Community foundations:
- Are exactly what the name implies—foundations for the benefit of a community. The Lutheran Legacy Foundation (LLF) exists to serve the Lutheran community.
- Receive and manage charitable dollars intended to be permanent endowments. The income, or a set percentage of the fund, is distributed to support charitable organizations.
- Are responsible for the investment of the funds. Typically, they hire professional money managers to invest for the foundation. Lutheran Legacy Foundation monitors the performance of the managers and makes changes if necessary. We monitor the performance of the managers and make changes if necessary.
- Are an attractive alternative for you to consider as you determine your charitable giving activities. See the difference between private foundations and community foundations.
Community Foundation Characteristics
Asset Pooling
Community foundations can pool multiple funds for investment while accounting separately for individual endowments. All community foundation assets are invested together, so management costs are lower and investment diversification is higher. This creates an economy of scale that is unavailable to small, individual funds.
Variance Power
Community foundations have variance power. When the original charitable designation of a fund is impossible, we can substitute a different charitable purpose consistent with your desires. Your charitable intentions remain even if circumstances change.
Charitable Variety
Community foundations benefit a wide variety of charitable projects and programs. You are not limited to giving to a single cause. You may choose to divide the gifts as you see fit.
Efficiency
Community foundations can create endowments for you in a matter of hours. Plus, you don’t have to apply for charitable recognition through the IRS.
We also decrease your costs:
- No attorney and accounting fees
- Eliminated expense of individual annual government reports
- Waived excise tax on capital gains (2 percent)
- No minimum distribution requirements
Working with a Community Foundation
Investing the Assets of Your Endowment
The Lutheran Legacy Foundation is committed to providing sound management of your fund’s assets. We will do all within our power to preserve your assets, maximize returns and give you the chance to accomplish more for mission and ministry.
The Lutheran Legacy Foundation Board of Directors chooses the managers of investments placed in the foundation. The board encourages a well-rounded group of investments, with short-term growth, long-term growth and diversity as considerations.
Monitoring Investments
The board works to be the best possible steward of assets. We monitor investment performance on a regular basis and take necessary action based on performance or procedure change.
Distributions from Your Endowment
Distributions vary depending on the type of fund you establish.
- Designated Fund – Disbursements are made annually to the charities you have chosen.
- Field-of-Interest Fund – Disbursements are made by the Lutheran Legacy Foundation Board of Directors to a charity in the filed of interest you have chosen.
- Donor-Advised Fund – Distributions are made at your request to the charities of your choice.
Distributions must be made to IRS-qualified charitable organizations. The foundation will consider all appropriate requests for disbursements.
Initial Investment
The minimum initial amount for an individual endowment fund with the Lutheran Legacy Foundation is $5,000.
Fees for Services
The Lutheran Legacy Foundation assesses an annual fee of one-and-a-quarter-percent (1.25 percent) for managing endowment funds. Unusual direct costs are assessed directly to a fund. The 1.25 percent fee is assessed quarterly and is based upon the ending fund balance for that quarter.
Reports
Each endowment fund will receive regular correspondence from the foundation, including quarterly financial reports and periodic foundation activity updates. IRS and other regulatory reports required for your endowment will be submitted by the foundation to the proper authorities on your behalf.
Types of Funds within the Community Foundation
Discretionary or Unrestricted Fund
This type of fund supports Lutheran Legacy Foundation’s operations and helps meet the needs of requests from the Lutheran Church at large. We receive many requests for funding from Lutheran entities and use money from unrestricted fund donations to meet the needs of those requests.
Designated (Agency) Fund
With this type of fund, you identify the organization or organizations to receive annual income. This fund is perfect for donors with multiple charitable interests, as you can donate to all desired organizations using only one fund agreement.
Field-of-Interest Fund
Field-of-interest funds combine the special interest of the designated fund with the flexibility of the unrestricted fund. When you choose a field-of-interest fund, you select the area you wish to endow, which can be broad or specific. For example, you could select Lutheran education, missions, social work or another interest. You choose the interest, and Lutheran Legacy Foundation takes care of selecting and distributing to recipients.
Donor-Advised Fund
Donor-advised funds allow you, or your designated representative, to make recommendations for annual grants. This type of fund is perfect for donors who want to be active in funding recommendations.
Recently, grandparents and parents have been establishing funds and having children or grandchildren serve as the fund advisor. This has served as a way to teach future generations about the importance of philanthropy.
