Create a foundation
Create your own foundation, without the paperwork
A named legacy fund lets your name, or a loved one's, keep doing good for years or forever. Here's how it works, and how it compares with a donor-advised fund, a private foundation and a charitable remainder trust.
How it works
Six decisions, all in our free builder
Name it
“The Margaret Ellis Fund for Cancer Research,” your family's name, or the name of someone you love.
Choose its causes
Use the same sliders to set how the fund divides its giving between the causes you care about.
Choose its lifespan
Spend everything within about 10 or 25 years, or give about 5% a year, forever.
Name advisors
Children or grandchildren can recommend grants, which keeps your family giving together.
Write its mission
In your own words, in a letter of wishes that guides every future grant.
Let it run
A sponsor typically handles investing, checks every grantee and reports to your advisors. Policies vary, so your executor should choose one that fits.
Compare
Four ways to create a lasting legacy
All four can be set up through your will. For most people, a named fund or a donor-advised fund gives the benefits of a foundation without the cost and paperwork.
| Named legacy fund | Donor-advised fund | Private foundation | Charitable remainder trust | |
|---|---|---|---|---|
| Best for | Most people who want a lasting legacy in their name | People who already have a DAF and want heirs to keep giving | Very large estates, and families who want full control | People who want loved ones to receive income first |
| Set-up cost | None | Usually none | Legal and filing fees, often thousands of dollars | Legal fees to draft the trust |
| Ongoing costs | An administrative fee set by the sponsor | An annual administrative fee that varies by sponsor | An annual IRS return (Form 990-PF), professional fees, and a 1.39% excise tax on net investment income | Trustee, investment and tax-filing costs |
| Who picks the grants | Your advisors recommend; the sponsor approves | Your successor advisors recommend; the sponsor approves | Your board or trustees decide | The named charity receives what remains |
| Yearly giving | Set by the lifespan you choose | No federal minimum; sponsor policies vary | Generally at least 5% of assets a year | Pays your beneficiaries 5% to 50% a year; charity gets the rest at the end |
| How long it lasts | About 10 years, 25 years, or forever | Depends on the sponsor; many allow successors | Forever, or until the board spends it down | For life, or a term of up to 20 years |
| Estate tax | Fully deductible | Fully deductible | Fully deductible | The charity's share is deductible |
General information, simplified. Rules and costs vary. A private foundation or a charitable remainder trust should be set up with an estate attorney.
Sample wording for a named fund
Our builder writes this for you, with your fund's name, causes, lifespan and advisors filled in.
I give ____ percent (____%) of my residuary estate to a public charity that sponsors donor-advised or named charitable funds, selected by my Executor, to establish a fund to be known as “[name of fund].” The fund shall be used only for charitable purposes, divided among the following purposes in these proportions: [causes and percentages]. I request that the fund distribute all of its assets within about twenty-five years after my death. I request that the sponsor invite [names] to serve as advisors to the fund and give good-faith consideration to their recommendations.
Sample language for discussion with your attorney. Not legal advice.
When to talk to an attorney
- You want a private foundation with its own board, or a charitable remainder trust.
- Your estate is large enough to owe federal or state estate tax.
- You own a business, farmland or other hard-to-value property.
- You want to place detailed restrictions on how the money is used.
Questions about named funds
Is my estate big enough for a named fund?
Often, yes. Unlike a private foundation, a named fund doesn't need its own staff or filings, so many sponsors accept modest funds. Some set minimums: Fidelity Charitable's endowed program starts at $100,000. If no sponsor will take the fund, your will sends the gift straight to charities for the same purposes.
Can my children run it?
They can serve as advisors who recommend grants. The fund's sponsor makes sure every grant goes to a qualified charity, which protects your family and the fund's tax status.
What happens when the fund's lifespan ends?
A spend-down fund makes its last grants and closes. A permanent fund keeps giving about 5% a year, indefinitely.
Who holds the money?
A public charity that sponsors named or donor-advised funds. MyLastWill is being organized as a nonprofit public charity. Until its tax-exempt status is final, the will builder writes cause gifts so your executor can carry them out through established charities, guided by our published research.
Fifteen minutes today. Generations of good.
Write your will, choose your causes, and print it for signing. It's free, and your answers stay on your device.
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