Frequently Asked Questions
What is a foundation?
- Foundations are grant-making organizations which are regulated by the Internal Revenue Code, which defines what types of activities are considered charitable.
- There are different types of foundations, including private, corporate, and community foundations.
- Most foundations award grants only to non-profit, charitable organizations.
- Foundations are prohibited from lobbying and political activities.
What is a legacy plan?
- A legacy plan names the organizations and causes you want to permanently fund.
- The principal remains in perpetuity and earns money.
- Annual distributions are made to your beneficiary organizations in the form of grants. The amount awarded each year is 5% of the fund’s principal (valued at market value as of December 31 of the preceding year based on a three-year rolling average).
- In your legacy plan, you can address concerns regarding the future of your beneficiaries (e.g., What if a beneficiary organization ceases to exist or its mission changes dramatically and is no longer aligned with your vision?).
- The Foundation often refers to legacy plans as endowment funds.
What is an endowment?
- An endowment is a permanent fund which earns money to benefit a charitable organization.
- The principal remains in perpetuity – annual distributions are made to the beneficiary from the funds’ earnings.
- At the Foundation, we refer to endowments established by donors as legacy plans.
- The Foundation also maintains endowment funds for organizations.
What is a bequest?
- A bequest is the act of giving property through a will.
- The Foundation can provide sample language for your will or trust to indicate your bequest to the Foundation. It can reference your Agreement with the Foundation and your Declaration of Intent – and then your Declaration of Intent specifies the individual beneficiaries. Therefore, if you want to make alterations to your legacy plan (such as change beneficiaries or advisors), you can do so without making any changes to your will or trust.
What is an estate?
- An estate refers to the assets and liabilities left after one’s death.
Other than cash, what assets can I contribute to my fund?
- Publicly Traded Stocks and Bonds
- Israel Bonds
- Insurance policies
- Personal residence
- Commercial property
- Credit card donations
- Retirement Policies (IRAs)
Does everything have to be Jewish?
- No. You may select any non-profit organization which reflects your values and charitable interests. You may also target a field of interest, such as Jewish education or geriatric care.
- The beneficiaries must simply be recognized as non-profit entities under the requirements of Section 501(c)3 of the Internal Revenue Code.
Are my transactions with the Foundation confidential?
- Absolutely. The Foundation does not share your information with any individual or organization.
How do I decide on a funding amount?
- This is your choice. You may fund a specific dollar amount or specify a percentage of your estate.
- Percentages work well because you may not know the exact assets that will be available in your estate. You can bequeath a percentage of your estate to the Jewish Community Foundation, and then, in the fund agreement, specify the percentage that each beneficiary will receive. You can also decide to fund some smaller amount now, so you can see the results of your generosity, and fund the remainder through your estate.
What is the minimum amount?
- There is no minimum dollar amount for a legacy plan.
- There is no minimum dollar amount to donate to an institution’s existing Organizational Endowment Fund with our Foundation.
- However, to establish a named endowment fund requires a minimum of $10,000 to assure distributions large enough to support the formal structure.
Can I change my legacy plan after it is established?
- Yes. You can modify your legacy plan as often as you wish at any time during your lifetime at no charge.
- It does not involve altering your will or trust when you donate with the Foundation.
Can my children decide where the money goes?
- Yes. You can name your children as advisors for part or all of your funds. The Foundation encourages this opportunity for a family dialogue about the kind of legacy you want to leave and how your children can help shape it.
- The Foundation’s professionals will help you explore the options for intergenerational legacy planning, to find the best solution for you and your family.
Are there fees for legacy planning assistance?
- No. There are no fees whatsoever until the time of funding. Thereafter an annual fee of 1% or less of the fund’s value is charged on the endowment fund. This is the same or less than other commercial or non-profit institutions. Historically, these professionally invested funds earn well over the 1% fee, so the Foundation fees should not reduce the principal of the funds.
How long does this process take?
- Some legacy plans come together in the course of a single meeting.
- More typically, conversations and analyzing take place over months and sometimes years.
- The Foundation’s staff and lay leaders will work with you at your own pace.
What if I move to a different city or state? Is this only for Orange County?
- Your legacy plan can be easily altered to reflect the changes in your life. Your beneficiaries are not geographically limited to Orange County.
How does the Foundation manage my funds and investments?
- The Foundation’s Investment Committee is a group of volunteers with expertise in finance and investments.
- The Foundation’s investment manager, SEI, ensures that funds held at the Foundation are wisely invested for optimum performance over time. SEI is a public company and has been a leader in the investment services industry for over 40 years. SEI is a leading global provider of wealth management solutions including investment services, and the company serves 7,000 clients and administers $424 billion in assets.
- To ensure that distributions to your beneficiaries are not dramatically affected by fluctuations in the market, the Foundation Board of Trustees establishes a spending rate, which is evaluated annually. The rate is based, in part, on a three-year rolling average of the Foundation’s investment returns. The Investment Committee has been distributing 5% annually for the last several years.
I’ve heard that I can receive an income and at the same time create a legacy for the future. How?
- That is an annuity, specifically a Charitable Gift Annuity.
- You contribute $10,000 or more and receive income annually for life at a set rate.
- You receive an income tax deduction for a portion of your gift.
- The income rate and tax deduction are both correlated with your age: the older you are the greater benefit you will receive. These rates are determined by the American Council on Gift Annuities.
- Many organizations offer gift annuities in exchange for making them the sole beneficiary. At the Jewish Community Foundation, you can choose any organizations to benefit from up to 90% of the charitable annuity, with 10% going to support the Foundation.
Should I talk to my lawyer and accountant?
- The Foundation strongly recommends that you consult with your own professional advisors regarding your legacy plan.
- The Foundation will provide sample language and information to assist your advisors.
- The Foundation’s endowment professionals will work with you and your advisors to ensure that the legacy plan is tailored to best meet your expectations and your means.