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Establish a Fund
Coulon Park Waterfront
ESTABLISHING A FUND
It’s easy to establish a fund. A minimum of $10,000 (or the equivalent) is required to begin a fund and before grants can be made. Just contact our Executive Director and explain what you have in mind. Here are some things to consider when establishing a fund.
Do you want to create a fund that will remain forever and have only the interest off the fund used for grants?
Would you like to retain the right to advise the Foundation on where and when disbursements are made?
Do you want to benefit a single organization or a specific area of need such as diabetes or scholarships?
Do you want to benefit a broad area of need, such as children, education, healthcare or the arts?
Would you prefer that the Foundation Board make grants from the fund based on priority needs of the community?
Do you know which assets you will use to initiate the fund (cash, securities, property)?
Based on what you hope to accomplish with your fund, we will provide you with the appropriate blank fund agreement to review with your legal advisor. When you know how you will designate the fund, what you will name the fund and what assets you will contribute to establish the fund, you will meet with our Executive Director to discuss any other considerations. When all of your questions have been answered, you can fill out the fund agreement and have the appropriate people sign it for Foundation approval. Once assets are transferred to the Foundation, your fund is official and will take its place among our family of funds.
Read the definition of funds below to help you clarify which type of fund you wish to establish. Then, don’t hesitate to give us a call for more information or to schedule an appointment.
FUND TYPES
Donor-Advised Funds
Donor-advised funds allow donors to play an active role in grant-making without incurring the paperwork, taxes and administrative headaches of establishing and maintaining a private foundation. Donor-advised funds can be established by an individual, a business or any group of people who share charitable interests.
Considerations for donor-advised funds
Donor-advised funds can carry the name of the donor, family, company or someone the donors wishes to honor.
A donor-advised fund can benefit any qualified charitable cause and be established as broadly (multiple causes) or narrowly (single cause or organization) as the donor wishes.
The donor receives a tax deduction because the funds are given to the community foundation as a charitable gift. Yet, in this case, the donor retains the right to work with the Foundation to recommend grants to the Foundation Board.
The donor can name a second generation of donor-advisors to continue a legacy of grant-making.
A donor-advised fund can be established so that all or a portion of the principal is available for grants, or so that grants are available only from fund earnings (endowment), thereby preserving the principal in perpetuity.
Grants from donor-advised funds can be made only to qualified charitable organizations as defined in Section 501 (C) 3 of the Internal Revenue Code. No grants may be made directly to individuals or to benefit specific individuals. This includes reimbursement of any expenses incurred to maintain or increase the fund or scholarship awards to individuals or educational institutions.
The minimum initial contribution to establish a donor-advised fund is $10,000.
Field of Interest Funds
Rather than naming a particular organization as the beneficiary, donors may establish a field of interest fund (minimum $10,000) to address broad areas of needs within the community, such as the arts, healthcare, aging, or at-risk-youth, or for a specific area such as diabetes, teen suicide, or even a geographic region. A field of interest fund does not name a specific organization to receive grants.
Consideration of Field of Interest Funds
While the donor specifies the area of need upon creation of the fund, the RCF Board awards grants to community organizations and programs working within the identified field of interest and maintains the fund on an ongoing basis.
RCF encourages donors to remain involved with Field of Interest Funds by adding to the fund at any time, helping to promote the fund and encouraging others to make contributions.
Scholarship Funds
The Renton Community Foundation is a champion of good education as a means to prepare our young people for the future. Therefore, we offer several options for donors who share an interest in providing educational opportunities for students and adults in our area.
Donors may make a contribution of any amount to one of our existing scholarship funds.
Donors may establish a designated scholarship fund (minimum $10,000), which identifies a specific educational organization to which grants will be made. In this case, the donor may specify the parameters of the type of student who is eligible to receive the scholarship, but the educational organization solicits applications and selects the awardees. Neither the donor, nor anyone from the Renton Community Foundation participates in the selection process.
Donors may also establish a general scholarship fund and then participate in the selection process by sitting on a selection committee in which they do not retain a majority vote. In this case, the donor can help establish all parameters for the scholarships awards and even vote on the final awardees, but the majority of the selection committee must be selected by the Foundation and cannot include relatives or employees of the donor.
Designated Funds
Donors who have a passion for a specific program or organization may establish a fund (minimum $10,000) to receive grants for a variety of needs within that organization, including operations, programs, or capital needs.
Consideration of Designated Funds
While the donor specifies the program or organization upon creation of the fund, the RCF Board awards the grants to meet needs within that program or organization and maintains the fund on an ongoing basis.
RCF encourages donors to remain involved with Designated Funds by adding to the fund at any time, helping to promote the fund and encouraging others to make contributions.
Unrestricted Funds
When a donor establishes an unrestricted fund (minimum $10,000), they trust the Foundation to monitor community needs and to award grants to appropriate organizations, programs or projects that help meet those needs. As with all of the Foundation funds, distributions are made in the name of the fund, or anonymously, as the donor wishes.
Consideration of Unrestricted Funds
RCF encourages donors to remain involved with Unrestricted Funds by adding to the fund at any time, helping to promote the fund and encouraging others to make contributions.
Agency Funds
Part of the Renton Community Foundation’s mission is to strengthen and expand philanthropy as a way to improve the quality of life in the greater Renton area. We take this part of our mission very seriously and work hard to help other non-profit organizations in our area to be as efficient and effective as possible in their fundraising efforts. Therefore, RCF offers other non-profit organizations the option of establishing their own fund within the Foundation (minimum $10,000). In return, the Foundation provides networking opportunities; education on board development, fundraising, budgeting, and donor cultivation; promotional opportunities; and investment and gift processing services. This allows the agency board to concentrate on priority needs within their organization and to serve as a bridge from the community foundation to the rest of the community.
Considerations for Agency Funds
Agency funds remain the property of the agency.
The Foundation charges a 1% management fee for these services.
Disbursements can be requested from the Fund with a thirty-day notice to the Foundation Board.
Fiscal Sponsorship Funds
Occasionally, the Renton Community Foundation will extend its tax-exempt umbrella to include an organization or project that has not sought tax exemption under the IRS. These organizations or projects must fill out a Fiscal Sponsorship Application and be approved by the Foundation for this privilege. Once approved, a restricted fund will be established ($10,000 minimum) within the Foundation specifically to support the organization or project.
Considerations for Fiscal Sponsorship Funds
The organization or project must adhere to an established set of ongoing requirements (such as carrying liability insurance or following a chain of command for donations) in order to reduce any risk to the Foundation.
The Foundation charges a 2% management fee on these funds because of the increased workload and risk to the Foundation.
Donations earmarked for the organization or project are actually given to the Foundation. This allows donors to receive the full benefits of making a charitable donation. The Foundation then places the donations in the restricted fund dedicated only to the support of the project.
Grants are disbursed to the organization or individuals associated with the project, who then provide regular reports documenting activities and expenditures, in accordance with the terms of a master Fiscal Sponsorship Agreement executed between the organization and the Foundation.
Fiscal Sponsorship Agreements will be reviewed on a regular basis, and possibly renewed, in order to modify terms of the agreement as needed.
While the Fund remains the property of the Foundation, if the sponsored group matures to the point of establishing its own tax-exempt corporation, the Foundation will be happy to disburse the full amount of the fund to the newly formed organization with a thirty-day notice.
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Contact the Foundation for more information by emailing us at lbohart@rentonfoundation.org, or calling (425) 687-4622. |
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