Types of Funds
Donors to the Foundation may reach their charitable goals and philanthropic interests in many ways. Donors may give gifts during their lifetime or provide for gifts to the Foundation as part of a legacy.
Specific ways our Foundation accommodates charitable giving:
- Unrestricted funds: Donors of unrestricted funds give the Foundation the flexibility to use their charitable gifts at the discretion of the Foundation. These donors recognize that the needs of the Lake City area may be dramatically different in years to come. They have confidence that the Foundation will use the unrestricted funds to meet those currently unforeseen needs in the community.
- Field of Interest funds: Donors give to Field of Interest funds to support specific areas of interests such as arts, community improvements, culture, environment, and human services. These donors work with the Foundation in identifying where and how they wish their gifts to be used.
- Designated funds: Donors may specify qualified, existing charities as recipients of their gifts, thereby providing those organizations with a one-time gift or with an ongoing source of income.
- Special Project funds: These funds are held in trust by the Foundation for special projects. Using the Foundation as a fiscal agent allows non-profit organizations to pursue their charitable goals without having to set up a financial infrastructure. It also allows project supporters to receive the maximum tax benefits as allowed by the tax code.
How funds are managed
Funds donated to The Foundation are our monetary assets. The four types of funds are: Endowed Funds, Spend-Down Accounts, Donor Advised Funds and an Unrestricted Reserve Fund.
Endowed Funds are established accounts that are invested in the stock market. Earnings from the investments are used to fund the purpose of the endowed fund (i.e. Scholarships, the Arts, etc.). The funds are managed by our treasurer, who is advised by Edward Jones Inc. Biannually, the Financial Advisory Board (individuals with finance and investment backgrounds) reviews the investing strategy of The Foundation.
Spend-Down Accounts are funds that are not endowed. They are generally raised for a near term purpose. An example of this is the Environmental Pillar Fund for sediment abatement, a program in progress. Funds in the account are required for the ongoing work. Depending upon the spending timeframe, these funds may be invested in short-term CDs.
Donor Advised Funds are owned by The Foundation, but the donors who established the funds direct where they wish the funds to be used, subject to approval by The Foundation’s Board of Directors, within funding limitations set by the Federal Government.
The purpose of a DAF is to allow the donor the opportunity to provide input on how the donation will be used. A common practice among those who establish these funds is to provide money from the DAF to be used as matching funds to attract additional money from the general public for a common purpose. This approach was used to attract funds for the Community Trees project, (where a $4,000 challenge was used to raise over $10,000); similar results with the community beautification projects, scholarships and packing for the weekend program.
Money used to fund a DAF cannot be taken from an IRA as a Qualified Charitable Distribution.
Unrestricted Reserve Fund:
Reserve account funds will be used as a source to fund grant requests in years where the earnings from Foundation investments have not met expectations of The Foundation. It is expected this Fund will only be needed occasionally – perhaps twice a decade.
Fund Management and Awarding of Grants:
Donations made to The Foundation are directed as the donor wishes. They generally end up in one or more of the Endowed Funds. Endowed Funds are invested, and only the investment earnings are available for funding grant requests. The investment objective of the endowed funds is to earn at least 5% on the investments each year. It is expected that at least 4% will be used to fund the grants requested from the public, and any excess earnings above the 4% will be used to further grow the endowment.
Make a Gift by Mail
Please download, print and mail the donation form:
All gifts to the Foundation are tax deductible and an investment in the community.
Please send donation to:
PO Box 86
Lake City, MN 55041