The ability to recommend grant distributions to individual charities is one of the key reasons that donors
choose to establish donor advised funds.
a. How spending is calculated?
By definition, the assets in a donor advised fund can be 'spent down.' Even the fund's corpus can invaded; our Spending Policy does not formally apply to such funds.
However, many of our donors treat their donor advised funds as permanent endowment and voluntarily adhere to our spending guidelines.
Here's how it works: each year on September 30th the fair market value of the fund is calculated based on a
16 quarter rolling average. The Finance Committee then recommends a payout percentage, and the Board approves
that percentage on a yearly basis. The Spending Policy allows up to 5 percent of a fund's assets to be spent
(based on a 16-quarter rolling average).
At present, the payout percentage is 5 percent of a fund's total assets (based on a 16-quarter rolling average)
less fees charged by the Foundation. Individual donors are notified of their spending budget for the coming
year in a letter. Again, this figure will be in the form of a recommendation for all donor advised funds.
b. Which organizations can receive grants?
As a general matter, all organizations must have tax-exempt status through the IRS. Organizations that apply to AAACF for grants must provide proof of their 501(c)(3) or 501(c)(4) status. AAACF staff will usually request copies of these documents from organizations recommended for grant distributions from donor advised funds.
c. How are donors recognized for their grant recommendations?
All award letters acknowledge the donor advised fund associated with the grant recommendation. Donors can, of course, choose to be anonymous.
Donor advised fund grants are also published in the AAACF Annual Report. AAACF compiles a list of organizations receiving awards but no longer associates those grant distributions with individual donors due to the volume of such lists.
d. What is the grant leverage program?
In 2003 AAACF began a new
grant leverage program as a means of boosting the Foundation's ability to fully fund those organizations that were deemed to have the most worthwhile projects/programs in a particular granting cycle. The Foundation's Distribution Committee engages in its usual due diligence process, thoroughly investigating every grant application and conducting site visits to learn more about the organization submitting the grant request. At the conclusion of this process, a letter is sent to individual donors inquiring about their funding preferences and inviting them to supplement the AAACF grant with additional funds. In 2003, our grant leverage program boosted our grantmaking capacity by over 50 percent.
