Community Foundation for Oak Park

Policy: Donor-Defined Funds

1. Definitions

   A "donor-defined fund" is a restricted fund of the Community Foundation created in response to a request from one or more principal donors who specify the charitable goals and purposes of the fund. Examples of donor-defined funds include:

   a scholarship fund

   a memorial fund

   a family fund

   A donor-defined fund may combine these types (e.g.: a memorial scholarship fund).

   A "principal donor" is a donor who requests the creation of a donor-defined fund, any person who represents such a donor in determining the specific policy for that fund, or any person retaining an advisory role on behalf of the donors in the ongoing operation of the fund.

2. Preliminary Creation

   Any of the four executive officers is authorized to create a donor-defined fund on behalf of a principal donor on a preliminary basis. This preliminary creation merely establishes the name of the fund and allows tax-deductible donations to be contributed to the fund. No grants may be made from a fund that has only a preliminary basis.

3. Final Creation

   Final, formal creation of a donor-defined fund requires the adoption of a specific policy on that fund by the Board of Trustees. That policy should result from a consensus between the Community Foundation and the fund's principal donors. It should address the following issues.

   1. the name of the fund;
   2. the purpose of the fund, especially the scope and form of grants (which must be legal and appropriate for a 501(c)(3) tax-exempt charity);
   3. the applicability of the Foundation's policy on grants (which may be waived in whole or part);
   4. whether the principal donors retain an advisory role in determining grants and, if so, how that role is exercised (however, see §4.k);
   5. whether grants from the fund may consume the principal or only consume earnings;
   6. the applicability of the normal geographical restriction that grants benefit the community of Oak Park (which may be waived);
      and
   7. the procedure for identifying the principal donor who is to be the Foundation's contact with all other principal donors (if such contact is to be maintained).

   If a consensus cannot be reached between the Foundation and the principa1 donors, the Foundation will direct the principal donors to alternative charitable agencies. When a suitable alternative tax-exempt agency is identified, the Foundation will then donate all money in the fund to that alternative.

4. General Provisions The following apply to all donor-defined funds and do not have to be included in the individual policy for any such fund:
   1. All grants from a donor-defined fund shall be appropriate for being issued by a tax-exempt charity.
   2. Money in a donor-defined fund will be handled according to the Community Foundation's policy "Fiscal and Financial Management". This money will be segregated only by bookkeeping and not into distinct bank accounts. The Board of Trustees may commingle the assets for convenience and in order to optimize the earnings for the benefit of both restricted and unrestricted funds.
   3. A donation to a donor-defined fund must be complete. No donor shall retain any ownership or control over any asset in a donor-defined fund except as permitted by the Internal Revenue Code for structured donations. The Board of Trustees has the full authority to manage a1l assets donated to the Foundation without donors dictating how those assets are handled, invested, or used to make grants. However, the policy for a donor-defined fund may provide for an advisory role for principal donors in determining grants in compliance with §j and §k.
   4. Any principal donor for a donor-defined fund who happens to be a Trustee of the Community Foundation or a member of a committee created by the Board of Trustees shall abstain from any decisions affecting that fund.
   5. Grants will be paid from donor-defined funds from time to time as determined by the Board of Trustees. Each grant will be made in the joint names of its donor-defined fund and of the Foundation.
   6. Principal donors may solicit additional donations to a donor-defined fund, providing all payments are made to the Community Foundation and that no statements are made contrary to the purpose of the fund as stated in the specific policy for the fund. The Treasurer (or the Treasurer's appointee) will report donations to a principal donor, who will then be responsible for acknowledging donations. For this purpose, the principal donors are responsible for ensuring the Treasurer has the current address of the person to be notified and for appointing successor principal donors. The responsibility of the Treasurer will cease if no principal donor can be located for a period of one year.
   7. If the purpose of a donor-defined fund is no longer valid, the Board of Trustees may modify that purpose to a new purpose that, in its judgement, reflects an intent similar to the original purpose. A purpose becomes invalid if the intended beneficiary project or program no longer exists, if the purpose becomes illegal, if the intended grant recipient no longer qualifies to receive grants from a 501(c)(3) tax-exempt charity, or if, for any reason, the purpose cannot be met. A purpose does not become invalid merely because it has become inappropriate or unpopular. If the Board of Trustees determines that the Community Foundation can no longer fulfill the still valid purpose of a donor-defined fund, the Foundation may donate the fund to another tax-exempt charity that, in the judgement of the Board of Trustees, might better fulfill that purpose. In this case, the donation to the other charity will be appropriately restricted to preserve the purpose.
   8. The Community Foundation does not perform trust services. While a donor-defined fund can be created to be the beneficiary of a trust, the Foundation cannot create or hold trust accounts. The Foundation will cooperate with donors who wish to make structured donations that involve the creation of a trust; however, the costs of creating a trust are the donor's.
   9. Any waivers and exceptions to the general policies of the Community Foundation must be explicitly described in the specific policy for a donor-defined fund. No waivers or exceptions to the Foundation's by-laws are permitted, including by-law Article VI, Section 3, which prohibits making grants directly to individuals. When a fund has a purpose of making scholarship grants or other grants to individuals, either the specific policy shall identify the intermediate agency required under by-law Article VI, Section 3, or else the Board of Trustees shal1 select that agency.
   10. If the specific policy on a donor-defined fund provides for advice on the operation of the fund collectively by a group of two or more persons — including but not limited to advice on issuing grants from the fund — the following provisions shall apply:
       1. Except for the principal donor, the advisory group is effectively appointed by the Community Foundation through the adoption of the specific policy for the fund.
       2. The specific policy shall provide for the succession of membership on the advisory group. This may be done by indicating membership by position or title so that succession is automatic, indicating how specific members in the group are succeeded, or both.
       3. The specific policy shall indicate who is the chairman of the advisory group.
       4. The advisory group shall make decisions only in a face-to-face meeting called by written notice sent by the chairman to all members. The notice shall be sent at least seven days prior to the meeting by first-class postal mail to the last known address of each member; however, a member may instead receive notices via E-mail if explicitly requested by that member. Notice may be waived in writing by any member and is presumed waived by a member’s presence at the meeting.
       5. A quorum for a meeting of the advisory group consists of a majority of its membership. Decisions require an affirmative vote of a majority of the membership, not merely a majority of those present. No member of the advisory group shall have veto authority over the decisions of the group.
       6. The advisory group shall communicate its advice to an officer of the Community Foundation in writing. That communication shall state the group's advice; list the "ayes" and "nays" on the decision to advise the Foundation; cite the date, place, and attendance of the meeting at which the group decided upon its advice; and be signed by at least two members of the group.
   11. No specific policy for a donor-defined fund shall provide that the Board of Trustees be advised solely by the principal donor or by a advisory group a majority of which consists of principal donors.
   12. This overall policy and the specific policy of a donor-defined fund may be modified by the Board of Trustees providing that, in the judgement of the Board, the intents of the original principal donors are substantially preserved.
   13. At the request of the principal donor of a donor-defined fund, the Board of Trustees may consider modifications to that fund's policy that change the intents indicated in that policy. However, the Board is not obligated to make any such modifications.

Approved 1 December 1993
Revised 29 January 2002, 13 February 2007

Community Foundation for Oak Park • P. O. Box 291 • Agoura, CA 91376-0291

Copyright © 2004, 2007 by Community Foundation