How to Open a Foundation Fund
There are two types of funds that can be held in the Young Life Foundation: a Young Life Area Fund and a Donor Advised Fund.
- Young Life Area Fund
This type of fund is generally utilized by Young Life areas, regions and even divisions that want to set aside a sum of money that is preserved for some special purpose. An example of this would be a campership fund or a strategic growth fund. There is no limit to what you could use a foundation fund to accomplish. Generally the usage of these types of funds is regulated by the local Young Life body establishing the fund (e.g., the local committee, etc.).
When a fund is established, you have the opportunity to choose one of five different investment strategies for your fund. Typically, we counsel people to consider the time horizon in which you want to use the funds as the driving factor in selecting an investment strategy. For example, if you have a fund that you want to use up in the next 12 to 24 months, you will probably want to consider investing in the cash management strategy to keep you very liquid versus a growth fund which could see more ups and downs and take longer to show a higher rate of return.
- Donor Advised Fund
A Donor Advised Fund (DAF) is similar to an account that an individual would open up and make a charitable deposit into. Very often, donors open up DAFs in a year when they have a profit windfall or in a year where they need to maximize their charitable tax deductions.
When you create a DAF, you get a tax deduction for the fair market value of the asset you used to fund the DAF. However, you can distribute that gift out over time to ministries and organizations you care about. An example of this would be: John and Mary are selling their business. They want to gift out 15 percent of the value to various charities over time. By creating a DAF and funding it with 15 percent of the ownership percentage of the company before the sale, they are able to not only get the tax deduction for the full fair market value in the year where their taxable income is the highest, they also avoid paying capital gains taxes on the percentage of the company that they gifted to their DAF.
To open an account, simply complete the applications above and return them to the Young Life Foundation. Once your fund has been established, we will work with you to secure the funding source. It's as simple as that!