Investment Comparisons

While foundation’s offer numerous benefits to donors, not all donors can keep up with the demands required in hosting their own personal private foundation. That’s where we come in. The chart below describe the benefits we can offer your clients in realizing their charitable goals.

Legal Status

Private Foundations

Independent organization 501(c)(3) tax exempt corporation or trust

Community Foundations

A Donor-Advised Fund within an existing Community Foundation 501(c )( 3) tax exempt organization

Initial Gift

Establish a new entity requiring legal filings, board of directors, and administration; may take several months

Entity already exists and has experience; paperwork can be completed in one day

Practical Minimum Asset Size

Substantial assets, probably over $1 million

$5,000 Endowment Fund Minimum

Distribution Rules

Minimum annual charitable distribution – 5% of net investment assets

No minimum distribution requirements as long as fund is active

Investment Restrictions

Cannot own more than 20% of stock in a business

No limitations on control of a business

Annual IRS Reporting

IRS information return (Form 990 PF)

No annual reporting requirements by the donor

Investment Income Tax

Pay 1% to 2% tax on net investment income

No tax on investment income

Cost

Can result in significant cost to client

Simple, and at no cost to donor

The Board is ultimately responsible for the overall Investment Program. The Board’s specific responsibilities include: establishing the Fund’s asset allocation and diversifying portfolio assets; establishing and following investment policy objectives and guidelines; hiring prudent experts to make investment decisions; controlling and accounting for expenses; and performing ongoing monitoring. In addition, the Board’s duties include the appointment and removal of Committee members to which the Board has delegated authority. The Board is also responsible for ensuring that the Fund is managed in the best interests of the Foundation and its donors and beneficiaries. The Board shall conduct its responsibilities as outlined in the Investment and Spending Policy.

All investments are carefully guided and motivated by:

– Strict adherence to the Investment Policy.
– Quarterly performance reports and professional financial consultation provided by Capital Cities LLC.
– The Foundation Finance Committee which conducts periodic reviews.
– Local Investment Advisors which conduct periodic reviews.

Financial Objectives

The objectives of the Board have been established in conjunction with a comprehensive review of the current and projected financial requirements. The objectives are:

1. To allocate total earnings from the Foundation’s endowment portfolio between current spending and reinvestment for future earnings while providing a dependable growing stream of income to beneficiaries of Foundation grants. Achievement of these objectives will ensure that the Fund preserves the real purchasing power in perpetuity while providing ongoing operational support to designated charitable activities.

2. To apply a smoothing rule to mitigate the effects of short-term market volatility on spending. The following smoothing rule will be applied:

Foundation’s spending policy is to spend 4.5%, 4.25%, or 4.00% (stepped according to average balance) of a 5-year moving average of quarterly market values. In the early stages of fund accumulation, however, the Finance Committee may recommend, and the Board may adopt an interim spending policy of 4.5% of a one year moving average of quarterly market values. This spending policy establishes the resources available for grant spending only. Operating expenses are outlined in the following paragraph. Amounts which remain unspent at the end of the year may be carried over for disbursement in the following years.

The Foundation will assess a 1.5% administrative fee annually to all endowed funds. If a scholarship fund recipient is chosen by a committee of the Foundation, then an additional .5% will also be charged annually. This fee is used to offset expenses associated with managing and administering all endowed funds.

3. The Finance Committee, with Board approval, reserves the right to take exception to the set Spending Policy in order to meet current conditions.

4. To control both administrative and investment costs.

5. To maximize return within reasonable and prudent levels of risk.

6. To maintain an appropriate asset allocation based on a total return policy that is compatible with a flexible spending policy, while still having the potential to produce positive real returns.

Contact Us

Dawn Brown

President & CEO

Dawn@GiveToGrant.org
765-662-0065

Sherri Rush

Chief Financial Officer

Sherri@GiveToGrant.org
765-662-0065

Shelly Jones

Development Manager

Shelly@GiveToGrant.org
765-662-0065