Just as each of your clients has a unique estate plan and financial plan to meet the client’s particular situation and goals, each of your philanthropic clients needs a unique charitable giving plan. For example, for some clients, giving shares of highly-appreciated stock consistently yearly to their fund at the FM Area Foundation makes the most sense for their charitable goals and their mix of assets. For other clients, leaving a bequest to the FM Area Foundation to support specific areas of interest is the best fit for the client’s financial situation and community priorities.
The FM Area Foundation offers charitable giving vehicles to meet a wide range of clients’ needs. In many cases, a single client can benefit from setting up multiple funds of different types.
Here’s a quick primer on a few of the most popular fund types.
Donor-advised Fund
A donor-advised fund enables your client to establish a specific account for charitable giving. Your client makes tax-deductible cash contributions (or, ideally, stock or other highly-appreciated assets) to the fund and then recommends grants to favorite charities.
Unrestricted Fund
The FM Area Foundation has its finger on the pulse of the community’s most pressing issues. An unrestricted fund allows your client to support community needs that can’t be identified until the future. One of the most significant benefits of a community foundation is its perpetual structure that allows clients and their families to offer support to nonprofits that evolves over time as priorities in the region shift.
Field-of-interest Fund
Clients who want to target their giving to specific areas of community need (such as education, community building, basic needs, or the arts) can set up a field-of-interest fund to establish parameters for grant-making under the ongoing guidance and expertise of the FM Area Foundation’s team.
Designated Fund
A designated fund allows a client to give directly to a specific agency or purpose. Over time, the FM Area Foundation’s team manages the distributions from the fund according to the terms established by your client.
Agency Fund
An agency fund is similar to a designated fund, except, in the case of an agency fund, the source of the initial contribution is the beneficiary nonprofit organization itself, not a donor or donors, as is the case with a designated fund. If your client serves on boards of directors of charities, they’d likely be interested in learning more about agency funds. Indeed, suppose you represent nonprofit organizations and their board members in your practice. In that case, it’s helpful to remember that organizations frequently establish agency funds at the FM Area Foundation to set aside endowment reserves or rainy day funds. The team at the FM Area Foundation is adept at navigating the specific accounting standards unique to this type of arrangement.
Scholarship Fund
Clients can set up funds to support students’ educational pursuits based on the parameters and application requirements they outline with help from the experts at the FM Area Foundation.
Here’s a pro tip: If you represent clients aged 70 ½ and older, consider recommending a Qualified Charitable Distribution from a client’s IRA to a fund at the community foundation. All of the fund types noted above are eligible recipients except for the donor-advised fund.
