Fund Terms & Conditions

Fund Relationship & Fund Advisory Privileges Definitions

Primary Fund Contact: One person per fund. This person should be contacted first for anything concerning the fund. This individual may or may not have fund advisory privileges.

Donor/Founder: The individual/company establishing the fund.

Current Advisor: This individual has full advisory privileges over a fund, including grant recommendations, investment recommendations, naming the fund, and appointment of other fund advisors and successor advisors (this is the highest level of privilege).

Successor Advisors: This individual is a second-generation fund advisor; he/she has no advisory privileges until after some or all of the Current Advisor(s) are unable to exercise their right to advise the fund.

Successor advisors may appoint further successors. If the successor advisor is a minor, the Community Foundation’s Governing Board reserves the right to require that grant recommendations be made by the minor’s legal guardian.

All requests to modify or appoint additional Current Advisors and Successor Advisors to a fund must be communicated to the Community Foundation in writing. In addition, a written acknowledgment must be received from the Community Foundation confirming that the request has been granted. If Greater Houston Community Foundation has not received the name(s) of an additional Current Advisor(s) or Successor Advisor(s) to the fund, or other special instructions, in writing, Greater Houston Community Foundation will use the fund’s balance to support its Unrestricted Fund.

Fund Representative: This individual has access to fund information, but no fund advisory privileges.

Endowed Funds: The donor(s) understand and acknowledge that any Endowed Fund created under this agreement with the Community Foundation or any of its affiliates or supporting organizations is a permanent fund and that only the spendable fund balance will be available for granting. A Spending Policy is established to ensure the availability of grantmaking dollars to Greater Houston Community Foundation in perpetuity. Annual fund grants are subject to the Community Foundation’s current spending policy. A copy of the Community Foundation’s current Spending Policy as contained in the Community Foundations Investment Policy Statement is available upon request.

Non-Endowed Funds: Fully expendable: the entire fund balance is available for grantmaking.

Role of Advisors

Donors establishing a fund may designate any person over 18 years of age to be an advisor but preferably no more than three. If a fund is advised jointly, upon the death of one fund advisor, the remaining advisor(s) retains the privileges associated with the fund.

Death of Donor(s)/Founder(s) of Non-Endowed Donor Advised Fund

Assuming no Current Advisor has privileges, Successor Advisor(s) assume privileges or receive the remaining balance upon the Donor/Founder’s death into a fund. If no Successor Advisor is recommended or named Successor Advisors do not respond within ninety (90) days after notice, the fund will terminate, and the balance of the fund will be transferred to the Community Foundation’s Unrestricted Fund. Donor/Founders can name eligible charitable organizations as successors to receive the remaining balance of the fund. If an organization is not eligible at the time of distribution, its portion is distributed among other qualified Successors Advisors or becomes part of Greater Houston Community Foundation’s Unrestricted Fund if none are named. Failure to establish a succession plan may result in the fund balance being transferred to Greater Houston Community Foundation’s Unrestricted Fund.

Death of Donor(s)/Founder(s) of Endowed Donor Advised Fund

After the death of the original donors, if no contributions have been made to the Endowed Donor Advised Fund and no grants have been recommended from the Endowed Fund by the Current/Successor Advisors for a period of five (5) years, and after the Current/Successor Advisors have been notified by the Community Foundation staff, the balance of the fund will be placed into Greater Houston Community Foundation’s Unrestricted Fund or a Field of Interest Endowed Fund. These funds will be used at the discretion of the Governing Board of the Community Foundation for the purpose of improving the quality of life of the residents in the greater Houston community.

Divorce

During a divorce, separation, or annulment, if both spouses are Current Advisors to a fund, Greater Houston Community Foundation can pause grant distribution recommendations. The suspension can end if both spouses agree in writing or establish an acceptable alternative procedure. With approval, the spouses can create separate successor funds, each with one spouse or Successor Advisor. If there is no agreement or legal resolution, the Community Foundation can divide the fund equally, with each spouse or Successor Advisor managing their respective fund. However, the Community Foundation will wait at least six months from the filing date of the divorce, separation, or annulment before taking such action.

Incapacity

An individual nominated in an account’s succession plan to act as account advisor when all Current Advisors either choose not to serve or are otherwise unable to act due to incapacity. A Successor Advisor has no account privileges until the Community Foundation receives written proof of incapacity (for example, a copy of an uncontested durable power of attorney with respect to the incapacitated Current Advisor and a written letter or certificate from a physician verifying the Current Advisor’s incapacity) or resignation of all Current Advisors. At that time, the Successor Advisor will be notified by the Community Foundation that he or she is now a Current Advisor with full privileges. If the Successor Advisor accepts the nomination, he or she has the option to draft a new succession plan and nominate new successor advisors. If no Successor Advisor has been recommended by a Donor/Founder, then upon the death of the last Current Advisor, any remaining balance in the fund will become part of Greater Houston Community Foundation’s Unrestricted Fund.

Grant Disbursement

Grants must be for charitable purposes, and those grants may be recommended to any 501(c)(3) organization or verified charitable entity (e.g. schools, religious institutions) located in the United States, or to any nongovernmental organization outside of the United States having a verifiable charitable purpose. All grants directed outside of the United States must comply with federal government regulations and must otherwise conform to all relevant U.S. federal and state laws. Grants may also be given for charitable purposes to non-501(c)(3) organizations if the charitable expenditure can be verified through a process called expenditure responsibility. Expenditure responsibility is required for any organization not described in IRS Section 170(b)(1) (A), including for-profit companies, private operating foundations, and disqualifying supporting organizations.

Minimum Grant Size

Your grant recommendations are designed to be carried out efficiently, accurately, and in alignment with your philanthropic goals.

• • Minimum grant amounts: Grants to 501(c)(3) public charities in the United States must be at least $250. Grants to organizations outside the United States—or those requiring expenditure responsibility—must be at least $5,000.
  • Recognition and confidentiality: Each grant is accompanied by a letter that includes your fund name and your name as the donor advisor, unless you request otherwise. Your mailing address can also be included upon request.
  • Timely distribution: Once your recommendation is approved, grants are typically issued within 10 business days. If there is a delay, you will be notified promptly with an explanation.
  • Fund-related correspondence: To help maintain efficiency and clarity, mail received by Greater Houston Community Foundation for your fund is not forwarded.

At Greater Houston Community Foundation, we are committed to making your giving experience as seamless and nonprofit-friendly as possible. To improve speed and reliability, the Community Foundation has expanded the use of ACH (Automated Clearing House) payments, reducing reliance on paper checks and helping more funds reach nonprofits faster.

The Community Foundation manages the administrative and operational responsibilities behind your philanthropy—including grant processing, recordkeeping, investment management, tax reporting, auditing, and ongoing reporting—so you can stay focused on what matters most: supporting the causes and communities you care about.

Restrictions On Grants

In compliance with the Internal Revenue Code, grants are not permitted to individuals; for non-charitable purposes; for political contributions or to support political campaign activities; or for any purpose that would provide benefits, goods, or services to a donor of the fund, the fund’s advisor(s) or other related parties. A fund advisor is subject to IRS penalties if the fund’s donor(s), advisor(s) or other related parties receive benefits, goods, or services in connection with a grant recommendation. This includes grants to satisfy pledges made by any person, including a fund advisor, and non-deductible (or partially tax-deductible) memberships, tickets, sponsorships, registration fees in tournaments, and cause-related market activities. Grants are not allowed to private non-operating foundations.

Please contact your Philanthropic Advisor if you have questions about the exclusion of benefits from grant recommendations and/or multiple-year payments.

Excluded Payments from a Donor Advised Fund

Greater Houston Community Foundation does not permit expense reimbursements, loans, compensation, or other similar payments from a Donor Advised Fund to any donor, fund advisor, or related party.

Pass-Through Fee

Unless pursuant to a separate agreement with the Community Foundation, funds that grant more than 80% of their initial fund balance within 12 months of being established will be assessed a 3% pass-through fee on the total amount granted from the fund, with a minimum of $500. The Community Foundation’s Governing Board sets policies and fees to ensure that all funds pay their share of the costs of the Community Foundation. The majority of funds remain at the Community Foundation for extended periods of time, and their fees support operational costs.

Fund Inactivity

Inactivity occurs when no recommendations for grants from the fund or gifts made into the fund are received for a period of three consecutive years, and the Primary Contact cannot be contacted. The Community Foundation staff will attempt to contact the fund’s advisor at least three times, including once via certified mail. If contact cannot be made, the Community Foundation’s Governing Board will recommend grants that will align with the founder and/or advisor’s intent for the fund or to support the Community Foundation’s Unrestricted fund.

Fund Closure

The Current Fund Advisor may recommend closing a fund by granting up to 100% of the fund balance to a qualified charitable organization, including any of Greater Houston Community Foundation’s funds (e.g., fields of interest funds, endowment funds, operating funds). Such recommendations must be received in writing and, if approved, funds will be disbursed in accordance with the Community Foundation’s current grantmaking policies and applicable laws and regulations.

Closing a fund by recommending a grant to another qualified charitable organization which is approved will occur as follows:

• 80% of the current balance will be granted within 10 business days of the request date, barring any issues with the organization’s status as a qualified public charity or equivalent.
• The Community Foundation will calculate any outstanding administrative fees, process the final grant within the following 45 days, and the fund will be closed. Endowed funds are permanent and cannot be closed.

Conflict of Terms

In the event of any inconsistency between these terms and conditions and those appearing elsewhere in connection with any fund, these terms and conditions shall control, as interpreted by Greater Houston Community Foundation. The Community Foundation reserves the right, in its discretion, to take any action it deems reasonably necessary or appropriate for the proper administration of any fund or to ensure compliance with applicable law.

Excess Business Holdings

Greater Houston Community Foundation does not allow donor advised funds to purchase business holdings. The Community Foundation recognizes the provision included in the Pension Protection Act (PPA) regarding excess business holdings. That is, the holdings of a donor advised funds in a business enterprise, together with the holdings of persons who are disqualified persons with respect to that fund, may not exceed any of the following:

• Twenty percent of the voting stock of an incorporated business
• Twenty percent of the profits/interest of a partnership or joint venture or the beneficial interest of a trust or similar entity
• Ownership of an unincorporated business that is not substantially related to the fund’s purposes

The Community Foundation will identify and monitor any new gift to a donor advised fund of any interest qualifying as an “excess business holding” under the PPA and will accept such gifts as appropriate according to the Community Foundation’s Gift Acceptance Policy. The Community Foundation will exercise its best possible price within five years of the date of the gift as required under the PPA. In any event, the Community Foundation will dispose of any excess business holdings prior to the five-year time limit, except in the event the Treasury Department grants an additional five-year holding period. The Community Foundation will notify potential donors of such interests of this requirement prior to the gift of such interest.

Complex Gift Fee

Gift assets that require special review, such as real estate, limited partnership interests, or closely held stock, may incur additional fees to cover tax, legal, or other expenses associated with the transaction.

All Funds: Terms & Conditions

Protection of Tax-Exempt Status

The donor(s) agree to comply with any written direction by Greater Houston Community Foundation to cease recommending grants or distributions or conducting activities that may jeopardize the Community Foundation’s tax status or otherwise subject the Community Foundation or the fund to excise taxes that are applicable to donor advised funds as defined in the Internal Revenue Code Section 501(c)(3).

Accuracy of Information

The donor(s) hereby certify that all information presented in connection with this agreement is accurate to the best knowledge of the donor and will promptly notify the Community Foundation in writing of any changes.

Use of Funds

The Community Foundation will make grants from the fund to carry out the charitable purposes of the fund in accordance with IRS Code 501(c)(3). The Community Foundation is generally unable to make reimbursements to any individual for expenditures or to make a grant or distribution for any non-charitable purpose or to any non-charitable entity under the provisions of IRS Code 501(c)(3). Advisors wishing to recommend any such reimbursement, grant, or distribution should discuss it with the Community Foundation’s Donor Services Department before engaging in any activity that might otherwise lead the donor(s) to an expectation that such payment would be appropriate.

Irrevocable Gifts

The donor(s) understand that the establishing gift and any subsequent gifts to the Community Foundation for the purpose of establishing the fund will constitute an irrevocable gift and is not refundable.

Ownership

Tools, equipment, and software used by the Community Foundation to provide service to the fund shall remain the property of the Community Foundation and/or its licensors, and no right, title, license or interest in any of them is conveyed to the fund by this agreement.

Acknowledgment of Charitable Donations on Behalf of the Fund

The Community Foundation agrees that it will acknowledge to donors all gifts to the fund of $250 or more in accordance with the guidelines established by the Internal Revenue Service (IRS). Generally, the IRS requires taxpayers to complete and file form 8283 with their federal income tax return for gifts of property valued at $5,000 or more. It is the donor’s responsibility to obtain a qualified appraisal for all gifts other than cash and marketable securities for tax deduction purposes.

Investments

The donor(s) acknowledges and agrees that they have been advised by the Community Foundation that current IRS regulations or rulings permit fund advisor(s) to designate investment preferences but require the Community Foundation to retain final discretion regarding such investments. The donor(s) understands that investments will be administered in accordance with the Community Foundation’s rules and procedures.

The donor(s) acknowledges that the investments in the fund are subject to market and interest rate fluctuations and may be co-mingled with assets of other funds for investment purposes. The total investment return of each investment managed is net of its operating expenses.

Indemnity

In consideration of the Community Foundation creating a fund at the request of the donor(s) or entity and for other good and valuable consideration, the donor(s) hereby agrees to indemnify and hold harmless the Community Foundation against any liability, cost, or expense which the Community Foundation may incur by reason of its acting upon instructions or recommendations given to the Community Foundation by any donor(s) or by persons authorized to make recommendations with regard to the fund.

Variance Power

It is understood that the fund to be established pursuant to this agreement will be subject to the provisions of the Certificate of Formation, Bylaws and other rules, regulations, and procedures of the Community Foundation which are now in effect and which may be adopted or amended, or both including but not limited to the power reserved by the Governing Board to modify any condition or restriction on the grant of funds if, in its sole judgment (without the approval of any trustee, custodian, or agent), such restriction or condition becomes, in effect, unnecessary, incapable of fulfillment, or inconsistent with the charitable needs of the area served by the Community Foundation.

Donor Advised Funds

Donor advised funds make giving easy and efficient. Donors (individuals, families, groups, companies, or other foundations) recommend grants from the fund to any Section 501(c)(3) nonprofit organization they wish to support. Grant checks include the name of the fund, and donors determine the level of publicity, including anonymous grants.

Fundraising

In general, Greater Houston Community Foundation does not permit fundraising.

Tax Status of Contribution

Funds established at the Community Foundation are component funds of the Community Foundation, a Section 501(c)(3) public charity. Contributions other than cash or marketable securities must first be approved by the Community Foundation. All contributions to Community Foundation funds are treated as gifts to a public charity and are generally tax-deductible, subject to individual limitations. The Community Foundation does not provide tax or legal advice; we recommend consulting a professional advisor with questions about a gift to the Community Foundation.

Fees and Minimums

There is no set-up fee to open a fund at the Community Foundation; however, an annual advisory fee, minimum of $1,500, is charged based on the level of assets in your account. Fees are deducted from your account monthly. Advisory fees support the costs associated with administering your donor advised funds, including online account management, gift and grant processing, philanthropic advising, and educational opportunities. The Community Foundation reserves the right to change its fee and/or minimum policies at any time.

Fund Balance vs. Available Fund Balance

Fund Balance: The net worth of the fund including all investment assets and any illiquid assets.

Available Fund Balance: The portion of the fund balance that may be used immediately for grantmaking.