Fund Types

• General Endowment Fund
• Advised Fund
• Why an Advised Fund?
• Understanding Endowment Funds

The distinguishing characteristic of a community foundation is that it encourages donors to make gifts to an endowed fund. An endowment is distinctive in that the gift is invested and only the income is distributed back to the community. Endowment gifts from a number of donors are usually combined and invested in income-producing assets. Most commonly, endowment funds are invested in stocks and bonds.

Every year 5% of the total assets of the Endowment Fund are made available to local non-profit organizations to address community needs. Some donors choose to earmark their gifts for specific organizations or areas of interest. There are many financial tools available to facilitate giving, please contact your financial advisor or speak to a board member about how the Foundation can best meet your needs.

Gifts contributed to the Foundation without specific limitations go into the general Endowment Fund. Those who contribute to the general Endowment Fund can take great satisfaction in knowing that their gifts are benefiting the community not only this year but in the years to come. These are "perpetual gifts", a way of supporting our island community for the future.

"I think planned giving is the way of the future, and I wanted the organization I support to start utilizing it. The Foundation offered me a vehicle, the Charitable Annuity, to get current income for my wife and I and leave the principal to our favorite non-profit when our estate is settled. I don’t want to see this organization doing bake sales and selling used furniture forever."
- SJICF Donor

Many donors are interested in an ongoing involvement with the Foundation and wish to advise the Board as to which organizations will be the beneficiary of their funds These donors may establish a fund in their name (or any name, for that matter) to be managed by the Foundation. After making the donation to the Foundation, the donor can request funding for different organizations at different times, reflecting their changing and/or expanding interests. These funds are pooled for investment purposes and economies of scale, but interest and appreciation earned and returned to each individual fund.

My partner and I didn't really need the inheritance we received from an aunt last year, so we used it to open a Memorial Fund in her name and, working with the Foundation, distributed the money to causes she would have wanted to support. This was a meaningful memorial to her, to us and to our island community."
– SJICF Donor

A community foundation, such as the San Juan Island Community Foundation, can be a creative partner with individuals and families as long-term financial and charitable plans are made. We see ourselves as being very flexible and will work earnestly to accommodate the donor's interests. There is no question that the most generous gift to the community is an unrestricted gift. This allows community needs, such as old ones being cured, yet new ones relentlessly surfacing, to be met with quick caring and cost-efficiency. Unrestricted, advised, designated … whatever category best matches a donor's charitable interest and financial plans, a community foundation can be a strategically wise partner.

Currently, the most "popular" type of fund at the San Juan Island Community Foundation, and at most other community foundations in the country, is an Advised Fund.

An Advised Fund is a component fund where the donor (or persons designated by the donor) exercises the privilege of making non-binding recommendations to the governing body of the community foundation, suggesting which charitable organizations would receive grants from this fund.

The popularity is well founded because: These funds allow for the on-going involvement by the donor(s) in the distribution of requested gifts to the charities of his/her choice. (The expertise of the Foundation's Board of Directors is always available should the donors want guidance as to where their grant could support qualified, yet often unmet needs in the community.)

• No specific charitable organizations are pre-designated so grants from an Advised Fund can be requested for different organizations at different stages in a donor's lifetime, reflecting changing and/or expanding interests. Thus an Advised Fund is extremely flexible, and can support charitable organizations locally, nationally, and, in certain situations, internationally.
• With a minimum of $2,000 suggested to establish an Advised Fund, it is accessible and affordable to a majority of caring citizens.
• Funds are commingled for investment purposed and economies of scale, but interest and appreciation earned is returned to each individual fund. Low annual fees charged to each fund make this form of philanthropy very cost effective.
• With the San Juan Island Community Foundation Board of Directors doing the administration of the grants for all Advised Funds, the donor is free of the clerical management of his/her grantmaking.
• Gifts of cash or appreciated property, most often publicly-traded stock (also closely-held stock), are usually used as the initial gift to an Advised Fund. A stock transfer (done electronically) is easy. Real property, such as real estate, art, and jewelry, is also a consideration. The Foundation sells the asset, using the proceeds to establish or add to an Advised Fund.
• An Advised Fund can have the involvement of a family for two or more generations. A permanently endowed Advised Fund can have an individual or family name last in perpetuity. (When the advisor(s) for the succeeding generations are no longer willing or able to advise the fund, any remaining principal becomes endowed in the name of the original donors. The pattern of community support established by the original donors is a guideline for future grantmaking.)
• When a Charitable Remainder Trust, Charitable Gift Annuity or Pooled Income Fund has been used by a donor, the remainder of the trust/annuity can be an Advised Fund, advised by pre-named children, grandchildren or close friends of the donors.
• And lastly, the 1993 substantiation requirements of the IRS state that a cancelled check is not sufficient evidence that a charitable contribution has been made. Rather than donors amassing multiple substantiation letters for multiple donations, an Advised Fund can mean, one donation-one substantiation letter from the San Juan Island Community Foundation, verifying a qualified contribution. The San Juan Island Community Foundation is a 501(c)(3) and any contribution made at any time to an Advised Fund is tax-deductible.