A donor-advised fund is a philanthropic endowment fund of the Jewish Federation of Cincinnati. While the fund is owned and controlled by the Jewish Federation, the donor retains the right to make recommendations from the fund for the distribution of income and principal to qualified charitable organizations.
Establishing a Donor-Advised Fund
You can open your donor-advised fund by completing and signing a simple two-page agreement that specifies the name of the fund and the individuals who may recommend grants from the fund. The minimum amount required to establish a donor-advised fund is $5,000.
Contributions to a Donor-Advised Fund
Contributions to your donor-advised fund can be made at any time. Both opening and subsequent contributions to your donor-advised fund may be in the form of cash or publicly traded securities. Since the Jewish Federation of Cincinnati is a public charity, you receive a charitable tax deduction for the fair market value of your gift in the year in which the gift is made to your fund. If your contribution consists of appreciated property that you have held for longer than twelve months, you avoid capital gains tax on the appreciation.
Distributions from a Donor-Advised Fund
You and your designees may recommend grants from your donor-advised fund to other charitable organizations classified by the Internal Revenue Service as a qualified public charity. Grants can be made to a wide variety of charities in which you are interested.
You may recommend grants from your fund, or other direct family members designated in the Agreement on file with the Federation. Designees can include children and grandchildren as well as spouse.
The administration of the grant distributions is handled entirely by the Jewish Federation. Donors receive a letter from the Jewish Federation once their grant recommendations are approved. The recipient organizations receive a letter from the Jewish Federation, along with the grant, identifying the named fund from which the grant recommendation was made.
Pledges of financial support cannot be made that obligate a distribution from a donor-advised fund nor can distributions from a donor-advised fund directly fulfill pledges of financial support, nor may they be made for services rendered or in return for privileges or personal benefits received. The Jewish Federation encourages grant recommendations of $200 or more; however, it will process recommendations for a minimum of $100.
Investment of Donor-Advised Funds
Your donor-advised fund dollars are pooled with other donor-advised funds for investment purposes. The Investment Committee of the Jewish Federation oversees the investment management of all assets of the Jewish Federation Endowment Fund.
You may choose between a pool of short-term money market instruments or a balanced fund of stocks, alternative investments and bonds for the investment of your donor-advised fund assets.
The Jewish Federation charges an annual administrative fee of 1.0% of the average balance or $200, whichever is greater. This fee is charged to the fund during the first quarter of the calendar year, based on the average fund value as determined on March 31, June 30, September 30, and December 31 of the previous year. The minimum $200 fee will be deducted from any newly established fund during the first quarter it is in existence.
Tax Deductibility of Donor-Advised Fund Donations
For income tax purposes, a charitable donation occurs when you make a contribution to your donor-advised fund, not when distributions are made from your donor-advised fund to other charitable institutions. Therefore, you can take advantage of higher income tax deductions during years when you receive additional income or when stock market returns have been especially good—even if you do not plan to recommend grants from those gifts until future years.
The Jewish Federation encourages you to discuss the deductibility of all of your charitable contributions with your professional tax advisor.
Donor-Advised Fund Reporting
You will receive a quarterly statement on your donor-advised fund indicating the beginning balance for that period, the income earned, and all year-to-date additions to and distributions from the fund, and the ending balance. You will also receive a year-end statement summarizing all activity for the calendar year.
Please see detailed procedures pertaining to the operations of the donor-advised fund here.