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

2. 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

3. 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

4. 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

5. 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

6. 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

7. 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

8. 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