annual gift: $250 Black Giving Circle Fund is a giving circle comprised of members from across the region who share the values and tradition of giving in the Black community. Minimum membership contribution: $365 per year 12

13 The General Endowment Fund serves donors wishing to make unrestricted gifts of any amount under $10,000. Over time, donors whose gifts total more than $10,000 may transfer them to a named Discretionary Fund. ADDITIONAL RESOURCES ON PHILANTHROPY The Chronicle of Philanthropy Connecticut Council for Philanthropy Council on Foundations Forum of Regional Associations of Grantmakers forum.org The Foundation Center Grantmakers for Effective Organizations Hartford Foundation for Public Giving Independent Sector Inspired Legacies National Center for Family Philanthropy National Council of Nonprofits The Philanthropic Institute 13