Opening Your Gift Fund
You may establish your gift fund by completing an Agreement and providing a minimum initial contribution of $5,000.

Naming Your Fund
You may name your Fund for your family or other loved ones. If you would like your Fund to remain anonymous, you may name your Fund accordingly. Although you may chose any name for your Fund, the CFSA reserves the right to consult with you to amend names chosen that may be confused with names of existing funds.

Types of Assets
You may contribute any of the following assets to open a Fund:
· Cash
· Publicly traded securities
· Bonds
· Mutual Fund shares
· Private securities
· Real property
· Tangible personal property
· Life insurance policies
· Retirement assets (IRAs, retirement plans, etc.)
· Business interests (non-publicly traded or closely held stock, partnership interests, etc.)
· Trust assets
· Estate assets

All gift acceptances are subject to Board approval and must meet criteria as outlined in the Gifts Acceptance Policy.

Eligible Donors
Individuals, families, corporations, nonprofit organizations, trusts and estates are eligible to open Funds.

TYPES OF ENDOWMENT FUNDS

Agency Endowment Funds
Nonprofit organizations establish an Agency Endowment Fund to grow assets to meet both current and future needs. The Foundation Board of Directors and staff manage the investments and administrative details of the endowment. This service frees the nonprofit to focus upon the community.

Charitable Gift Annuities
A charitable gift annuity is a way to make a gift to your favorite charity, and still receive an income for yourself or others. It is a contract under which the Foundation, in return for a transfer of cash or other property, agrees to pay a fixed sum of money for a period measured by one or two lives. Remaining funds will be placed in a charitable fund of your choice.

Community Endowment Named Funds
With a gift of $5,000 or more, The Community Foundation will establish a fund bearing the name you designate. These named funds offer ways for businesses, friends, family members, neighbors and colleagues to commemorate special individuals. Once a named fund is established, gifts may be designated to the fund at any time.

Donors can address the most urgent needs of the community through Community Endowment Named Funds which allow the Foundation to make grants targeting emerging community challenges. Donors place no restrictions on how their funds are used and decisions are left to the Board of Directors. These funds are the most timeless in terms of community impact. Donors entrust the Foundation with the selection of projects to receive grant funding.

Donor Advised Funds
These funds are charitable giving alternatives that are managed by the Foundation on behalf of an organization, business, family or individual. Advised Funds are established by donors who wish to actively participate in the grant-making process. Individuals, families and corporations recommend charities they want to support through the advised fund they establish. It is easy to give to multiple nonprofits through an advised fund.

Donor Restricted Funds
These charitable purpose gifts are subject to restrictions or conditions imposed by the donor as to how the gifts may be used.

Field Of Interest Funds

Donors can specify a particular field of interest that they would like their gifts to support. Income from these funds are used to support programs at the discretion of the Board of Directors, but only in specific fields of charitable concerns as determined by the donors.

Scholarship Funds

Donors establish Scholarship Funds to help students achieve their education goals by providing grants for college or university tuition, room and board. Donors are involved by defining candidate eligibility, selection and award use.

Supporting Organizations

Supporting organizations are separate nonprofit organizations with applicable IRS tax exempt status. They have a separate board of directors and award their own grants. The Community Foundation of South Alabama provides professional management and oversight of all aspects of the supporting foundations' administrative, investment and grant making activities. A supporting organization can be an alternative to a private foundation or a donor advised fund.

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Gift Fund Management

Spending Policy
The growth of endowment funds is crucial for the sustainability of the beneficiary of the fund. The Community Foundation has developed a distribution formula that will accomplish your distribution goals while positioning your endowment to grow.

The formula is based on the 5% rolling average of the fund balance. The percentage of value used in the spending rule varies, but research indicates that the 5% of the fund balance is the most accepted rate. It may be set lower or higher. Adding the fund balances for the last 20 quarters, finding its average, and using 5% of that average for distribution determine the distribution amount.

Currently, the distribution amount can vary significantly each year based on the interest income. By adopting the recommended formula, the distribution amount received by the beneficiary each year will vary only slightly. Historically, the CFSA managed portfolios have averaged a growth of 8% per year with 5 % recommended for grant distributions based on the above referenced formula with the 3% balance dedicated towards the fund growth.

Managed Funds Options Available
The Community Foundation Investment Policy overseen by the Investment Committee has designated four types of portfolios for the donor to select to meet the philanthropic goals. The CFSA Investment Policy offers four types of portfolios: Conservative, Moderate, Aggressive and All-Equity.

At the fund's establishment, the donor will select the portfolio that best meets the fund growth needs. The selection may be changed with written notice to the CFSA if the donor decides that the originally selected portfolio does not meet the goals of fund growth.

The guideline for acceptance of new gifts and the disposition of assets other than cash follows:

· Donated securities will be sold in a timely fashion if they are not compatible with the CFSA's investment guidelines. The proceeds will be reinvested to conform to the CFSA's investment guidelines. If the donor requests that securities be held and not sold, a letter is required from the donor documenting the request to hold securities. Retention of the securities shall continue to be at the discretion of the Investment Committee.

· Gifts of real estate require review by the Board due to legal requirements for transfer, insurance, and expenses incurred in the maintenance and ownership of the real estate. The donor must provide the requirements set by the Board regarding real estate transfers, insurance, appraisals, Phase I environmental survey, hold harmless agreements, title policy, and related issues.

· Gifts of paid up life insurance requires the CFSA as owner and irrevocable beneficiary and a letter assuring the donor will pay future premiums.

Other gifts presented to the CFSA, such as collections of art, jewelry, etc. require special consideration as personal property and a qualified appraisal as to value.

Gifts of Assets Other Than Cash
The Board of Directors or its Executive Committee reviews for final acceptance each new gift of real estate or personal property except cash.

Gifts Are Irrevocable
In order to meet IRS guidelines, your contribution becomes irrevocable once it is accepted. It is owned and held under the direction of the Community Foundation of South Alabama's Board of Directors. Contributions to the CFSA are not refundable.

Understanding Variance Power
Variance power is a distinctive feature of community foundations. The IRS requires that the Foundation have absolute discretion over all Funds in order to provide maximum benefits to you. However, the CFSA will carefully consider your recommendations regarding preferences and distributions.

Grant Distributions
The CFSA makes grants to any qualified, public 501 ( c ) ( 3 ) charity in any geographic region in the United States. Funds are permanent funds in which the assets are owned by the CFSA and managed according to the charitable purposes that you designate. Since the goal of the funds is to preserve principal, only the spendable income is available for distribution.

Administration Fees
The CFSA operating costs are covered by a modest service charge of 125 basis points (1 1/4 %) per year of the fair market value of your Fund.

Tax Considerations
Tax laws and regulations change frequently. Your tax situation is unique and likely to be affected by specific facts and circumstances that are beyond the CFSA's control or knowledge. The CFSA encourages you to consult with your professional advisor when establishing your Fund.

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