A fund may be classified as donor advised if it has at least three characteristics: (1) a donor or person appointed or designated by the donor has, or reasonably expects to have, advisory privileges with respect to the fund's distributions or investments, (2) the fund is separately identified by reference to contributions of the donor(s), and (3) the fund is owned and controlled by a sponsoring organization, such as a community foundation. A fund possessing these characteristics may be exempt from the donor advised fund classification if it grants to one single public charity or government unit or if the fund meets certain requirements applicable to scholarship funds.
Donor advised funds
In grantmaking, this speaks to the practices one applies to reviewing grant requests prior to approving them. It generally includes establishing the charitable status of the grantee, the charitable purpose of the grant, and the financial and organizational capacity of the organization to undertake the proposed activities.
Employer Identification Number
An Employer Identification Number (EIN) is also known as a Federal Tax Identification Number, and is used to identify a business entity.
Excess benefit transaction
A prohibited transaction in which an economic benefit is provided by an applicable tax-exempt organization, directly or indirectly, to or for the use of a disqualified person, and the value of the economic benefit provided by the organization exceeds the value of the consideration received by the organization. An excess benefit may result from overcompensation for services or from other transactions such as charging excessive rent on property rented to the charity. In the case of donor advised fund donors and donor advisors and disqualified persons of supporting organizations, stricter rules sometimes apply.
Excess business holdings
The amount of stock or other interest in a business enterprise held in a donor advised fund that exceeds the permitted holdings. The excess business holdings rules were created for private foundations but were extended to apply to donor advised funds by the Pension Protection Act of 2006.
A process that sponsoring organizations must follow when making grants from a donor advised fund to organizations not described in Section 170(b)(1)(A) of the Internal Revenue Code and some supporting organizations.
Distribution of funds.
Payment for incurred expenses.
The duties of board members and trustees arising under state law that are often described as the duties of care, loyalty and obedience. Fiduciary duties also arise in other cases where one is in a position of trust or confidence.
Field of interest fund
A fund held by a community foundation that is used for a specific charitable purpose such as education or health research or a specific geographic area.
Financial advisory firm
Investment banking specialists who offer advice and personalized service.
Diversification is a risk-management technique that mixes a wide variety of investments within a portfolio in order to minimize the impact that any one security will have on the overall performance of the portfolio.
A review of financial statements prepared by management. Unless deemed necessary, the accountant is not required to obtain any independent corroboration to substantiate the staff information.
A statement from the community foundation which details the activity of a fund including grants paid, contributions made, summary of activity and fund balances.
There are a variety of fund types offered by community foundations such as scholarship, donor advised funds, field of interest funds, unrestricted funds, and agency endowment funds.
Geographic affiliates are defined as a component fund or collection of component funds established within or by the community foundation, serving a defined geographic region and under a common advisory group. This definition does not include separately incorporated organizations such as supporting organizations.
Gift acceptance policy
This type of policy outlines the issues regarding the acceptance or rejection of proposed gifts.
The term used to describe an asset contributed by a donor to a fund. This could be cash, appreciated stock, real estate, etc.
A statement of a foundation's goals, priorities, criteria and procedures for applying for a grant.
A grant recipient.
The award of funds for charitable purposes.
A source of information on US nonprofits. A searchable database of more than 1.7 million IRS-recognized nonprofit organizations.
Assets that are not easily and quickly converted into cash.
Independent public accountant
Independent public accountants perform many functions, including auditing financial statements, designing financial accounting systems, assisting in the managerial accounting function, providing managerial advisory services, and tax preparation.
A fixed charge for borrowing money; usually a percentage of the amount borrowed.