With Named Funds, Season of Giving Never Ends
Editors note: This column appeared in the December 19 edition of the Northfield News.
During the holiday season, the spirit of giving surrounds us. Whether it’s giving a little extra at your place of worship, dropping spare cash into the Salvation Army’s red kettle, purchasing food for a local food shelf or clothing for those in need, it just feels good to know you can help your neighbors. Many people wish to extend their season of giving to the Northfield community year-round and do so by establishing a named fund through Northfield Shares.
While some people establish a named fund (i.e. the Smith Family Legacy Fund) through an estate gift, others create funds while they are still living so they can watch from a distance the impact they are making. The latter may be a great option if you had a taxable event this year. A few examples of a taxable event include selling property, receiving a large inheritance or holding appreciated stock.
Regardless of the form the gift takes, there are several different options for the type of named fund you can establish.
Donor Advised Funds
Think of a donor advised fund as like having your own family foundation but without all of the legal and accounting paperwork. With your gift, you can receive an immediate tax benefit, but delay any decisions regarding what charities will benefit. Your family can recommend grants to your favorite causes on a schedule that works for you. By researching different nonprofits and determining which to support, kids learn the importance of thoughtful philanthropy and how to most effectively use their grant dollars.
Another option is an endowment, meaning that the principal is retained and only the income is spent. This enables the donor to support the community in perpetuity. The most common endowment fund types are as follows:
- Undesignated Funds—After the fund is created by the donor, responsibility for use of the income is given to the community foundation, such as Northfield Shares through its Grants Committee and Board of Directors. That provides great flexibility to fund needs within the Northfield area through the annual grants program.
- Field of Interest Funds—The donor designates the general area in which grants should be made, such as youth development, the arts, athletics or beautification of Northfield. For instance, the Nutting Beautification Fund through Northfield Shares has helped support a variety of projects by Northfield in Bloom such as hanging flower baskets on local bridges and throughout Division Street.
- Donor-Designated Funds—The donor selects the charities to which the income will go, and the relative amounts. Payments are made from the fund annually. The recipients and relative amounts can be changed by the donor.
As you can see, there are several ways to give the gift that keeps on giving to the Northfield community by establishing a named fund. If you’d like to learn more about these gift-giving options, Northfield Shares would love chat with you. By establishing your fund through Northfield Shares, you enable your community foundation to expand its mission to advance philanthropy, inspire volunteerism and promote collaborative leadership.