July 9, 2024
Earning Trust by Honoring Donor Intent
When donors make gifts or establish funds with MCF, they trust that those gifts or funds will be used for their intended purposes. Upholding this trust and honoring donor intent is central to MCF’s values and mission.
We work closely with donors to record their intentions, especially for future gifts they are planning through their estates. We also help donors create succession plans that clearly specify how named funds will make a difference in the future. These records are flexible and can be updated at any time during the donors’ lifetimes, and their guidance can be critical to ensuring that gifts and funds make their intended impacts.
Honoring Intent for an Undesignated Gift
MCF recently received a gift from a donor’s revocable trust, and it arrived without a specific gift designation. Fortunately, the donor had completed a Legacy Statement of Intent with MCF prior to their passing indicating that their future estate gift should be used to “improve educational opportunities for younger children so that kids got off to a good start that would allow them to have success in the future.”
With this background, MCF used the gift to establish a new Field of Interest Fund, named after the donor, that will provide permanent annual support for early education in our community.
Succession Plans Ensure Continued Legacies
Succession plans help create lasting philanthropic legacies for individuals and families and the causes and communities they love.
For advised funds, MCF works with donors to create succession plans that detail how those funds will continue to make a difference when the donors are no longer willing or able to advise on their distributions. Donors have many choices for their succession plans, and often name children as successor advisors. Others choose to identify specific nonprofits or fields of interest to benefit from their funds.
Finding a New Fund Purpose
Honoring donor intent is also a central consideration when the purpose or organization for which a fund was established changes or ceases to exist. In these situations, whenever possible, MCF works directly with the fundholder to identify appropriate alternatives that align with the fund’s original purpose and honor the intent of any donors who supported it.
Recently, an organization that held an endowment with MCF dissolved. Working with members of MCF’s staff, the organization’s board of directors helped identify another public charity whose mission most closely matched theirs to receive future distributions from their fund.
These proposed changes were brought before MCF’s Board of Governors to ensure they honored the fund’s original purpose and the intent of its donors. Once these changes were approved, the fund agreement was amended to support the new organization moving forward.
Variance Power Makes This Possible
MCF’s ability to modify a fund’s purpose is granted through the variance power it holds over funds. All funds held by MCF are governed by a fund agreement between MCF and the fundholder. These agreements, along with MCF’s trust agreement, include a provision that allows the MCF Board of Governors to modify the restrictions on distributions from that fund if it “should ever determine that those restrictions have become unnecessary, incapable of fulfillment or inconsistent with the charitable needs of our community.”
We, and all community foundations, are required to retain this variance power as part of our tax-exempt status. MCF’s variance power ensures that funds will continue to support the needs of our community while honoring donor intent when the fund’s original purpose can no longer be fulfilled.
As the community’s foundation, we are thankful for the trust donors and fundholders place in us to carefully steward their gifts into the future.
If you would like to create a plan to guide your future estate gift to MCF, or ensure that your named fund has an updated plan for its succession, please contact our Donor Engagement Team at 608-232-1763, or by email at legacy@madisongives.org.
Learn more about MCF’s variance power.