What is a donor fund?

What is a donor fund?

Most of CFNL’s donor funds are endowment funds. An endowment fund is a donation that is permanently invested. The annual interest earned on this investment is used to provide grants for charitable projects. 

CFNL can accept donations to begin an endowment fund in many ways, including:

  • Cash, cheque or credit card
  • Donations of publicly listed securities
  • Bequests in wills or gifts of life insurance
  • Gifts of real estate or other property

Contact CFNL at info@cfnl.ca or (709) 753-9899 to learn more. 

Why start an endowment fund?

Long-term community impact: An endowment fund enables your gift to live on in perpetuity as a permanent resource to the community. We are committed to managing your fund permanently according to your wishes. CFNL staff and volunteers utilize their extensive community knowledge to provide resources on the greatest area of need throughout the province.

Flexibility: Funds can be set up to benefit different grant recipients each year, to support scholarships that can be taken to any university, or to fund grassroots community projects that aren’t associated with large organizations. This flexibility can allow your fund to respond to the community’s changing needs so that it can make the most difference over time. Donors get a tax receipt for their full donation when the fund is started and funds can be disbursed over time. This can be beneficial if a donor has a specific tax event in a given year, but wants to give a donation over time. 

Ease of use: Endowing a fund at a community foundation takes the burden of fund management off the donor. We handle administration, grant application assessment, and grant follow-up. Donors can choose to be anonymous donors. As the donor, this gives you the option to be as involved or as hands-off as you would like to be. Donors are provided one tax receipt for their giving easing the administration of their philanthropy. 

Financial responsibility: Funds endowed with us are conservatively invested to ensure long-term stability. Fund holders are provided with annual audited financial statements on the value of their funds and the income and expenditures of the foundation.

Affordability: Starting an endowment fund is free of charge. Each fund is charged an annual fee to recover costs for philanthropic services from CFNL and fees associated with investing the fund. Currently, this is set at 2.5% per year. 

Please note: A minimum balance of $10,000 is required to maintain a donor-directed fund. This is to ensure that the interest on the fund is sufficient to sustain a worthwhile annual grant. The full amount does not need to be invested at the outset but can be contributed gradually over a period of up to five years.

How are funds invested?

At the Community Foundation of Newfoundland and Labrador, many different funds are pooled together into one large endowment. The total earnings on the pooled endowment are split between the different funds on a proportional basis. Investing all the funds together in one large pool allows us to secure lower investment management rates and higher rates of return than can typically be obtained for smaller funds.