MCF’s Fund Inactivity Policy

Philanthropy exists because people believe in the power of giving to make change. But to achieve change, that money must be put to work in the community.

Donor advised funds provide flexibility

Madison Community Foundation helps donors in Greater Madison engage in philanthropy by providing the opportunity to establish different types of charitable funds, including donor advised funds. Donor advised funds offer a flexible way for donors to recommend distributions throughout the year to the nonprofit organizations that align with their values.

When someone makes a gift to MCF to create a donor advised fund, but never recommends distributions from that fund, those gifts are not helping make a difference. So MCF’s Board of Governors adopted a Fund Activity Policy that provides guidelines on how frequently donor advised funds must make distributions. This policy ensures that donor advised funds remain active in supporting charitable needs in our community and enables MCF to remain in compliance with the National Standards for Community Foundations.

Putting your gifts to work

Generally, MCF considers a donor advised fund active when the fundholder is recommending regular distributions or is communicating with MCF about their plans for distributions. If you have a donor advised fund, examples of activities that keep a fund active include:

• Regularly recommending distributions. As the fund advisor, you recommend distributions each year to qualified charitable organizations. The amount you distribute may vary from year to year, but the goal is to put the money to work in the community supporting the organizations and causes you value.
• Developing a long-term giving plan. You may want to defer recommending distributions while working with MCF staff to develop a giving plan to meet your specific philanthropic goals. Options for giving plans include:
  • Future Giving Plan – If you are focused on actively building your fund balance to ensure grantmaking during your retirement or when your income may change, you could create a future giving plan.
  • Next Generation Giving Plan – If you want to involve your children or grandchildren in your philanthropy, you might want to create a plan that will let you build the fund balance by making gifts during your lifetime and defer recommending distributions so you can leave a charitable legacy for the next generation to advise.
• Special Project Giving Plan. If you are planning to recommend a larger grant or series of grants for a specific project, you can set up a special project giving plan to defer making distributions for a time.

What happens if my fund becomes inactive?

MCF reviews donor advised funds every year to ensure compliance with our Fund Activity Policy and identify inactive funds. Our staff contacts all donor advised fund advisors each year to provide a summary of fund activity and to encourage grant recommendations.

• After two years of inactivity, MCF staff will attempt to contact you by mail to remind you of the Fund Activity Policy and encourage you to recommend a distribution.
• After three years of inactivity, we will consider the fund inactive and will reach out to you via certified mail. MCF also will make a grant for the minimum award amount to an organization that aligns with your previous giving or in accordance with the fund agreement, or make a transfer to a non-donor advised fund held at MCF.

If the fund remains inactive for four years and MCF staff have been unable to connect with you, MCF can consider the fund abandoned and treat it as an undesignated gift to the Foundation. MCF’s Board may exercise its variance power to direct the fund resources toward meeting the community’s needs (taking into account your original intentions, if you shared those with us) by making distributions from the fund to qualified charitable organizations.

In this way, MCF can ensure that these charitable funds continue to enhance the common good in our community. You can find our Fund Activity Policy here.