When donors create an endowed fund with Clarion County Community Foundation their hope is to be of service in the future, the long future of 100 years, 150 years, and perhaps longer. It may happen that the future is radically different than the donor envisions. For two different fund situations it is prudent to include a sunset provision in the fund contract.
The endowed restricted fund names a specific nonprofit to benefit from the fund. Examples of this type of fund are those set up to provide income to a local church, a local health clinic, a shelter for battered families, a local chapter of the Red Cross, or a local veterans organization.
If a donor researches local directories of 100 years ago, or even 150 years ago as we descended into the Civil War, the listing of local organizations active in charitable work is very different from a listing of today’s nonprofits. The donor must consider what is to be done with the endowed restricted fund when it can no longer function because the designated nonprofit is gone.
The sunset provision to be completed is this: If my designated nonprofit or its successor ceases to exist or reside in Clarion County the fund shall become . . . . You may choose to complete the sentence with “an unrestricted grants fund.” This means the fund is available to fill whatever need the community foundation trustees think is worthy.
Another option is to complete the sunset provision by naming a broadly stated field-of-interest the donor believes will always remain an important charitable cause. This broadly stated purpose could be conservation, family health, legal aid for the poor, public recreation, or historic preservation.
The other situation for which a sunset provision is useful is a fund that donors expect to grow by future personal contributions and fund raising activities. If the future growth is weak or fails to continue as anticipated, the fund may suffer from being too small to earn income for meaningful grants.
The organizers of the fund may decide to set a minimum level of grant activity for their fund. The sunset provision may state: If the fund is unable to award a grant of $200 or more every biennial for six consecutive years, the fund shall become . . . . The organizers have the option of completing the sunset provision in accord with what appeals to them.
No one can know if or when a sunset provision may be invoked. If a decision is to be made, the original donors have an opportunity to make that decision rather than latter-day trustees. In creating an endowed fund it is best to think long. Charles Marlin