Minor Successors, or What to Do When Your New Fund Adviser Isn’t Old Enough to Vote
At the Community Foundation of Greater Des Moines, we’ve been talking about how to deal with minor successors being named on a fund. We started looking into it after reading a discussion about it on the Philanthropy Exchange. It’s a tricky situation: If your fund adviser is underage, they may not be in a position to correctly advise.
In the Philanthropy Exchange chat, colleagues at other community foundations told readers what they do. One community foundation requires all primary and successor advisers to be at least 18 years old. Another recommends that until the minor successor adviser turns 18, the original donor designates a spendable percentage that will be granted towards specific charities and causes, or a percentage of the spendable will be directed into a community pool.
Although the Exchange was a helpful starting point, we were curious what the Council’s recommendation was. We contacted Brad Ward, the Director of Community Philanthropy, to ask for his thoughts.
Brad emphasized the need for flexible guideposts rather than strict guidelines: If possible, one should ask questions while setting up the fund to get the original fund adviser’s view on having minor successors. After one does this, there are two ideal options that community foundations typically use. The first, as noted above: The adviser can designate a percentage of the spendable to go towards specific charities and causes they identify. The other: A percentage of the spendable can be directed into a community pool.
Aside from providing his recommendations, Brad also discussed a number of items that community foundations should consider when constructing and implementing a procedure to manage the naming of minor successors. The first item that he addressed was the legal consideration. Brad posed the question: Should the community foundation adhere to state law in relation to minors, or does it use its own discretion to decide when the successor is no longer a minor and is therefore ready to advise the fund? The community foundation needs to be clear on who they consider to be a minor and if that falls in line with state law or not.
Brad also mentioned that a community foundation may want to consider requiring a minimum fund amount in order for donors to have successors named on the fund, or those funds must be endowed for future successor advising rights. He explained that this could help ensure there will be enough left for the successors to have meaningful grant funds to work with. There was also the consideration of how long the line of succession could be. Will successors include grandchildren and great-grandchildren of the original adviser, or will the line of succession end after the first set of successors? If additional generations are considered, new minimums for giving and fund balances should be approached with the original donors and future advisers.
We took what we learned from the Council – both through the Exchange and through Brad – and used it to improve our discussion. And soon, we’ll have a procedure in place to will guide us if this situation arises in our work.
