Fund Policies and Guidelines for Your Fund at The Philadelphia Foundation Welcome to The Philadelphia Foundation! Your generosity allows us to build healthy communities; advance economic opportunities; strengthen children, youth and families and enhance culture and recreation throughout Southeastern Pennsylvania. Our work is part of a proud tradition that dates back to 1918. This booklet is designed to help you answer common questions that donors often ask about their fund. It also explains the policies and procedures for making grants from your fund and how additional gifts can be made to your fund. Many of these policies and procedures specifically pertain to Donor Advised funds, but most are also applicable to other funds set up for general charitable purposes. FOR MORE INFORMATION, CONTACT THE PHILANTHROPIC SERVICES DEPARTMENT AT 215-563-6417 OR E-MAIL DONORRELATIONS@PHILAFOUND.ORG.
CONTENTS
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Your Fund Agreement | Checking the Status of Your Fund | Investment Options
Topics Related to Events & Memberships
Due Diligence for Grants
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5
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Balancing Allocations
Challenge Grants | Pledges | Anonymity
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Using Donor Central
When to Grant | Geographic Considerations |
Minimum Grant Amount | Spending Rule for Endowed Funds | Getting Advice from The Foundation
Traded Securities | Gifting Other Kinds of Assets | How to Make Out a Check to Your Fund | Receipt Information
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Making Gifts of Publicly
Raising Money for Your Fund |
Making a Gift from Your Estate | Transferring Assets from Other Charitable Funds | Transferring Assets from a Private Foundation
Policies listed in this booklet were accurate at the time of its printing, but are subject to change. Published 1/1/2012
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GENERAL INFORMATION ABOUT YOUR FUND YOUR FUND AGREEMENT CHECKING THE STATUS OF YOUR FUND INVESTMENT OPTIONS BALANCING ALLOCATIONS
WHAT SHOULD I DO WITH MY FUND AGREEMENT?
“ THE PHILADELPHIA FOUNDATION FIT OUR PURPOSE VERY NICELY.” – TPF DONOR
You will receive two copies of the Fund Agreement. Please sign both copies and return both to the Philanthropic Services staff member at The Philadelphia Foundation who helped you establish your fund. Upon receipt of the signed copies, both will be signed by the Foundation. Once the charitable donation has been received, the Foundation will keep one copy for our files, and the other will be returned to you, signifying that the fund has been established. Please call Philanthropic Services if you have any questions regarding the Fund Agreement or other aspects of how the fund is set up. WILL I BE GETTING ANY OTHER DOCUMENTS AFTER MY FUND IS SET UP?
After we receive your signed Fund Agreement, you will be sent a folder of welcome materials containing information about the administration of your fund, including how to recommend grants and make additional gifts into the fund. The folder will serve as a convenient place for you to keep all future correspondence and materials related to your fund. HOW CAN I CHECK THE STATUS OF MY FUND?
THE MISSION OF THE PHILADELPHIA FOUNDATION THE PHILADELPHIA FOUNDATION IS IN THE BUSINESS OF “BUILDING COMMUNITY” THROUGH: BUILDING PHILANTHROPIC RESOURCES MANAGING THOSE RESOURCES WELL DISTRIBUTING THOSE RESOURCES EFFECTIVELY
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The easiest way is to log on to Donor Central, your personal online tool for managing the fund you have established. It can be accessed through our website, www.philafound.org (see page 3). You may view your current fund balance, your spendable balance, recent gifts received and grant recommendations that have been made and that have been approved. You will also receive a quarterly donor statement by mail for your reference. WHAT ARE MY INVESTMENT OPTIONS?
Your fund’s assets will be invested in one of our five investment pools to closely match projected grantmaking requirements with the appropriate investment horizon. These pools fall into two categories: the endowed pool and non-endowed pools. The endowed pool has a perpetual investment horizon. It adheres to a total return investment policy along with a spending rate set to maintain, and ideally increase, the purchasing power of the endowment, without putting the principal value of the assets at imprudent risk. Non-endowed pools (used primarily for non-endowed Donor Advised funds) are those in which both the principal and income are expected to be used for grantmaking over varying lengths of time. Contact Donor Relations to review the investment horizons and asset allocations in which your fund is invested. The Philadelphia Foundation hires managers who specialize in particular asset classes to ensure that there is superior performance and adequate diversification for each investment pool. Our goal is to benefit from a range of expertise from managers in a way that would be impractical and cost-prohibitive for individual investors to duplicate.
HOW CAN I ENSURE MY INVESTMENT ALLOCATIONS WILL REMAIN BALANCED?
The Foundation automatically rebalances your fund’s target allocations across investment pools each quarter or whenever the allocation becomes out of balance by 5% or more from the target. WHO DECIDES HOW MY FUND WILL BE INVESTED?
When you establish your fund, you will discuss your philanthropic investment goals with our Philanthropic Services staff to help you determine the appropriate pool for your fund’s investments. Your quarterly donor statement will show the fund’s performance, and you can always get your current fund balance online using Donor Central. Should you wish to discuss possible changes to the asset allocation strategy for a non-endowed fund you have established, please contact our Philanthropic Services staff. Movement between non-endowed pools is available only once a year, usually in the spring. Endowed funds may not be converted to non-endowed funds.
“ I WANT TO HELP STUDENTS ACHIEVE THEIR DREAMS.” – TPF SCHOLARSHIP DONOR
THE PHILADELPHIA FOUNDATION... KNOWS OUR COMMUNITIES HELPS YOU ACHIEVE SUPERIOR TAX BENEFITS MAKES FUND SETUP & ADMINISTRATION EASY CARES ABOUT THE REGION’S FUTURE HONORS YOUR FUND’S PURPOSE FOREVER!
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WE ACHIEVE OUR
MISSION BASED ON CERTAIN
VALUES
TRUST HOPE EFFICIENCY
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RECOMMENDING GRANTS THROUGH THE FOUNDATION USING DONOR CENTRAL EVENTS & MEMBERSHIPS CHALLENGE GRANTS MULTI-YEAR GRANTS ANONYMITY FOR GRANTS GEOGRAPHIC CONSIDERATIONS DUE DILIGENCE FOR GRANTS WHEN TO GRANT MINIMUM GRANT AMOUNT SPENDING RULE FOR ENDOWED FUNDS GETTING ADVICE FROM THE FOUNDATION
HOW DO I RECOMMEND A GRANT THROUGH MY FUND?
You may recommend a grant online using Donor Central. Or you may download a grant recommendation form from the Foundation’s website (www.philafound.org) and fax it to us (addressed to “Donor Relations”) at the Foundation at (215)563-6882. In addition, forms are provided in your welcome packet. You may duplicate these forms if you wish and we would be happy to send you more if you need them. The grant minimum is $250. WHAT IS DONOR CENTRAL AND HOW DO I ACCESS IT?
“ THIS HAS MADE OUR LIVES SO MUCH EASIER.”
Donor Central is your personal online tool for managing the fund you established at The Philadelphia Foundation.
– TPF DONOR
To access Donor Central, log in (there’s a link on www.philafound.org) with your personalized User Name and Password, which can be found in your welcome packet. If you do not have your User Name and Password, and would like to explore the features of Donor Central, or have any other questions about using this tool, please contact Philanthropic Services (donorrelations@philafound.org) for assistance. HOW DO I RECOMMEND A GRANT THROUGH DONOR CENTRAL?
Once you are logged in to Donor Central, follow the prompts listed there. TO WHOM MAY I RECOMMEND A GRANT?
Grants may be recommended to organizations that are recognized by the IRS as tax-exempt, charitable organizations with 501(c)(3) status and that meet the Foundation’s due diligence and nondiscrimination requirements. The Philadelphia Foundation does not knowingly approve grants to organizations that discriminate in their hiring, those they accept as volunteers or the clients they serve on the basis of race, color, religion, national origin, ancestry, sex, gender identity, sexual orientation, age or disability. MAY I MAKE A GRANT TO A SPECIFIC INDIVIDUAL?
Donor Advised funds may not make grants to individuals. Scholarship funds or funds that are advised by a committee may recommend a grant to support an individual only if that individual has been selected through an objective, predefined process and the grant is for a charitable purpose. An educational scholarship is the best example of this type of grant. In a case like this, once the individual is selected, we require that the grant be made to the educational institution that the student will be attending. The educational institution will receive the check, not the individual. Grants cannot be directed to specific individuals who are victims of a disaster or who have an illness. Support in these situations may be provided through nonprofit groups that serve many people affected by disasters or illnesses. In addition, no grant from a fund can benefit a relative of the donor.
THE MISSION OF THE PHILADELPHIA FOUNDATION IS FULFILLED BY: CONVENING, LEADING & SUPPORTING BY FOCUSING ON: VULNERABLE POPULATIONS OUR DONORS THE NONPROFIT SECTOR
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WHO IS ABLE TO SET UP A FUND
WITH THE FOUNDATION?
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MORE THAN 75% OF THE FOUNDATION’S ANNUAL GRANTS ARE RECOMMENDED BY THE FOLLOWING:
INDIVIDUALS
MAY I MAKE A GRANT THROUGH MY FUND TO ATTEND A CHARITABLE EVENT?
No. According to IRS regulations, the cost of a ticket to such an event cannot be paid by your fund, even when only a portion of the ticket price is identified as tax-deductible and another portion as non-tax-deductible. Two examples illustrate this point: A.) If a charity’s fundraising event is $250 per person, and the charity states that $100 is tax-deductible and $150 is non-tax-deductible, you may not divide the event support between a Donor Advised fund and your personal check. You must pay the full $250 personally. B.) If you wish to sponsor a charity’s event (at which individual tickets cost $200 per person) at a $5,000 level, you may recommend a grant of $5,000 from your Donor Advised fund to support the charity and personally pay $200 per ticket to attend. WHAT IF I AM NOT GOING TO ATTEND THE EVENT BUT WISH TO SUPPORT IT BY BUYING TICKETS?
You may support the event by recommending a general operating grant from a Donor Advised fund so long as you do not attend the event. MAY I PAY FOR MY MEMBERSHIP DUES TO A MUSEUM, OPERA, SYMPHONY, PUBLIC RADIO OR TELEVISION STATION, ETC. THROUGH MY DONOR ADVISED FUND?
FAMILIES
No. Generally a membership cannot be purchased through a Donor Advised fund or other types of funds, because a member is considered someone who is entitled to certain rights and privileges in return for an annual contribution. (These include membership cards that entitle the donor to reduced or eliminated entrance fees and discounts on purchases.) However, general operating grants to a nonprofit are always allowed. In general, one way to think about this is to ensure that you do not receive anything beyond what is considered “incidental benefits” as a result of your membership. Examples of incidental benefits are a T-shirt, coffee mug or name recognition.
PRIVATE FOUNDATIONS
IF I REFUSE A MEMBERSHIP BENEFIT CAN I MAKE A GRANT FOR MEMBERSHIP THROUGH MY FUND?
Yes, but only if you explicitly reject the benefit at the time the gift is made. You cannot choose to refuse the benefit after you already received it. In a case like this, we suggest that you recommend the grant for general operating support in order to avoid the appearance of conflict. CORPORATIONS WITH A CHARITABLE VISION
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MAY I CONTINUE TO MAKE MY ANNUAL MEMBERSHIP CONTRIBUTION TO MY PLACE OF WORSHIP THROUGH MY DONOR CENTRAL ADVISED FUND?
You may continue to recommend grants for religious institution memberships, which are not affected by legislation or regulations. However, you may not pay for religious school tuition through a grant from your Donor Advised fund.
MAY I RECOMMEND A GRANT TO NONPROFITS THAT ENGAGE IN LOBBYING?
You can recommend grants to nonprofits registered with the IRS as 501(c)(3) organizations that engage in lobbying or the practice of advocating their clients’ interests. However, the grant you recommend can only be for general operating support and not for specific lobbying activities. DO YOU EVER ASK NONPROFITS TO PROVIDE REPORTS ON THE WORK THAT MY FUND IS SUPPORTING?
There are instances where it makes sense to request a final report from an organization to which you are recommending a grant. Such instances would be when the grant is of a magnitude that is beyond the contribution size the organization typically receives, when the grant is related to a specific outcome you are interested in, or if there are specific activities the organization needs to complete in order to receive your contribution (such as the case of a challenge grant).
“ TPF IS AN INCREDIBLE RESOURCE FOR THE NONPROFIT COMMUNITY.” – FINANCIAL ADVISOR WHO WORKS WITH THE PHILADELPHIA FOUNDATION
In a case like this we ask the nonprofit to sign a grant agreement prior to distributing the funds to ensure that they understand the conditions under which the grant is being made. WHAT IS A CHALLENGE GRANT AND HOW DO I MAKE ONE?
Challenge grants are grants offered to nonprofits to challenge them to raise matching monies. An example is when a donor offers a nonprofit a challenge grant of $50,000 and the nonprofit must raise $50,000 in order to receive the grant. We will enter the grant in our system but not complete processing it until the challenge has been met by the nonprofit. If you are interested in making a challenge grant, The Philadelphia Foundation staff will be happy to discuss the details with you. MAY I FULFILL A PLEDGE THROUGH MY FUND?
PARTNER WITH THE PHILADELPHIA FOUNDATION BY: CREATING A NEW FUND
No. Your fund cannot be used to fulfill any current or future pledge. MAY I MAKE A MULTI-YEAR GRANT?
Yes, you may recommend that the Foundation make a multi-year grant from your fund to a nonprofit organization or school. The assets to fulfill a multi-year grant must be segregated from the balance of the fund in order for the Foundation to be able to complete these kinds of grants. Please talk to the staff at The Philadelphia Foundation when you want to make this kind of grant so that we can help facilitate it. MAY I MAKE AN ANONYMOUS GRANT?
Yes, you can make a grant anonymously at any time. In addition to requesting anonymity when establishing your fund, you can also indicate your preferences each time you recommend a grant. Both the name of your fund and/or your own name can remain anonymous to grant recipients and will not be included in The Philadelphia Foundation’s public listings of grants.
CONTRIBUTING TO AN EXISTING FUND PLANNING FOR A FUTURE FUND GETTING INVOLVED IN FAMILY PHILANTHROPY ESTABLISHING A GIVING CIRCLE
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MAY I RECOMMEND GRANTS OUTSIDE OF SOUTHEASTERN PENNSYLVANIA?
Yes, you may recommend grants anywhere in the U.S. and internationally to support a charitable organization. Special due diligence is conducted for international grants (see below). Please note there is a $2,500 minimum grant size for international grants. For all other grants the minimum is $250. MAY I RECOMMEND GRANTS TO PRIVATE FOUNDATIONS?
To comply with IRS regulations, the Foundation cannot distribute grants to non-operating private foundations, even though they are 501(c)(3) organizations. However, grants may be made to private operating foundations (private foundations that use the bulk of their income to provide charitable services or to run charitable programs of their own). WHAT ARE THE PHILADELPHIA FOUNDATION’S DUE DILIGENCE REQUIREMENTS?
Due diligence is the process The Philadelphia Foundation uses to ensure that organizations are qualified to receive grants and are capable of fulfilling your charitable intent. The due diligence review typically involves our receiving and reviewing the organization’s current 501(c)(3) tax-exempt letter as well as financial and programmatic information to ensure compliance with The Philadelphia Foundation’s policies.
WE SERVE THE FOLLOWING COUNTIES:
For grants that are recommended outside the U.S., the Foundation may, if necessary, use the services of a third party to determine whether grantees are public charities (or their equivalent), comply with the U.S. government’s requirements, and follow all applicable domestic and international tax laws. Additional costs may be charged to the donor for this service. HOW LONG DOES IT TAKE TO PROCESS A GRANT RECOMMENDATION?
CHESTER
Grants to organizations The Philadelphia Foundation has supported in the past can be processed quickly, usually within five business days. Grants to organizations not yet supported through the Foundation may take longer to process (one to two weeks) to allow time for us to receive materials and ensure all the proper due diligence is completed before making the grant.
MONTGOMERY
IS THERE AN ANNUAL DEADLINE TO MAKE A GRANT RECOMMENDATION?
BUCKS
DELAWARE PHILADELPHIA
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We accept grant recommendations year-round, and with a Donor Advised Fund at The Philadelphia Foundation, there’s no deadline to distribute a specified dollar amount by year’s end. If, however, you’d like to support a nonprofit before the end of the calendar year, please make sure your grant request is received by the Foundation no later than Dec. 1 to allow us time to review and process your grant.
CAN YOU SEND ME THE GRANT CHECK SO I CAN DELIVER IT TO THE NONPROFIT?
No. The Foundation sends checks directly to grantee organizations. You will, however, receive a copy of the letter that accompanies the check so you will know when it was sent. WHAT IS THE MINIMUM GRANT AMOUNT?
The minimum grant amount is $250 to U.S. based nonprofits. The minimum for grants made internationally is $2,500.
“ GIVING BACK TO THE COMMUNITY IS CLEARLY IMPORTANT.”
DOES THE FOUNDATION HAVE A SPENDING RULE, AND IF SO, HOW DOES THAT APPLY TO THE GRANTS I RECOMMEND?
– TPF DONOR
Yes, The Philadelphia Foundation has a spending rule for funds established as endowments. It does not apply to non-endowed funds. The spending rule is a formula that determines the amount of money available for grantmaking from endowments. Based on historic stock and bond market performance, this should allow the endowment fund to distribute grants in inflation-adjusted amounts in perpetuity. An example: The Foundation’s spending policy may allow for distributions annually of 5% of the fund’s average 20 trailing quarters’ market value. Please contact your donor services representative for the current spending policy. The spending policy is calculated on the fund’s balance as of September 30, with the money available for distribution the following January. WHAT IF I DON’T KNOW WHO TO MAKE GRANTS TO OR WANT TO KNOW WHO IS DOING THE BEST JOB IN MY AREA OF INTEREST?
We have experienced staff and extensive research capabilities that are available to help you. For example, we can help you learn about nonprofit groups that work in your areas of interest or do customized research on issues that interest you. Contact Philanthropic Services, donorrelations@philafound.org, to learn more about how we can assist you.
FUND TYPES AT THE PHILADELPHIA FOUNDATION DONOR-ADVISED UNRESTRICTED FIELD OF INTEREST (COMMUNITY IMPACT) SCHOLARSHIP DESIGNATED ORGANIZATIONAL ENDOWMENT
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GIFTING ASSETS TO THE FOUNDATION MAKING GIFTS OF PUBLICLY TRADED SECURITIES GIFTING OTHER KINDS OF ASSETS HOW TO MAKE OUT A CHECK TO YOUR FUND RECEIPT INFORMATION RAISING MONEY FOR YOUR FUND TRANSFERRING ASSETS FROM OTHER CHARITABLE FUNDS TRANSFERRING ASSETS FROM A PRIVATE FOUNDATION MAKING A GIFT FROM YOUR ESTATE
CAN A DONOR GET A REFUND FOR A FUND ESTABLISHED AT THE FOUNDATION?
No. All contributions, once accepted by the Foundation, are irrevocable contributions to The Philadelphia Foundation and are not refundable. However, if you want to terminate your non-endowed fund, simply recommend grants to appropriate organizations for the fund’s entire balance, and we will then close the fund. Should you move to another community, if you like, we can facilitate moving your fund to the community foundation in your new location.
“ WE GET TO DO THE FUN PART.” – TPF DONOR
HOW DO I GIFT PUBLICLY TRADED SECURITIES?
Please contact us each time you wish to gift securities. We will provide you with current account information for stock transfers. This will ensure that your contribution is credited to the correct fund in a timely fashion. Additional fees to the donor (such as a broker’s commission) may apply. MAY I GIVE ANYTHING BESIDES CASH AND PUBLICLY TRADED SECURITIES? HOW?
Yes. You may give real estate, closely held stock, an interest in a family business, and many other assets. All such gifts are reviewed individually. We will talk with you about the details of your proposed gift and the appropriate procedure for transferring the asset. We do not accept vehicles or livestock. Charities are not permitted to value non-cash gifts, such as artwork and real estate. It is the responsibility of the donor to obtain an independent, professional valuation at the donor’s expense. HOW DO I MAKE OUT A CHECK TO ADD TO MY FUND?
Checks should be made out to The Philadelphia Foundation with a note in the memo section as to which fund it is for: e.g., the ABC Fund. Or, send a cover note indicating the name of the fund to which the contribution should be credited. WHAT INFORMATION WILL BE ON MY RECEIPT?
In all cases the receipt will show the date the gift was received and the name of the person who gave it (unless that person requests anonymity.) If the contribution was a check, the dollar amount and check number will also be shown. If the gift was in the form of securities, the receipt will list the date on which the securities transferred and the number of shares. We also provide the value of the stock. The value is determined as of the date the physical stock was delivered to The Philadelphia Foundation or its approved brokerage firm. The value is based on the high and low average for the day of the stock transfer multiplied by the number of shares, with appropriate disclaimers. Receipts for real estate and other non-cash gifts identify the property transferred. The IRS may require you to obtain an independent appraisal and to file a Form 8283 with your income tax return. We can provide you a Form 8283 on request.
PLANNED GIVING OPTIONS AVAILABLE THROUGH THE FOUNDATION: BEQUESTS CHARITABLE GIFT ANNUITIES CHARITABLE LEAD TRUSTS CHARITABLE REMAINDER TRUSTS GIFTS OF LIFE INSURANCE/REAL ESTATE GIFTS OF RETIREMENT ASSETS
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CAN OTHERS CONTRIBUTE TO MY FUND?
“ SETTING UP A FUND LIKE THIS WITH THE PHILADELPHIA FOUNDATION IS THE RIGHT THING TO DO.” – TPF DONOR
Yes. If they wish to give a check, they can follow the same procedures outlined on page 8. They also can contribute online with a credit card through our secure website. Normal credit card processing fees will apply to the contribution. HOW WILL I KNOW WHO HAS CONTRIBUTED TO MY FUND?
We will provide you with a gift acknowledgement that lists those who have made contributions (except for those who requested anonymity). You can also check for this information online through Donor Central. If someone is combining cash donations and sending in a check to your fund for that total, only the person writing the check will receive an official gift receipt that lists the date and the amount. CAN I HOLD FUNDRAISERS FOR MY FUND?
Yes, if you adhere to the Foundation’s legal and IRS guidelines. Please contact Philanthropic Services to request a copy of the current policy before you begin any fundraising for your fund to protect yourself from being subject to serious penalties and liabilities. HOW LONG DOES IT TAKE TO PROCESS A GIFT TO MY FUND?
Most gifts of cash are processed within 72 hours or sooner after receiving them. Publicly traded securities are typically sold upon receipt unless special circumstances dictate that The Philadelphia Foundation holds the stock for a period of time. Once sold, the proceeds are reinvested in The Philadelphia Foundation’s investment pools in accordance with the donor’s choices. Of course, the gifts of tangible assets will take longer, depending on the nature of the gift and the liquidation plan. HOW DO I TRANSFER ASSETS TO MY FUND AT THE PHILADELPHIA FOUNDATION FROM MY COMMERCIAL DONOR ADVISED FUND?
Simply recommend a grant of any or all the assets in the commercial fund (through Schwab, Fidelity or Vanguard) to The Philadelphia Foundation to be added to the Donor Advised fund. MAY I MAKE A GIFT TO MY FUND FROM MY PRIVATE FOUNDATION?
Yes, these contributions are allowed and at this time do count toward the 5% minimum distribution requirement for private foundations. We suggest that you consult with your legal counsel when making a grant from a private foundation. CAN I MAKE A GIFT TO MY FUND THROUGH MY ESTATE?
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Yes. There are several ways. Your fund can be named as a beneficiary of your estate. You can also gift retirement assets, life insurance and real estate. Specialized mechanisms—charitable gift annuities, charitable lead trusts and charitable remainder trusts—can provide you with income during your lifetime and later benefit your fund or a new fund that can be created in your memory. If you would like to discuss this further, please contact us so that we can assist you.
THE PHILADELPHIA FOUNDATION
THANKS YOU FOR STARTING
A FUND WITH US!
TPF STAFF, ON BEHALF OF SOUTHEASTERN PENNSYLVANIA
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