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Grants And Guidelines

Funds established at NOFI are funds of NOFI and not separate trusts. Nothing in the fund agreement will affect the status of NOFI as an organization described in Section 501(c)(3) of the Internal Revenue Code (“the Code”) of 1986, as amended, and as an organization which is not a private foundation within the meaning of Section 509(a) of the Code.

NOFI has exclusive ownership and legal control over amounts contributed to or earned by each donor advised fund account. This means that contributions made to a donor advised fund account of NOFI are irrevocable and that advice regarding grant recommendations and investment allocation is not binding on and is subject to review and approval by NOFI.

NOFI reviews disbursement requests by verifying a proposed grant recipient' s exempt, public charity or exempt, private operating foundation status, as appropriate, in IRS Publication 78. In addition, depending on the particular circumstances, the sponsoring charity may perform additional review of grant recommendations to U.S. public charities and private operating foundations. Such additional review may include:

  • Requesting relevant documents from the proposed grant recipient (e.g., IRS determination letter, audited financial statements, IRS Forms 990 or 990-PF),
  • Requiring the proposed grant recipient to provide information on its operations (e.g., charitable objectives, operating budget, directors),
  • Obtaining additional assurances that the donor or donor adviser will not receive an impermissible benefit from the proposed grant, and
  • Obtaining a current address and the name of a contact person from the grant recipient.

Furthermore, grants may be recommended to governmental units defined in Section 170(c)(1), if the grant funds are used for exclusively public purposes. NOFI does not currently make grants to U.S. private foundations or foreign organizations. Where NOFI chooses to make grants to individuals or to entities other than public charities and private operating foundations, additional review procedures are appropriate to ensure that funds are used for charitable purposes. NOFI choosing to make grants to a U.S. private foundation or a foreign organization requires that the proposed grant recipient provide the sponsoring charity with information specifying the charitable purposes for which the grant funds will be used, including information on the proposed grant recipient's charitable objectives and how use of the grant funds will further those objectives. NOFI generally enters into a written grant agreement with the U.S. private foundation or foreign organization providing the charitable purposes for which the grant funds will be used, and that the grant recipient will periodically submit reports describing the expenditure of grant funds and the grant recipient's progress in accomplishing the charitable purposes for which the grant was made. NOFI monitors the performance of the grant recipient under the terms of such agreement. NOFI may follow other appropriate procedures where the foreign organization is the equivalent of a U.S. public charity. NOFI choosing to make grants to individuals within a charitable class adopts procedures to assure that there is no impermissible benefit being conferred on the individual.

NOFI maintains a Minimum Level of Activity in its Donor Advised Fund Accounts. Aggregate Grant Distributions Will Exceed a Minimum Threshold. Grant distributions from the aggregate of a sponsoring charity's donor advised fund accounts exceed a minimum threshold of, for example, 2% of the sponsoring charity's net assets on a fiscal five-year rolling average basis.

Investment fees are charged to funds, and investment returns are posted to the funds net of that fee. Information about investment fees is available upon request. Income, investment gains or losses, and fees are posted to the fund on a monthly basis.
Any costs incurred by NOFI necessary for the disposition of securities and other assets (i.e. legal and appraisal fees) and for the management of such assets prior to disposition will be forms an expense of the fund.

NOFI charges annual fees for administrative work done on behalf of the Donor Advised Funds. The annual fee is $1000 for each Donor Advised Fund per year. The fee is due January 1 of each year.

Gifts of business interests require a Planned Giving Agreement be executed upon creation of the Donor Advised Fund. The suggested minimum rate of giving is 2.5% annually.

Fees And Minimums

The current fee schedule provides for an annual administrative fee charged to all Donor Advised Funds (whether endowed or spendable) of the greater of 1% of the fund’s asset value (declining as assets exceed $1 million) or $500. An administrative fee is charged against the fund monthly. In addition, customary investment management fees apply. The fee schedule is subject to change at the sole discretion of the; fund advisor(s) would be notified in writing in advance of any fee changes. Minimums A Donor Advised Fund may be opened with $10,000, which is due to NOFI within 60 days of signing a fund agreement. If the fund’s assets do not reach $10,000 within 60 days of inception, the fund may not be recognized as a separately-named fund, and any assets within the fund may be transitioned to an unrestricted fund at NOFI at the discretion of NOFI’s Board of Directors. Externally-managed funds have a minimum balance requirement of $25,000. Endowed funds are required to maintain a $50,000 minimum balance. Spendable funds are required to maintain a $500 minimum balance. If a fund maintains a balance of less than $500 for more than six months, after notification to the fund advisor(s), NOFI may close the fund and transition the remaining assets to an unrestricted fund at NOFI at the discretion of NOFI’s Board of Directors.

Incidental Vs Non-Incidental Benefits

IRS regulations place limitations on grants made from a donor advised fund. Grants can only be made exclusively in furtherance of charitable purposes. Donors, donor advisors, and related persons may be subject to excise taxes and other penalties if they receive more than an incidental benefit from a donor advised fund (IRC 4967).

A benefit is considered more than incidental if a person receives a benefit that would have reduced or eliminated a charitable contribution deduction as part of the transaction.

Other impermissible private benefits include grants for school tuition or scholarships sent directly to individuals. Additionally, grants may not be used for lobbying, political contributions, to support political campaign activities, or any other non-charitable purpose.

Being aware in advance of what sort of charitable efforts that could be considered a non-incidental benefit can help donors avoid instances where their grant may not be able to be processed.