You can simplify your charitable giving by opening a Donor Advised Fund (DAF) with Los Altos Community Foundation (LACF). Many individuals, families, and organizations use Donor Advised Funds as an easy way to organize all their giving through one expertly-managed and cost-effective giving vehicle while taking advantage of LACF’s services and expertise. Donor Advised Funds are simpler and less expensive to set up and operate than a family foundation.
LACF Donor Advised Funds offer the following benefits:
- Your gift qualifies for an immediate tax deduction this year.
- You can recommend a grant from your DAF to any 501(c)(3) in the US at any time over multiple years. Unlike private foundations, DAFs do not require minimum annual distributions.
- Flexible naming of your DAF. You can name it for your family (such as the “Smith Family Fund”) or in honor of or in memory of a loved one. Or you could select a name that enables you and your grants to remain anonymous.
- If you would like to grant locally, LACF offers personal service and knowledge of local nonprofits and their needs. Also, you can grant to one of LACF’s programs, if you’d like. Our personal service is unique – no other DAF custodian can provide our level of local knowledge.
- Flexible grantmaking notification. For example, grants can be sent in honor of a friend or loved one. Or LACF can send a grant from your DAF to a nonprofit without your name listed if you would to remain anonymous.
- You can choose one of two DAF investment options, depending on your time frame for grantmaking: 1) LACF Cash Fund and 2) LACF’s Long-Term Growth Fund, which is a moderate mix of equity and fixed income funds. This fund is managed by an independent local wealth advisor.
- An online portal on which you can see your fund’s balance, recent grants, and statements. You can also recommend new grants through this portal.
- Easy access to LACF. You can contact us at any time via phone, email, or by dropping by our office. LACF can offer quick turnaround on selected grant requests if you need it.
- Your administrative fee supports LACF and thus our work to further improve our community.
- Donor Advised Funds are also an excellent way to create a family philanthropic legacy by naming your children or other family members as successor advisers and getting them involved in your grantmaking decisions.
Opening a Donor Advised Fund is simple
- Fill out the LACF Donor Advised Fund agreement (please contact LACF if you have questions or would like assistance in doing this).
- Submit the completed form and your initial tax-deductible gift (check, stock donation, or other assets). The minimum initial gift is $5,000. There is no maximum to establish a fund and you can add to the fund at any time in the future.
- Choose your fund’s investment option (Cash or LACF’s Long-Term Growth Fund, which is managed by an independent local wealth advisor)
- Start giving from your fund!
Two LACF Fund Options: Spend-Down and Endowment
Your Fund can be a “Spend-Down” fund where you grant the funds you donated to it. Or, you can specify that your fund is an endowment.
An endowment is a permanent fund in which the money you donated becomes the principal and is never granted. Instead, the earnings from the principal of the fund are used to grant to nonprofit organizations. LACF has a Spending Policy for annually determining the earnings of each fund that can be used for grantmaking. Typically this is about 4% of the principal.
The advantage of an endowment is that it can grant to the community in perpetuity while also growing over time. You can create different types of endowed funds.
Some examples include:
- Unrestricted Endowed Fund. The earnings from this type of fund are granted to the most important needs in the community. LACF’s Board of Directors determines how to grant the endowed fund’s earnings.
- Donor Advised Fund. You and your heirs advise how the earnings are granted each year.
- Designated Fund. You specify one or more nonprofits to which the earnings are granted each year. For example, each year the earnings from LACF’s Walter and Marie Singer Endowment Fund are given to ten designated nonprofits.
- Field of Interest Fund. You specify an area that you would like the earnings to be granted to. For example, you might specify education or the arts. The earnings would be used to grant to local nonprofits focused on this Field of Interest. LACF’s grants committee determines the grant recipients for the earnings each year.
Any endowed funds receive the benefits listed above for Donor Advised Funds.
Note: LACF is not engaged in rendering legal, financial, or tax advice. Information in our publications and on our website is provided as a service to provide general information about charitable giving. Many topics related to charitable giving have complexities and nuances that cannot be adequately detailed in brief articles or announcements. Individuals’ personal situations may vary. Please consult your financial or legal advisor.