A Guide to Donor Advised Funds
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WHAT IS A DONOR ADVISED FUND?
A Donor Advised Fund (sometimes referred to as a “Donor Advised Fund”) is a flexible charitable giving tool to help you and your family meet your charitable goals. It functions like a charitable checking account, allowing you to add funds and make distributions at your convenience.
Once established, you may make additional contributions to the fund at any time and recommend distributions to approved Internal Revenue Code § 501(c)(3) charitable organizations. The fund is credited/debited with actual investment returns and grows tax-free, enhancing the amount available for charitable purposes.
GETTING STARTED
CREATING YOUR DONOR ADVISED FUND
Each Donor Advised Fund is governed by a written agreement between the United Jewish Foundation of Detroit and the Donor of the fund. An agreement takes just minutes to prepare. Contact the Endowment Department at 248.203.1519 to start the process.
NAMING YOUR FUND
As the initial donor of a Donor Advised Fund, you need to designate the name of the fund on the application form. A fund name can include your name, the name of your family or any other name that is meaningful to you.
Making contributions
A minimum contribution of $5,000 is required to establish a Donor Advised Fund. Additional
contributions, in any amount, can be made at any time. These additional amounts are eligible for tax
deductions in the year they are contributed to the fund. We ask that the fund be maintained with a
minimum balance of $5,000.
Contributing assets / property to your fund
Assets which may be contributed to a Donor Advised Fund include cash (checks or wire transfers) and
publicly traded securities. Please contact the United Jewish Foundation of Detroit about gifts of
privately held businesses, restricted stock, real estate and other assets — which also may be
contributed in particular circumstances — for assistance in the smooth transfer of these assets.
Naming successor donor advisers
At a donor’s request, a Donor Advised Fund can be advised by persons representing up to two
generations – the donor(s) and the next generation. At such time as there are no remaining donor
advisors, the fund’s balance is paid to the Jewish Federation of Detroit.
Investment of Donor Advised Funds
The United Jewish Foundation of Detroit provides seven different investment strategies for the management of Donor Advised Funds:
UNITED JEWISH FOUNDATION JEWISH COMMUNITY ENDOWMENT FUND SUMMARY OF INVESTMENT OPTIONS AS OF FEBRUARY 2024
- United Jewish Foundation Balanced Investment Portfolio: Broadly diversified growth-oriented portfolio with 40+ managers and a 40% target allocation to alternative investments (30% private and 10% low Beta hedge funds). The target asset allocation is 80% Growth Assets and 20% Risk Reduction assets.
- United Jewish Foundation Fixed Income Investment Portfolio: Portfolio is invested in the broad
bond market with investments in U.S. government and high quality corporate and mortgage-backed bonds. - Short-Term Cash Fund: Federal Hermes Government Obligations Fund Symbol: GOFXX
- U.S. Stock Index Fund: Vanguard Total Stock Market Index Fund Symbol: VITSX
- U.S. Active Large Cap Stock Fund: Independent Franchise Partners US Equity Fund Symbol:
IFPUX - U.S. Aggressive Growth Stock Fund: Conestoga SMID Cap Fund Symbol: CCSGX
- Non-U.S. Stock Fund: American Funds EuroPacific Growth Fund Symbol: AEPGX
- Socially Responsible Investment Option: RBC Global Opportunities Fund Class I Symbol: RGORX
- Israel Impact Focused Investment Option: VanEck Vectors Israel ETF Symbol: ISRA
Disclaimer
Investments in all funds are subject to market and other risks which could result in a substantial loss of value, as well as a possible increase in value through capital appreciation and receipt of income. Results are not guaranteed.
The Board of Governors of the United Jewish Foundation of Detroit, with the assistance of its Investment Committee and investment consultant, monitor the asset allocation, fund selections, performance and fees of each of the investment pools.
Donors may recommend that their funds be invested in one or more of these pools and may suggest changes to the investment allocation as of the first day of any month. To suggest such a change, donor(s) must advise the United Jewish Foundation of Detroit of their recommendation in writing prior to the end of the preceding month.
Key Features of Our Donor Advised Funds
Tax deductions
If you itemize tax deductions on your tax return, you may claim a federal charitable income tax deduction for your gift to a Donor Advised Fund in the year of contribution subject to the following limits:
These deductions may be limited by current tax law. Any amount which is not able to be deducted in the year of contribution may be carried forward and may be deducted over the next five years. Be sure to consult with your tax professional to determine the tax-deductible value and benefit of your contributions to the fund.
Tax reporting
The United Jewish Foundation of Detroit provides each donor to a Donor Advised Fund with receipts documenting contributions. For contributed assets requiring an appraisal to determine their tax-deductible value, donors need to obtain the appraisal. In addition, the United Jewish Foundation of Detroit must report to the IRS the sale proceeds it realizes on the sale of appraised property if the sale occurs within two years of its contribution.
When you establish a Donor Advised Fund, you do not need to keep records for income tax purposes of distributions made from your fund to charities. Individual donors receive a tax deduction when they make their initial gift to a Donor Advised Fund and when they make subsequent gifts to their fund. Thus, distributions from the Donor Advised Fund are grants from the United Jewish Foundation of Detroit. As such, you are not allowed to take a second tax deduction at the time those distributions are made to charities.
Fees
There are no transaction fees for new contributions to your fund, investment pool changes or distributions to other charities. Each Donor Advised Fund is charged an administrative fee of three quarters of one percent (.75%) per year. These fees are paid by the Donor Advised Fund monthly, up to a maximum of $15,000 annually. In addition, each Donor Advised Fund also pays its pro rata share of the investment management fees for the investment pool in which it is invested.
Donor Advised Fund accounts with balances above $2 Million opened after February 28, 2018, will be charged the base administrative fee of three-quarters of one percent (.75%) on the first $2 Million plus .10% (one-tenth of one percent) on all amounts over $2 Million.
Perpetuity of funds
The donor of a Donor Advised Fund may establish that upon the death, resignation or incapacity of all donor advisors that the fund be maintained to support (a) the Federation through a Perpetual Annual Campaign Endowment (“PACE”) Fund to provide an annual gift in the donor’s name to support Federation’s Annual Campaign in perpetuity, (b) a specific agency of the Federation or (c) a community priority.
Making Distributions from Your Fund
Recommend distributions from your fund
As a donor advisor, you may recommend that distributions of at least $250 be made from your Donor Advised Fund at any time. Under current federal tax law, there are no minimum annual distributions required from Donor Advised Funds. We encourage you to take advantage of the knowledge and expertise of the United Jewish Foundation of Detroit’s endowment team members. They can provide you with valuable information regarding local community needs and assist you with questions about specific nonprofit organizations.
All recommendations for distributions from Donor Advised Funds are subject to staff review and the review and approval of the Federation’s Grants & Distributions Committee. The following guidelines must be followed with respect to recommendations for distributions:
- Recommendations for distributions should be submitted on a Donor Advised Fund Distribution Recommendation Form, signed by a donor advisor, by U.S. mail, e-mail or via Donorsphere. We process and distribute grant checks at least twice a month.
- Donorsphere is Federation’s on-line donor portal. It allows a donor to electronically suggest philanthropic grants and access a fund’s recent activity and current balance. Registration is available at jewishdetroit.org/donorsphere by selecting “Register.” Questions should be directed to Chelsea Brown brown@jewishdetroit.org.
- The minimum distribution for each charitable grant is $250 and can be done at jewishdetroit.org/distribution.
- An unlimited number of distributions are permitted from each fund.
- Subject to approval by Federation, distributions may be made to any tax-exempt public charitable organization within the United States, provided it meets the qualifications set forth by sections 170(c), 501(c)(3) or 170(b)(1)(A) of the Internal Revenue Code; gifts may not be distributed to any type of private foundation.
- Distributions may not be used to satisfy any personal or corporate pledge or obligation of a donor or advisor, or to provide a benefit to a donor or advisor — such as paying synagogue membership dues, obtaining event or raffle tickets, or attending charity dinners — unless the benefit is permitted by the then-applicable Internal Revenue Code and related regulations.
- The Federation prohibits distributions to organizations that promote anti-Semitism or other forms of hate, bigotry and intolerance, including those that endorse extremist views which condone violence. The Federation also prohibits distributions to organizations that advocate against Israel’s legitimacy as a secure democratic Jewish state.
Distribution acknowledgement
A letter accompanies each distribution to a charitable organization. The donor advisor receives a copy of that letter.
Quarterly reports
Donor advisors to a Donor Advised Fund receive quarterly reports summarizing the activities of the fund via Donorsphere or by mail. The report shows contributions, income earned and fees paid by the fund, and any distributions to charities made during that quarter.
Address of charities
Donations for organizations with many chapters are mailed to the office closest to the Federation unless otherwise notified by the donor. If you wish to have a distribution mailed to a specific address, please provide us that address.
Disclaimer
All Donor Advised Funds are component funds of the United Jewish Foundation of Detroit. The investments of the Donor Advised Funds are investments of the United Jewish Foundation of Detroit and are subject to the approval of its Board of Governors. As such, the asset allocations, underlying investments and investment managers for these funds are the responsibility of and within the exclusive control of the United Jewish Foundation of Detroit. Investments within Donor Advised Funds are not subject to any federal or Michigan securities registration or law.
The information contained in this handbook is intended to inform you of the administrative and tax rules applicable to Donor Advised Funds. This is not intended to provide legal or tax advice. You are encouraged to contact your professional advisor with any questions you may have. The information contained in this handbook, and the policies governing the administration of Donor Advised Funds, is subject to change without notice by the United Jewish Foundation of Detroit. Changes will be made as necessary to ensure the Donor Advised Fund program’s compliance with applicable federal and state laws and regulations.
Appendix I: Frequently Asked Questions about Making Distributions from Your Donor Advised Fund
You can recommend distributions from your Donor Advised Fund at any time. The preferred way to make distributions is through the Donorsphere portal. Alternatively, you can recommend distributions via email with a member of our endowment team, or in writing to::
Donor Advised Funds
Jewish Federation of Detroit
6735 Telegraph Rd.
Bloomfield Hills, MI 48307
Q: May I recommend support for the general operating budget of a charity?
A: Yes. You may suggest a distribution for general support, as well as distributions for capital or endowment campaigns or specific projects.
Q: May I recommend a distribution for tickets to a fundraising event?
A: No. Donor Advised Fund assets cannot be used to purchase tickets or pay for any portion of attending an event.
Q: I would like to recommend a distribution to complete a pledge I have made to a charity other than Federation’s Annual Campaign. Is that all right?
A: Unfortunately, such a recommendation is not appropriate under the IRS regulatory limitations placed on Donor Advised Funds, since Donor Advised Fund assets cannot be used to satisfy a binding personal obligation. The United Jewish Foundation of Detroit, acting on behalf of a Donor Advised Fund, can make a multi-payment pledge to be paid from the Fund. Please contact a member of Federation’s Endowment team for specific wording before completing any gift documentation. In addition, a Donor Advised Fund can be used to pay a non-binding gift.
Q: I would like to support a charitable organization which is located in another state. Is this possible?
A: Yes. You may recommend supporting any 501(c)(3) public charity anywhere in the United States.
Q: Will I be notified when a distribution that I have recommended has been made?
A: Yes. We will mail you a copy of the distribution letter so you’ll know it has been paid.
Q: Now that I have established a Donor Advised Fund, I’d like to wait until later this year to recommend any distributions from the fund. Is that permissible?
A: Yes. You may recommend distributions at any time – now or in the future. You may even wait until a
future year to do so.
Q: Are there any other types of distributions that are inappropriate for a Donor Advised Fund?
A: Because Donor Advised Fund are regulated under federal tax rules, such funds are not able to make distributions that benefit a specific person. Also, Donor Advised Funds cannot make distributions to private foundations or any nonprofit that is not an IRS approved 501(c)(3) public charity.
Q: I can think of a distribution where I might want to remain anonymous. Is this possible?
A: Yes. All you need to do is to let us know in writing that you wish to remain anonymous for a particular recommended distribution. You will receive notification when the distribution is made – but it will not identify you to the charity.
Q: Sometimes I am not sure about a particular charity that I am considering. Can your staff assist me?
A: Yes. The United Jewish Foundation of Detroit staff has extensive knowledge of the tax-exempt charitable organizations and community needs. We are pleased to provide information and assist in your consideration. If you prefer to do your own research, there are two websites that can assist you in determining the charitable status of an organization and finding charities that fit your desired goals – www.guidestar.org and www.charitynavigator.org.
Appendix II: Your Relationship with the United Jewish Foundation of Detroit
Communicating with the United Jewish Foundation of Detroit
As a donor, we encourage you to communicate with us in person, by telephone, U.S. Mail, email or Donorsphere. During office hours, all telephone calls are handled directly by staff. If we take a phone message or you leave a message in Federation’s voicemail for a member of our Endowment team, we will strive to return your call as quickly as possible.
Confidentiality of donor information
Information about United Jewish Foundation of Detroit donors is confidential. We do not disclose financial or personal information.
Information on charitable giving and organizations
To assist you in meeting your charitable goals, we are pleased to provide you with information on
charitable giving techniques, such as planned giving, as well as information about charitable organizations you may wish to support.
In our relationship with you, we encourage the involvement of your professional advisors. We cannot provide you with legal services. We encourage you to solicit legal and other professional advice, as needed, to ensure that your arrangements and dealings with the United Jewish Foundation of Detroit are appropriate and beneficial to you.
Our Family of Agencies
Appendix IV: United Jewish Foundation Donor Advised Funds Policies and Procedures
- Farber Hebrew Day School – Yeshivat Akiva
- BBYO, Inc.
- Fresh Air Society / Tamarack Camps
- Gesher Human Services
- Hebrew Free Loan Association
- Hillel Day School
- Michigan State University Hillel:
The Hillel Campus Alliance of Michigan
(HCAM): Western Michigan University/
Central Michigan University/Eastern
Michigan University/Alma College/Albion
College/Kalamazoo College/Saginaw Valley/
Grand Valley State University/Northern
Michigan University/Michigan Tech - University of Michigan Hillel
- Hillel of Detroit: Wayne State University/
Lawrence Technological University/ Oakland
University/Oakland Community College/
University of Detroit – Mercy/University of
Michigan Dearborn - Jean & Samuel Frankel Jewish Academy
of Detroit - The J (Jewish Community Center)
- Jewish Family Service
- Jewish Senior Life
- Yeshiva Beth Yehudah
- Yeshivas Darchei Torah
- Yeshiva Gedolah of Greater Detroit
Appendix III: Donor advised fund agreement
Click here to view/download the agreement.
Appendix IV: United Jewish Foundation Donor Advised Funds Policies and Procedures
The Federated Endowment Fund
Jewish Federation of Detroit/United Jewish Foundation of Detroit
SEC. 1. ESTABLISHMENT AND PURPOSE
1.1 Authorization. The Jewish Federation of Detroit and the United Jewish Foundation of Detroit, nonprofit Corporations (hereinafter referred to as “Federation”) have authorized the establishment of Donor Advised Funds as component funds of the Federation and have authorized the Chief Executive Officer and the Grants & Distributions Committee to provide all needed rules, procedures and policies for the establishment and administration of such Funds, subject to the authority of the Board of Directors.
Procedures. These procedures are prescribed by the Grants & Distribution Committee, with the approval of the Board of Directors. The procedures set forth herein are subject to change by the Federation from time to time with respect to existing and future funds.
1.2 Establishment of Funds. Donor Advised Funds may be established by the donation or transfer by a person (hereinafter “Donor”) to, and acceptance by, the Federation of money or property, whether by contribution, devise or by transfer from a charitable or other organization (hereinafter “contribution”), to further carry out the purposes of the Federation, as set forth in its Articles of Incorporation. Donor Advised Funds are and shall be administered as part of the Endowment Funds of the Federation. However, the procedures set forth herein are provided in recognition of a particular purpose of Donor Advised Funds, which is to develop interests and activities of the Federation by a wide range of living donors. The establishment of Donor Advised Funds is designed as a means of broadening the base of endowment support, encouraging meaningful interchange of ideas by donors in the Federation’s philanthropic interests and to provide funds to supplement and extend the programs and interests of the Federation in serving its charitable, educational, cultural and religious purposes (which purposes are hereinafter referred to as “charitable”) and shall encompass only charitabl
purposes as defined in sections 170 (c) (1) (2) of the Internal Revenue Code.
1.3 Nature and Terms of Funds. Each Donor Advised Fund shall be the property of the Federation held in its normal corporate capacity, not as a trust fund held by the Federation as a trustee. Each Fund shall be recorded on the books and records of the Federation as an identifiable or separate fund and may be given a name as requested by the Donor.
1.4 Designated Funds. In establishing a Fund, the Donor may recommend the use of the income or assets of the Fund for the benefit of or in the furtherance of the purposes of one or more specified charitable organizations (described in IRC section 509 (a) (1), (2) or (3)) where such use is consistent with the purposes of the Federation. Distributions from such a Fund will be made for the purposes so designated. Such a Fund is subject to the authorization of the Federation to modify any restriction or condition on distributions if, in the sole judgment of the Federation, such restriction or condition becomes unnecessary, incapable of fulfillment, or inconsistent with the Federation’s charitable purposes.
1.5 Forms. The Chief Executive Officer of the Federation is authorized to provide forms for the establishment of and additions to Donor Advised Funds and such other forms as are necessary or desirable for the administration of Donor Advised Funds in accordance with these procedures.
SEC. 2. ACCEPTANCE OF FUNDS
2.1 Authorization. The Chief Executive Officer or the Chief Financial Officer of the Federation (or such additional officers or employees of the Federation as may from time to time be authorized) shall have the authority to accept, on behalf of the Federation, contributions to establish or add to a Donor Advised Fund. However, if any assets proposed to be contributed are not in the sole judgment of Federation readily marketable or are subject to liabilities, the Chief Executive Officer and one other officer of the Federation, acting jointly, shall have authority to accept or reject the assets proposed to be included in a Donor Advised Fund. The Federation will not certify to a Donor the value of a contribution of property. A Donor may not impose any material restriction or condition that prevents the Federation from freely and effectively using the contributed assets, or the income derived therefrom, in furtherance of the charitable purposes of the Federation.
2.2 Minimum Fund Balance. A minimum amount of $5,000 is established as a prerequisite for creation of a Donor Advised Fund. Any fund with a balance of less than $100 will be terminated by transfer of the remaining assets thereof to the United Jewish Foundation.
SEC. 3. INVESTMENT OF FUND ASSETS
3.1 Responsibility. The Federation has the responsibility and authority for the investment of the assets of each Donor Advised Fund. At the discretion of the Federation, the assets of any Fund may be retained, invested and reinvested as a separate unit for investment purposes, commingled with those of other Philanthropic or Endowment Funds, or invested in units of a common investment fund.
SEC. 4. DISTRIBUTIONS FROM THE FUND
4.1 In General. The Federation shall monitor all distributions of income or principal of Philanthropic
Funds. The Donor of a Donor Advised Fund (or his/her designee, as permitted in Section 4.2 below)
may recommend to the Federation the making of distributions from the Fund which are consistent
with the specific charitable needs most deserving of support by the Federation. Such
recommendations will be solely advisory and the Federation is not bound by them.
4.2 Donor and Designee(s) Accorded the Privilege of Making Recommendations.
The privilege of making recommendations (as described in Section 4.1 above) shall be extended to Donor and their designee(s) at a Donor’s request. A Donor Advised Fund can be advised by persons representing up to two generations – the Donor and the next generation. At such time as there are no remaining donor advisors, the Fund’s balance is paid to the Jewish Federation of Detroit. For convenience hereinafter, the term Donor will include and shall apply to all persons having the privilege of making recommendations.
4.3 Limitations. The following limitations apply to all distributions from Donor Advised Funds:
4.31 The minimum amount of any one distribution from a Donor Advised Fund shall be $250.
4.32 The Federation, as a public charity, will not make any distribution from a Donor Advised Fund except as a distribution from the Federation for its charitable purposes. No such distribution may be used to discharge or satisfy a legally enforceable pledge or obligation of any person (such as membership fees or contributions from which the Donor receives any personal benefit).
4.33 Unless otherwise agreed in advance, any pledge entered into after the establishment of a Donor Advised Fund, to the Federation or its constituent agencies, shall constitute a request to distribute the amount thereof from the Fund to Federation. If the amount of the pledge is larger than the amount of the Fund, the excess shall constitute a legally binding pledge.
4.34 At the death of the Donor, in the event there are outstanding unpaid obligations to Federation, including Federation’s Annual Campaign or any Federation constituent agency, Federation may first use any remaining Fund balance to satisfy any unpaid obligations to Federation and thereafter to Federation’s constituent agencies.
4.4 Procedure.
4.41 Recommendation by Donor. A donor may make recommendations with respect to distributions from a Donor Advised Fund. Donor recommendations must be submitted in writing or electronically.
4.42 Staff Investigation. With respect to each recommendation by a Donor, the Federation will make an initial determination of whether the recommended entity is a valid 501(c) (3) organization.
4.43 Authorization Procedure. The Grants & Distributions Committee shall consider the allocation of funds from the Donor Advised Fund to the recipient charitable organization(s) for approval or other appropriate action.
4.5 Notification to Grantee as to Source of Distribution. Any distributions from a Donor Advised Fund, unless otherwise requested by the Donor of the Fund, shall identify to the grantee organization the name of the Fund from which the distribution is made.