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How Do Charities Work?

Donors make charitable contributions to donor advised fund accounts and have the privilege of naming their donor advised fund account, designating donor advisers and successor donor advisers, making recommendations regarding grants paid out of a donor advised fund account, and advising on the investment allocation of assets in a donor advised fund account.

Under the 2018 tax law, you may benefit by contributing to a DAF in alternating years to ensure that you can itemize deductions. If you itemize deductions on your income tax return, you can write off the amount you contribute to your DAF as a charitable contribution for that year you make the deduction. A donor cannot receive any personal benefit (i.e., goods and services) in exchange for a donation from a DAF. And once funds are contributed into a DAF, they cannot be withdrawn for or by the donor. The charitable gift is irrevocable.

NOFI educates its donors and donor advisers on an ongoing basis about charitable giving and ways to increase philanthropy. These educational endeavors can take a wide variety of forms, including one-on-one counseling, technology-based communications, efforts to provide broader access to sources of information about charitable organizations, and communications regarding grants from the sponsoring charity.

Testamentary Gifts Contributions to a Donor Advised Fund may be made as part of your estate plan. The fund may be named as the beneficiary of cash and cash equivalents, securities, life insurance policies, retirement plans, charitable remainder trusts, charitable gift annuities, charitable lead trusts and/or brokerage accounts. NOFI can provide sample bequest language allowing the donor to designate all or a portion of his/her estate to benefit a fund at NOFI. Completion of a Donor Advised Fund agreement allows the donor to instruct NOFI regarding the fund’s name and purpose after the donor’s lifetime, name successor advisors, and to specify charitable fields of interest. NOFI staff can assist you and your legal or tax advisor on the many ways charitable giving can fit into your estate plan.

Donors establishing an advised fund may designate themselves or any person to be an advisor to the fund. Ideally, fund advisors are at least 18 years of age; however, if a fund advisor is a minor, the NOFI will work with the minor’s guardian to facilitate fund advisory privileges. Individuals named as fund advisors may recommend grants to be issued from the fund. If a fund is advised jointly, upon the death of one advisor, the remaining advisor(s) retains fund advisory privileges.

Donors may appoint an Advisory Committee for an advised fund. The Advisory Committee may make recommendations to the Board of Directors concerning grants from the fund and any other matters that it deems of importance. Generally, each Advisory Committee should select one person who will have the authority to transmit the Advisory Committee's recommendations to NOFI. Unless contrary instructions have been made by the Donor, whenever two persons are designated to make recommendations they shall act by unanimous consent; whenever more than two persons are so designated, then a recommendation by a majority of such persons shall constitute an effective recommendation for consideration by NOFI.

Fundraising Policy and Donors may make additional contributions to funds they create, and NOFI may, in its discretion, accept additional contributions to named funds from others.

Third-party contributors have no access to the fund and no grant recommendation privileges, nor may they receive anything in exchange for or in consideration of their contribution, under IRS rules. No fund advisor(s) nor any third party may solicit third party contributions in exchange for a promise or guarantee to contributors that intended grant recommendations will be approved. NOFI is unable to assist event organizers with fundraising events to benefit a Donor Advised Fund. Without prior express written approval by NOFI, the fund advisor(s) may not raise money for any fund through quid pro quo fundraising events, online solicitations, or mass appeals. Donations may be requested for memorial funds established in honor of someone who has passed away.