A designated fund is a great solution for donors who wish to create a long-term charitable resource to benefit one or more nonprofits perpetually, but do not want to give the entire amount for directly to the charity at the outset. Designated funds are invested by The Community Foundation so that a sustainable percentage of the fund’s balance (traditionally 5%) can be paid to support the named charity or charities’ operations perpetually. Donors often consider creating a designated fund when:
- the benefited charity does not have the size, experience or expertise to administer a sizeable fund,
- the donor is concerned about the long-term existence of the benefited charity and would like to name backup charities to receive payments if the primary charity ceases to exist or changes its mission, or
- the donor is simply more comfortable separating the principal gift from the control of the named charity’s staff and/or board.
The minimum fund size for a designated fund is $5,000 with a requirement that the fund size reach $50,000 by the third year.