Legal Aspects of Fund Management Fund Management Legal Issues Section 6 A Cornucopia of Fund Management Legal Issues

Cornucopia Donor advice vs. donor control What requires board approval? Transfer of fund to another foundation Corporate funds Fund policies and practices for the long game DAF successor advisors Maintain fund or close and transfer Power of attorney and fund advising

Donor Advice vs. Donor Control Donor control means donor can direct grants, investments, spending, etc. Donor control would be stipulated in the agreement with words like “control”, “right” and “direct” associated with the donor’s “powers” Donor control violates variance power and is prohibited - will disqualify tax benefits for gift Donor advice means that the community foundation board has absolute and final control

What Requires Board Approval? Ultimately, the board has final control over all aspects of the community foundation Nonprofit corporation law and UPMIFA permits boards to prudently delegate decisions to committees, staff, counsel (legal, investment, accounting, etc.) Key items require board approval

Board Approval Minutes of meetings Financial reports Audit 990 (only review required) CEO hire/fire and review Policies (investment, spending, fees, gift acceptance, ethics, personnel) Agreements or Templates (gifts, services, goods) Strategic Plan Other

Transfer Funds to Another Foundation Transfer allowed to another tax exempt organization qualified as 501(c)(3) Always abide by terms of gift agreements Honor donor restrictions and intent Document due diligence prior to transfer Transfer agreement with recipient Report on 990

Corporate Funds Types of corporate funds: Scholarships, Advised, Other Scholarships require special federal rules if for employees or family of employees Scholarships must follow PPA requirements if corporation is represented on committee Corporate advised funds must follow same due diligence as DAFs created by persons

Polices for the Long Run Restrict DAF successor advisors – perhaps one subsequent generation only if fund is large enough to justify (e.g., $100,000+) Merge or modify small and old funds Conduct due diligence (copy of confirming legal documentation) if a Power of Attorney or Guardian requests to advise if donor is incompetent but still living