What is a Donor Advised Fund?
A Donor Advised Fund is a separate fund held within the Cortland Community Foundation that allows donors to assist in the spending of their charitable gift. Participating Donor Advised Funds are one of the most efficient charitable estate planning tools available for creating a legacy of charitable giving for many generations. A Non-Participating Donor Advised Fund allows you to receive your allowable tax deduction now and recommend grants from the fund at some other time.
Establishing a Donor Advised Fund Account
A minimum contribution of $10,000 and a completed Donor Advised Fund Application are required to open a Donor Advised Fund account. The application may be sent to:
Cortland Community Foundation
P.O. Box 466
3334 NYS Route 215
Cortland, NY 13045
Once the account is established, it must be funded within 1 year or it may be closed. The fund is eligible for grants one full calendar quarter after the dollar minimum of $10,000 has been met.
Upon opening the account you will be asked to name your fund. Usually donors choose to name their fund in honor of themselves, their family, a relative or a friend. Donations will be listed by the fund account name in publications unless anonymity has been requested.
The account holder(s) may designate a successor(s). If a successor(s) or a named charitable organization is not named, the Cortland Community Foundation will transfer the balance of the fund to their unrestricted general fund upon notification of the account holder(s) death.
Contributions
You may make additional contributions of any dollar amount at any time. Your fund may accept gifts from third parties.
Contributions may be made in the form of cash, stocks, bonds, mutual fund shares, or other securities, a life insurance policy, pension funds, bequests or a charitable trust.
Cash contributions must be in the form of a check made payable to “Cortland Community Foundation” or wire transfer. Please contact the Foundation at 607-758-9553 for wire transfer information.
Once a contribution is accepted by the foundation, it is considered an irrevocable charitable donation and is not refundable.
Tax Deductions
You should always consult your accountant or tax advisor regarding your personal situation. Regulations regarding charitable giving tax deductions vary greatly at the state level. Your tax deduction at the federal level will depend on whether or not you itemize your deductions.
All contributions made to the Cortland Community Foundation are tax deductible to the fullest extent allowed by law. The deduction is allowed in the tax year that the contribution(s) is made to the foundation, NOT when the grants are distributed.
Contributions to the Cortland Community Foundation and any earnings related to your contribution are not part of your taxable estate for federal estate tax purposes and are not subject to probate. Amounts contributed to the Donor Advised Fund account are not included in your gift and estate tax unified credit calculation.
Income that accrues to your Donor Advised Fund account belongs to the account and not the account holder(s). Therefore, the account holder(s) is not taxed on this income and cannot claim a charitable deduction when the income is earned or distributed from the account.
Contributions made by cash are eligible for an itemized income tax deduction equal to the amount of your contribution on the date that the contribution is made.
Contributions made by the donation of securities or other tangible goods are eligible for an itemized income tax deduction equal to the mean of the high and low prices of each security on the date that each is received by the foundation.
Grant Recommendations
The minimum grant recommendation is $250.00. There is no maximum.
Grant recommendations may be submitted once per calendar year to as many organizations that you wish. The grants may be made in the name of your fund or anonymously.
Although the law requires that the ultimate grant making decisions be made by the foundation’s Board of Directors, it is the board’s intention to fulfill all grant recommendations as long as they meet the Cortland Community Foundation’s grant making guidelines.
Grant Making Guidelines
Grant recommendations may be made by completing a Donor Advised Grant Suggestion Form and mailing it to:
Cortland Community Foundation
P.O. Box 466
3334 NYS Route 215
Cortland, NY 13045
IRS guidelines do not allow grants from Donor Advised Fund accounts to be distributed on behalf of a personal pledge of the account owner, donor or any other party. Nor for any private benefit, such as tuition, scholarships sent to individuals, dues, membership fees, benefit tickets or goods purchased at a benefit auction, etc.
Grants cannot be used for lobbying, political contributions or to support a political campaign.
A Donor Advised Fund may pledge a grant payable over an extended period of time to the extent allowed by the spending policy.
Account owner(s) and/or donor advisor(s) are encouraged to include the Cortland Community Foundation General Fund in their grant recommendations.
All grant recommendations must be made to qualified U.S. 501(c) 3 public charitable organizations. Grants cannot be made to private foundations.
Non-Participating Donor Advised Funds
Funds are invested in a safe investment vehicle for preservation of principal. The interest earned is retained by the Cortland Community Foundation to cover the administrative costs of managing the account and processing the grant recommendations.
No fees are charged to the account.
It is recommended that a minimum of $10,000 be retained in the account.
The account holder may convert all or part of this fund to a Participating Donor Advised Fund account at any time.
Participating Donor Advised Funds
Once the fund has met the dollar minimum of $10,000, it will be invested with a group of funds of which it will share in the group’s investment gains and losses.
To assist in the administrative costs involved in managing the account and processing grant recommendations, a fee will be assessed to your account quarterly. The fee is a sliding scale based on the average fund balance over the previous 12 quarters.
The spending policy for Participating Donor Advised Fund accounts allows the Donor Advisor(s) to recommend grants from an amount that represents 4% of the prior 12 quarters average fund balance on an annual basis. Each year the Foundation will provide the Donor Advisor(s) the dollar amount, per the above spending policy, that they have available to recommend in the form of grants. The entire amount does not have to be distributed each year.
Services Provided
The Cortland Community Foundation will provide account holder(s) with the following services:
- Remit checks to approved grant recommended organizations accompanied by a letter indicating the fund where the donation came from and any special instructions regarding the application of the donation per the donor advisor’s request.
- Inform the donor advisor of the approved grant recommendations and the date the checks were sent.
- Acknowledge receipt of all donations received by the foundation that will serve as the donor’s receipt for tax purposes.
- Send annual statements of the fund account’s activity, including contributions received, grants disbursed, account fees and earnings.
“What is the use of living, if it be not to strive for noble causes and to make this muddled world a better place for those who will live in it after we are gone? “ - Winston Churchill