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 endowment,
- the donor is concerned about the long-term existence of the benefited charity and would like to name backup charities to receive endowment payments if the primary charity ceases to exist or changes its mission, or
- the donor is simply more comfortable separating the endowment principal 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.