Could a Field of Interest Fund be Right for You?
Donor advised funds have become popular for managing charitable giving in recent years. However, there are other lesser-known vehicles that can also be useful, depending on your unique goals. One such fund is the field of interest fund.
How are field of interest funds different from donor advised funds?
Donor advised funds are charitable giving vehicles administered by a sponsoring organization that qualifies as a public charity – such as Foundation For The Carolinas. You surrender ownership of anything contributed to the fund but typically retain advisory privileges over how the fund is invested and how it distributes money to charities.
On the other hand, field of interest funds benefit organizations that fall within a specific charitable field or category rather than a particular charitable organization. You may describe the field of interest fund broadly (the environment) or narrowly (to improve the tree canopy in the Town of Matthews). Typically, advisory privileges are relinquished to the sponsoring organization when the fund is created.
This distinction provides additional benefits.
What are some benefits of using a field of interest fund?
- Tax benefits. Like with donor advised funds, a contribution to a field of interest fund should qualify for an immediate public charity income tax deduction. However, field of interest funds do qualify for different treatment in certain circumstances. For instance, qualified charitable distributions from IRAs can be made to field of interest funds – but not to donor advised funds.
- Take advantage of others’ expertise. You may care greatly about a cause, such as K-12 education or reducing homelessness, but may not have in-depth knowledge about the organizations addressing such work. With a field of interest fund, you entrust the sponsoring organization to distribute funding to the most impactful organizations.
- Account for evolving needs and opportunities. As time passes, the charitable landscape changes. Economic changes may create new challenges even as other problems are solved and innovative technology may offer great opportunities. Organizations may merge and others may be established. You may not have the pulse on these changes, and may prefer for your fund to be able to adjust its giving as needed. As the bedrock of the community foundation movement, field of interest funds provide organizations, like FFTC, the ability to respond to evolving needs and provide civic leadership in your community now and in the future.
When are field of interest funds most useful?
Field of interest funds can be useful for lifetime giving, particularly if you are passionate about a charitable field but agnostic regarding specific charitable organizations. Additionally, they are helpful if you want to use your IRA for philanthropic good during your life.
However, given the unique structure of a field of interest fund, this philanthropic tool is perhaps most beneficial in the planned giving context. In addition to creating a standalone field of interest fund that reflects your specific, perhaps narrow charitable focus, you may wish to consider contributing to an existing field of interest fund, pooling your resources with other like-minded community members for greater impact.
Many community foundations have such funds that reflect broad community areas of need. Foundation For The Carolinas, for example, offers eight FFTC Community Impact Funds that support broad causes in our community.
How can you learn more?
- Individual or Family Philanthropy: Contact Whitney Feld at firstname.lastname@example.org or 704.973.4581.
- Planned Giving: Contact Kindl Detar at email@example.com or 704.973.4581.
If you are interested in learning more about legal and tax considerations of using a field of interest fund, read Field of Interest Funds: Legal Considerations, which is adapted from an article originally published in the NC Bar Association’s newsletter, The Will & The Way.
Disclaimer: The information provided in this article is general and educational in nature. It is not intended to be, and should not be construed as, legal or tax advice. Foundation For The Carolinas does not provide legal or tax advice. Laws of a specific state or laws relevant to a particular situation may affect the applicability, accuracy, or completeness of this information. Please consult an attorney or tax advisor regarding your specific circumstances.