Donor Care Policy & Procedures
Adopted by HCF’s Board in August 2022
The Herefordshire Community Foundation (HCF) is a local independent charity with strong local roots that provides a grant making and fund management service to its donors. HCF became a registered charity in June 2002 with a founding aim of:
“ The promotion of any charitable purposes for the benefit of the community in the County of Herefordshire and in particular, the advancement of education, the protection of good health, both mental and physical, and the relief of poverty and sickness.”
HCF gives grants to individuals, families, voluntary and community groups and other charitable causes and supports projects that make a real difference to the quality of life for the people of Herefordshire.
The Herefordshire Community Foundation recognises that the support and care of donors is central to the achievement of its mission. The purpose of HCF’s Donor Care Policy is to set out for donors its commitment to donor care and the basis upon which HCF accepts gifts to support donors to give effectively. It establishes guidelines governing the acceptance of donations by HCF for the benefit of its operations, programmes or services and provides guidance to prospective donors and their advisors when donating to the Foundation.
This Policy is to be read in conjunction with the Fund Agreement.
Our commitment to donors
HCF will always:
- Respect its donors.
- Treat potential donors with an established level of care.
- Guarantee clarity of any fees to the Foundation, the status of any funds held and the right to have successors.
- Strive to always comply with the donor’s wishes.
- Be transparent, accurate and honest in its dealings with donors.
- Be aware of its commitment to equal opportunities.
All donors have the right to:
- Confidentiality and the right to remain anonymous.
- Privacy and compliance by HCF to its Confidentiality and Data Protection Policies.
- Prompt attention, accuracy and integrity from all staff and volunteers.
- Not be subjected to any undue pressure.
- Appropriateness in solicitation of future giving.
- Removal of their details from HCF’s database records upon request.
All donations will:
- Receive a prompt gift acknowledgement and “thank you” unless no receipt was requested.
- Be directed as per the donor’s wishes.
HCF may accept a variety of donations. All are outright donations of assets by living donors made on a one-off or regular basis. The Foundation can also accept planned donations that take effect after the donor’s death.
HCF will accept the following types of outright donations:
- Cash or cash equivalents of any amount, although donations to establish Named Funds must meet the minimum requirements set by the Board.
- Publicly traded shares at fair market value. The Board will have full discretion over the sale of any donated shares.
- Personal property, as long as the items are saleable and at a value which will offset any costs HCF incurs in selling.
HCF may also be named as the beneficiary of the following planned donations:
- Residuary Legacy: A donation of some or all the remainder of an estate after all assets have been handed out and debts paid off.
- Pecuniary Legacy: A donation of a fixed sum of money.
- Specific Legacy: A particular named item left as a gift in a will, for example shares, property, jewellery, furniture or art.
For the avoidance of doubt, the value of any asset donated to HCF can decrease as well as increase in accordance with market conditions and other factors.
HCF may also work with donors who wish to undertake social investment where their donations are ‘recycled’ and some or all of the donated assets may ultimately be returned to the Foundation for further application to its charitable purposes in line with any restrictions agreed with the donors. Such arrangements will be subject to separate policies and agreements.
Assets donated to establish, grow or contribute to funds at HCF are irrevocable. They become the Foundation’s property and the Board carries the legal responsibility for ensuring that donations are used for charitable purposes in line with any restrictions agreed with donors.
Donations from individuals that have been subject to Gift Aid and/or tax refund claims cannot be repaid under any circumstances. HCF may accept a donated asset with the condition that some or the entire amount may be returned in the exceptional case where the donor is an institution donating assets comprising its untraceable client or dormant accounts in line with its own legal and regulatory requirements. In such circumstances, HCF can provide an indemnity stating that it will refund any monies that the institution might be liable to pay to a person or body. The indemnity is limited to the book value of the donation received.
HCF may carry out appropriate due diligence and regularity checks on donors in order to identify and manage associated risks. HCF reserves the right not to accept a donation if the Board determines that the restrictions, liabilities or reputational risks in doing so would be too great or would conflict with the Foundation’s charitable aims or its Investment Policy.
Subject to compliance with HMRC regulations, cash donations made by UK taxpayers are eligible for Gift Aid, which means that HCF can claim an additional 25% of the value of the donation, at current rates. Gift Aid received is added to funds alongside the original donation. Higher-rate taxpayers may be able to claim additional tax relief on their donations.
For HCF to claim Gift Aid and for donors to benefit from tax advantages relating to charitable donations, donors must part with ultimate control over the donated asset. Actual or perceived direct control by donors may jeopardise the basis on which donations are made and the charitable status of HCF. Donors and Fund Advisors cannot therefore act independently of HCF in relation to their fund. Donors, Fund Advisors and related parties, such as donors’ family members or business interests, also cannot directly benefit from their funds.
HCF will acknowledge donors appropriately and publicise their involvement in line with their wishes. Donors may remain anonymous if they prefer. In all cases, HCF will keep the details of its particular agreements with donors confidential, subject to its legal and regulatory accounting requirements.
A fund at HCF is not a distinct legal structure like a charitable trust. It is a vehicle for having regard to the donor’s wishes without the administrative or regulatory requirements that would be required of a separately constituted charity.
The Named Fund is the principal fund type set up by an individual, a family or an organisation, often in the donor’s name or that of someone or something with whom they feel closely associated. Alternatively, the fund can be anonymous.
Donors may set up a Named Fund with a donation of a minimum value set by the Board.
There are three types of Named Funds:
- Endowment Funds: The donation is held as capital and invested by HCF. The investment return provides revenue which is used to support charitable causes each year. The minimum value of a new Endowment Fund is decided by the Board on a case-by-case basis.
- Flow Through Funds: The donation is treated entirely as revenue to support charitable causes. There is no minimum value to open a Flow Through Fund. Each new fund is reviewed on an annual basis and if there has been no fund activity after 2 years, HCF will suggest that it is incorporated into another fund with similar criteria.
- Combined Funds: The donation is held partly as an Endowment Fund and partly as a Flow Through Fund.
Themed Funds are an alternative type of fund supported by one-off or regular donations from a number of donors who share a common cause.
Donors who establish Named Funds may choose to make one or more of the following recommendations as to how they wish for their fund to be used:
- Unrestricted: The fund’s revenue supports the activities of HCF or its general grant-making at the discretion of the Foundation.
- Field of Interest: The fund’s revenue supports the donor’s preferred causes or localities and allows HCF discretion to make grants in lien with their wishes.
- Donor Advised: The donor determines the purpose of the fund and recommends grant recipients from shortlists prepared by HCF.
- Panel Advised: As Donor Advised but where the donor wishes a panel or committee to recommend grants on their behalf.
- Donor Nominated: The donor recommends charities to be beneficiaries of grants from the fund.
- Agency: The fund is set up solely to benefit a named organisation.
- Designated: The fund’s revenue supports a series of named organisations each year agreed with the donor at the point it is founded.
HCF will advise on the most appropriate fund option depending on the value of the fund, the likely fund revenue and the level of engagement the donor wishes to have.
Fund Advisors and Panel Members
Donors who establish Named Funds may designate themselves and/or any person over the age of 18 to be a Fund Advisor. A fund may have more than one Fund Advisor but ideally no more than three. Fund Advisors’ privileges include setting and reviewing the fund criteria with HCF, agreeing succession arrangements and being engaged with the Foundation’s wider work.
Fund Advisors for Donor Advised funds may also make recommendations on grants.
For Panel Advised funds, donors may nominate persons over the age of 18 to be Panel Members. Panel Members may be involved with the Fund Advisor in making grant recommendations. Panel Members do not, however, have the same advisory privileges relating to fund criteria and succession arrangements.
Management of investments
Donations to establish or contribute to Endowment Funds at HCF are held as capital and invested according to the powers set out in the Investment Policy as reviewed by the Board from time to time. The capital sum is invested to maintain and, if possible, increase the value whilst generating income for grant-making. Funds are pooled and allocated units within the overall portfolio and credited with their income. It is HCF’s policy not to spend capital unless instructed by the donor under the Fund Agreement.
The majority of new Endowment Funds are held as legally Expendable Endowment Funds which allows HCF flexibility to apply a Total Return Investment policy if appropriate as agreed by the Board.
Some funds administered by HCF are part of the Communities First Endowment Trust and are held as legally Permanent Endowment Funds. The Trust was established as part of a government endowment match challenge scheme which ran from February 2012 to October 2014. It was a condition of this scheme that matched donations were held in the Trust and invested by one body. HCF receives direct income from the Trust funds and distributes this in accordance with the terms of the scheme.
HCF in general does not undertake direct fundraising activities. However, occasionally it may be appropriate for donors or advisors to use fundraising approaches to grow the Named or Themed Funds. Any such fundraising must be approved by HCF as it will require the use of the Foundation’s name and charity number.
HCF can provide donors with information on how best to advertise their fundraising efforts to generate donations but it cannot manage the fundraising itself. HCF also cannot reimburse donors, advisors and any other parties for expenses relating to fundraising activities they undertake.
No other expenses incurred by donors or advisors can be paid from the fund’s revenue unless explicitly stated in the Fund Agreement.
All funds take a share of the overall costs of HCF carrying out its charitable activities. These include grant-making from funds, engagement of donors, developing new philanthropy and sharing expertise on issues effecting communities. The contribution made by each fund, the Management Fee, depends on the level of engagement the donor requires and the size of their fund.
The current annual fees are available separately. Irrespective of fund criteria or restrictions, the HCF applies Management Fees towards its operating costs and general purposes without further recourse to donors.
Interest earned on unallocated revenue in a fund also accrues to HCF to support costs.
Where a Named Fund has additional requirements above the normal support work done by HCF, there will usually be additional contributions made towards the direct costs of such further charitable activities.
The Board will review Management Fees from time to time and reserves the right to vary them if necessary.
HCF recommends that donors with Named Endowment Funds or their Fund Advisors determine arrangements for how they wish their fund to be managed following their death or when they are no longer willing or able to act. For corporate donors, this includes circumstances where the company ceases trading or is taken over.
Succession arrangements must be detailed in writing to HCF.
Requests to modify succession arrangements should be communicated to HCF in writing and a written acknowledgement confirming that the request has been approved will be issued.
Donors or Fund Advisors who wish HCF to continue to maintain a separate Named Fund may choose one of the following options:
- Designate another Themed Fund as the recipient of future revenue. HCF will honour such an arrangement by maintaining the separate Named Fund in perpetuity, but it retains the right to transfer the fund revenue to the closest equivalent Themed Fund should the one chosen be closed for any reason.
- Give discretion to HCF to continue awarding grants in line with the wishes and restrictions set out in the Fund Agreement.
- Give discretion to HCF to use future revenue from the fund to support HCF’s activities.
- Nominate one or more Successor Advisors, who must be aged over 18 at the time they succeed and willing to act in this capacity, to take over their advisory privileges.
Successor Advisors do not play a formal governance or managerial role and must accept that the original donation is irrevocable.
Successor Advisors may not recommend changes to the fund purposes unless permission is explicitly given by the founding donors or Fund Advisors in the Fund Agreement.
A Successor Advisor normally acts in the role for one generation. However, further generations of Successor Advisors can be nominated in the following circumstances:
- Where the first-generation Successor Advisor makes additional donations to the fund at least equal to the minimum amount set by the Board.
- Where the fund value is over a minimum amount set by the Board.
If, for any reason, nominated Successor Advisors are unable or unwilling to continue to act as Fund Advisors or if no succession arrangements are made to replace the current Fund Advisors, then discretion to continue awarding grants will be transferred to HCF under its delegated powers. The name of the Named Fund will be maintained and grants will be awarded in line with the original purpose and focus of the fund unless the original donor or existing Fund Advisor has specified differently in a written expression of wishes in relation to succession arrangements.
Fund inactivity & closure
If Fund Advisors or Successor Advisors do not make recommendations to HCF on the fund’s distribution and if there is no other arrangement in place, then the fund will be deemed inactive.
HCF will make all reasonable effort to re-establish contact with the Fund Advisors or Successor Advisors. If contact cannot be made after a year, the Board will agree distribution of resources in accordance with the fund criteria, unless otherwise agreed as part of the Fund Agreement.
Fund Advisors or Successor Advisors may themselves close an Endowment Fund by transferring its assets to another fund at HCF or any other agreement referred to in the Fund Agreement. Flow Through Funds may be closed by the donor or advisor, recommending grants of the remaining fund balance to support charitable organisations or activities, or by nominating that the balance be transferred to another Themed Fund.
Ultimate responsibility & resolution of disputes
Although it will always take account of the wishes of donors, the Board has the ultimate responsibility for awarding grants from all funds held by HCF, subject to any restrictions agreed with donors, and for the management of donated assets once given. In particular, the Board:
- Will not to agree to requests to spend capital from Endowment Funds unless there is specific provision to do so in the Fund Agreement.
- Reserves the right not to approve Fund Advisors, Panel Members and/or Successor Advisors’ recommendations if it determines that they are not charitable, would conflict with the Foundations stated policies or damage its reputation.
In the case that a dispute arises, it must be dealt with between the donor or its advisor and the CEO. In some circumstances, the matter may be referred to the Chair of the Board who will seek to resolve it through further discussion. However, this Policy takes precedence and ultimately HCF’s decision regarding any dispute is final.
Variation of restrictions
Donors accept that HCF must be flexible in meeting community needs in the future. As such, donors agree that the Board may at any time, at its sole discretion, amend any restrictions applying to the use of the fund if it believes that those restrictions:
- Cannot be satisfied or are not in accordance with the original wishes of the donor or the original spirit of the donor’s donation.
- Have come impractical, unsuitable, irrelevant, obsolete or undesirable.
The Board will not amend any restrictions applying to the use of funds if those amendments would allow the fund to be used for any purposes that are not charitable under the law of England and Wales.
Variations to this policy
HCF may vary the terms of this policy from time to time.