Establishing a Legacy Fund with KBFUS
1. Clarifying your charitable goals
The first step in establishing your legacy fund is identifying your passions and values, and defining an objective or ‘charitable goal’. Do you want to strengthen the healthcare infrastructure in Western Africa? Are you concerned about human rights in the Democratic Republic of Congo? Do you want to improve youth employment in Spain? Or, would you rather provide long-term support to the business school of the University of Brussels?
2. Developing a fund that meets your needs
Whether your objective is broad or narrow, and whether it is focused on a specific cause or on a designated nonprofit institution, we will work with you to structure your legacy fund so that it matches your charitable goals.
You will also need to set a timeline and decide upon a name. While some donors want to set up a fund of permanent duration, others prefer to concentrate their giving and expend all of their legacy fund’s assets within a number of years after their passing. Similarly, donors differ in their preferences for recognition. Some choose to give in their name, while others like to remain anonymous. In this latter case, you may wish to name your fund after its mission.
3. Opening your legacy fund
Opening a legacy fund is simple and straightforward, and there are no set-up or legal fees involved. You can open a fund with a contribution as low as $1,000, and your fund will become operational and its assets invested once a minimum balance of $100,000 is reached.
Even if you intend to contribute the bulk of your fund’s assets at a later date through a testamentary gift, you may wish to establish your fund now. Doing so would be prudent financial planning, as it will allow you to take advantage of tax deductions for contributions made to the fund during your lifetime. In such a case, we will formalize the opening of your fund through a letter agreement (available upon request), which will spell out the characteristics of your fund, such as its name, objective, intended duration, and the investment of its assets.
If you prefer not to open a fund at this stage, you may choose to include instructions for a charitable bequest to KBFUS in your last will and testament, for the purpose of establishing a legacy fund. We will be happy to provide you with sample language to do so.
4. Contributing assets to your fund
Giving should happen when it works for you. Some choose to give during their lifetime and claim an income tax deduction for their contributions. Others prefer to make a charitable bequest, so that their estate will benefit from an estate tax deduction. At KBFUS, you can do either or both.
You can also contribute to your fund through a ‘planned gift’, which refers to any major gift that involves financial or estate planning. These include gifts of life insurance policies, gifts of retirement plan assets, charitable remainder trusts, and charitable lead trusts. See a brief overview of the main types of planned gifts.
KBFUS has the experience and expertise to accept any type of charitable gift – from simple donations of cash to more complex planned giving transactions. And, because we are a Section 501(c)(3) public charity, you receive the maximum charitable tax deductions allowable by law for income or estate tax purposes.
5. Investing fund assets to generate income
Through professional investment, your legacy fund can earn income and grow tax-free over time, thus increasing the amounts available to support charitable purposes. When establishing a fund, you can select one of our four investment pools for the allocation of the assets of your fund. If you prefer, you may recommend that the management of your fund’s assets be entrusted to a designated investment advisor of your choice.
All of our investment portfolios are managed using reasonable and prudent investment practices. Our Investment Committee monitors the performance of the asset managers and reviews their recommendations, paying particular attention to diversification of the investment portfolios. For more information, please see our KBFUS Investment Policy Statement.
6. Supporting your charitable goals
Your fund will start its operations as soon as a minimum balance of $100,000 is reached, unless you instruct us otherwise.
If your legacy fund was established to support a particular cause, we will identify the nonprofit institutions that are active in the field and location of your choice, select the organizations achieving the greatest impact, and make gifts from your fund to support their work. On the other hand, if your fund is intended to provide support to one or more designated nonprofit institution(s), we will reach out to the organization(s) and work with them to identify initiatives that match your wishes and instructions.
All projects supported through your fund will be carefully vetted, and payments will be made after review by our Board of Directors. A grant agreement will be signed with the grantee, specifying the purpose of the grant and requesting a brief report after one year.
7. Management fees
To help us cover our operational expenses, KBFUS charges a management fee of 70 basis points per year (that is, 0.7% of the invested assets of your fund – 0.175% assessed quarterly).
Return to Legacy Funds
Any further questions? Please contact us at [email protected] or (212) 713-7660.
|KBFUS Investment Policy Statement|