When your company establishes the fund, it designates an individual or group of individuals to serve as its "advisors." These individuals "advise" the community foundation or public charity on how the income from your company's fund should be distributed in the form of grants (hence the term, "donor-advised" fund). While the final decision on grant distributions rests with the board of trustees of the community foundation or public charity, in practice your company's grant recommendations will seldom, if ever, be rejected.

A donor-advised fund is not subject to the excise tax and payout requirements of a private foundation, and it can be established quickly and easily. Because community foundations are public charities supported by donors from across the community, all contributions are allowed the maximum tax benefits (up to 50 percent of adjusted gross income).

While a community foundation or other public charity will charge a small annual fee for administering the fund, research indicates that, depending on asset size, it is normally less expensive than the annual operating expenses of a private foundation.

To learn more about setting up a donor-advised fund, contact Indiana Grantmakers Alliance.

Partial text reprinted with permission from the Forum of Regional Associations of Grantmakers

©2003 Indiana Grantmakers Alliance, Inc.
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Phone: (317) 630-5200 | Fax: (317) 630-5210
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