10. Successor Advisors
Donors may recommend other living persons – children, friends, or business associates – as successor advisors to recommend grants from the fund. However, for advised funds with balances of less than $500,000, successor advisors selected by the donor may not name others to serve as their successors. Exceptions to this policy may be made when, for example, the special expertise or knowledge of advisors is felt to be critical in managing a fund such as a medical research fund.
Exceptions to the single generation successor advisors can be requested on funds that maintain a balance of at least $500,000. Such exceptions may be made when a private family foundation terminates and becomes an advised fund, or when a new fund is established with at least $500,000. The request for unlimited successor advisors must be made by the original donor and be specified in the Donor Advised Memorandum. Successor advisers have the privilege of suggesting grants from the income of the total fund, and, in addition, from the principal that has been contributed by the successor adviser. Successor advisers may not recommend grants that invade the original principal gift. It is recommended that annual grants be limited to 5% of the total fund balance each year.
In the event that there are multiple advisers on a fund, one adviser must be named as the contact adviser, who will have the authority to communicate suggestions to the Foundation. Advisers must be at least 18 years of age; however, donors may wish to include younger children or grandchildren as a part of a plan to pass on family values to the next generation. Minor children must serve in conjunction with an adviser of legal age.
Donor advised funds established by corporations or entities other than individuals or families are often advised by an appointed committee with a process for selecting new members. A list of these committee members/advisers must be submitted to the Foundation annually. Grant suggestions must be signed by an officer or authorized representative of the entity that established the fund. Any changes in the structure of grant recommendation process within the entity must be communicated in writing by an officer or authorized representative of the entity that established the fund.
The primary purpose of a community foundation is to encourage active philanthropy. For a fund to remain active the successor advisor must propose at least one approvable grant, or add to the fund, during the course of a calendar year. If after that year no activity has occurred, and the Foundation is unable to make contact with the named advisor(s) at the address furnished, the fund will be transferred to the Bishop's Fund. It is the sole responsibility of the successor advisers to notify the Foundation of changes in addresses or contact information.
Rather than naming a successor advisor, Donor Advised Fund holders may rather choose to designate that their fund:
1) become a named fund within the Bishop's Fund
2) become a designated fund with the distributable earnings designated to specific organizations
3) be transferred to an existing fund or funds within the Foundation
4) become a new Field of Interest Fund within the Foundation