Frequently Asked Questions

Potential donors and their advisors generally ask a number of similar questions about establishing and operating a fund at The San Francisco Foundation.  We have outlined these issues and responses to them.

However, the list isn’t exhaustive.  If you have additional questions or would like to discuss any of the issues below, we would welcome hearing from you.  Please direct any questions about establishing funds to Donor Services professionals at 415.733.8500 or email donorservices@sff.org.

Donor Advised Funds

How do I open a Donor Advised Fund?
How do I choose a name for my fund?

Who can oversee the fund?

What are the guidelines for making a grant from a Donor Advised Fund?
How do I recommend a grant?
How are funds invested?

Program-Related Investment Fund

About the Program
The Investments
Participating in the Fund

How do I open a Donor Advised Fund?

You can initiate the process by completing and returning the ‘Donor Advised Fund Agreement’. You can create a fund with cash, stocks, and other kinds of assets. The minimum initial amount needed to establish a fund is $10,000. Your banker, broker, or financial advisor may transfer assets directly to the Foundation; simply ask them to get in touch with us.

You will receive a charitable deduction for the full amount of the gift in the year of the contribution; additional contributions can be made at any time and in any amount. Others may donate to your fund to mark a special occasion, or to support a special project you have in mind.

To request a donor brochure and fund agreement form, contact our Donor Services professionals at 415.733.8500 or email donorservices@sff.org.

How do I choose a name for my fund?

Many donors use their family name in naming their fund, which will appear in Foundation publications such as our annual report. Another option is to select a different name, such as the “Main Street Fund,” to protect your confidentiality. Complete anonymity is of course an option for those who do not wish their names or fund name to be revealed or listed publicly.

Who can oversee the fund?

Throughout your lifetime, you advise on the grantmaking activities of your fund. You may choose to designate your spouse or partner, your child, other family members, or a friend as an advisor to your fund. And you may extend the life of your fund into future generations by providing the Foundation with names of Successor Advisors.

What are the guidelines for making a grant from a Donor Advised Fund?

We welcome and encourage grant recommendations to established nonprofit 501(c)(3) organizations. The Foundation verifies the nonprofit status and charitable mission of the recommended organization. We request that each donor recommend grants in amounts of $250 or more. While the Foundation’s area of expertise is in the Bay Area, you may recommend grants anywhere in the United States and to some nonprofits abroad.

Your status as a donor via The San Francisco Foundation enables you to receive maximum tax benefits because you have relinquished legal control of your charitable gift. Therefore, we cannot fulfill any pledges you may have made. Similarly, since you will have already received a full deduction for the amount contributed to your fund, donor advised funds cannot be used for social events such as dinners or for memberships which include any goods or services. Grants from your fund are used exclusively for charitable purposes.

How do I recommend a grant?

Once you have established a fund, you may send us your gift-giving recommendations in writing, via fax or online through our website or Donor Center. You may want to use our Grant Recommendation Form for this purpose. It allows you to tell us the name, address, telephone number and contact person at the organization you wish to support, the amount of your proposed gift, and its purpose – general support or a specific program. The form also allows you to designate a particular grant as anonymous.

Donors recommend grants that provide general support to nonprofit organizations, or more specifically, to support a particular project, for a scholarship fund or class gift, equipment, or other purposes. Grants may be made in honor or memory of someone you wish to acknowledge.

Grant checks are accompanied by a transmittal letter identifying the donor advised fund by name (unless anonymity has been specified). You will receive a copy of this letter as well.

Our professional grantmaking staff is recognized as among the best in this specialized field. While many donors are already well informed about the causes and organizations they wish to support, others avail themselves of our expertise in identifying priority needs and worthy organizations in our communities. We can help you design targeted giving plans and assist you in maximizing the benefits of your philanthropy. Foundation donors receive our newsletters and annual reports, and are invited to Foundation forums on timely issues and social challenges.

How are funds invested?

The San Francisco Foundation’s funds are professionally managed and overseen by the Investment Committee and the Board of Trustees. Annual Investment and Audit reports are available upon request.

Our overall investment strategy is to provide prudent management of invested capital while producing a reasonable income for grantmaking and fund growth.

You will receive quarterly statements of your fund’s activity, mailed 30 days after each quarter’s close. You may also confidentially access your fund’s monthly statement online.

Program-Related Investment Fund

About the Program

What is Program Related Investing?

Program Related Investing, or PRI, is a type of investing whose primary purpose is to create positive social or environmental impact by providing important community projects access to a unique form of low cost, recyclable capital. Program Related Investing is part of a larger field of impact investing, which spans a broad range of themes, from affordable housing, to small business financing, to clean energy, to name just a few. When government and philanthropic grants alone are insufficient to meet community needs, Program Related Investing can provide nonprofits and small businesses with the low-cost capital they need to innovate, grow, and create lasting social change. More than a one-time grant, these funds help organizations build credit, and as loans are repaid, new investments are made back into the community. At The San Francisco Foundation, we specifically invest in projects that lack access to traditional sources of capital, where our investment can play a catalytic role in bringing other investors to the table.

Why is The San Francisco Foundation doing this?

There is a gap between the need for capital for important community projects and what the private market will provide. Impact investing offers the Foundation and its donors the opportunity to fill this gap. By conducting due diligence on opportunities that the private market would not consider, philanthropic dollars can pave the way for other investors to come to the table. The San Francisco Foundation’s Program Related Investment Fund is designed to achieve not only social and environmental returns, but to galvanize other capital to meet the needs of our region.

How does it work?

The San Francisco Foundation’s Program Related Investment Fund utilizes charitable assets from our endowment and participating donor advised funds to provide low-interest loans, loan guarantees, and other financing arrangements to nonprofits and social enterprises in the region, primarily through experienced intermediaries. As borrowers repay their loans to the PRI fund, money is reinvested in new impact investments. At the end of five years, money is returned to participating donor advised funds, where it is then available for grantmaking.

How are Program Related Investments different than grants?

Unlike grants, when we make Program Related Investments, we expect to get the capital back. This enables us to recycle the capital into other community projects. In addition, impact investments are typically much larger than grants, and can therefore achieve results at greater scale.

Does the Foundation have experience with this kind of investment?

Yes. The Foundation’s Board of Trustees authorized a loan guarantee program in 1989. Many successful projects have utilized the loan program, including: La Clínica de la Raza, Museum of Children’s Art, and Preservation Park. In 2009, the Foundation expanded the program, committing $5 million from our endowment to the Program Related Investment Fund and shifting the focus from loan guarantees to direct loans. In addition to experience, The San Francisco Foundation has the deep community knowledge, as well as the relationships and credibility among Bay Area donors and leaders, required to make a program like this successful.

Who else makes Program Related Investments?

Increasingly foundations of all types and sizes are beginning to make PRIs using their discretionary grant funds, but the field of PRI is still relatively new, with a large percentage of the investments taking place overseas. The Foundation is part of a growing movement to make PRI accessible to donors at the local level. We are among a small handful of community foundations offering a PRI option to donor advised fund holders.

The Investments

How does the Foundation find deals to invest in? What criteria are used to select deals?

The Foundation leverages its deep roots in the community and relationships with grantees and intermediaries to find potential investment opportunities. The Foundation prefers to work with experienced intermediaries, organizations that assemble capital in a particular sector and have the expertise to structure the best deals. The Foundation looks for deals that benefit low and moderate income residents while advancing our mission in the areas of community development, the environment, community health, education, and the arts. We use three basic criteria when selecting deals: (1) Impact – will the project create significant and measurable results in the region? (2) Organizational capacity – does the borrower have the necessary management and financial capacity? (3) Financial health – does the borrower have realistic success targets and means of repayment? Borrowers must have either a prior track record of repaying loans or other indicators of successful financial performance. We prioritize opportunities where the Foundation’s investment can play a catalytic role in leveraging other capital.

Who monitors the deals?

Monitoring occurs at three levels: Staff, the PRI Committee of the Board, and the full Board of Trustees. Borrowers are required to submit quarterly unaudited financial statements, annual audited financial statements, and an annual report on the social or environmental outcomes.

How does the Foundation measure impact?

The Foundation tracks financial performance as well as social and environmental returns, e.g., the number of new jobs created, affordable housing units built or rehabilitated, or energy savings generated.

Participating in the Fund

How can donor advisors participate?

Donor advised fund holders may allocate a portion of their donor advised fund assets to the Program Related Investment Fund, much like they do with the Foundation’s traditional investment pools. Assets allocated to the PRI Fund will not be immediately available for grant making. To learn more about opening a donor advised fund, please visit our website or contact Philanthropic Services at 415-733-8500.

What are the terms?

The minimum investment is $250,000 for a commitment period of five years. This minimum and commitment period reflect the community’s need for large, long-term, low-interest loans that can create large-scale environmental and social impact and the Foundation’s capacity to engage donor investors.

What are the fees?

The San Francisco Foundation, through its endowment and the modest returns generated by the loans, covers all of the costs of operating the Program Related Investment Fund. As a result, 100% of the capital provided by participating donor advised funds goes directly to the borrowers for their high impact community projects. There are no fees.

How will the funds be invested?

Utilizing the criteria described above in deal selection, potential investments include loans and loan guarantees to nonprofit entities or social enterprises, insured mission deposits in local community banks, and credit unions, and equity investments in for-profit affiliates of nonprofit entities.

Can donors make grants with the money that is invested in the Fund?

Investments in the Fund require a five year commitment. During this time, donors may make grants with their remaining donor advised fund assets, but not with the portion committed to the Program Related Investment Fund. At the end of the five year commitment period, capital net of gains and losses will be returned to the participating donor advised funds, where it is then available for grantmaking or new impact investments.

What is the expected return on investment?

Our primary purpose is to generate social and environmental returns consistent with our mission while galvanizing other capital to meet the needs of our region. The Foundation tracks and measures our progress toward all three goals. In addition, the Foundation targets a gross return of 3% from borrowers, which is used toward the costs of the PRI program. While it may be possible to generate a higher market rate of return, this is not the Foundation’s goal or expectation; rather we aim to provide nonprofits and small businesses access to the low-cost capital they need to innovate, grow, and create social change. Should the fund generate returns over and above the operational costs of the program, those returns will be shared pro rata among participating donor advised funds and the Foundation on an annual basis.

What are the risks?

As with any investment, there is always the risk of loss. Our careful due diligence and close partnerships with proven intermediaries mitigates these risks. We have had no defaults to date, however the Foundation recognizes that this is a possibility. It is our policy to carefully monitor delinquent payments, to communicate immediately with the borrowers and, if necessary, to revise payment schedules to avoid default situations. Staff reports to the PRI Committee on all late payments as a part of regular quarterly portfolio reports. If a borrower should default, the Foundation and PRI Committee will determine whether there is appropriate recourse from the borrower or any of its guarantors. Any losses to the fund will be shared pro rata among all investors, including the Foundation, based on invested capital at the time of the loss. At the end of the five year commitment period, the Foundation will return capital net of gains and losses to each participating donor advised fund.

How will donors know about new deals and impact?

The San Francisco Foundation will be in regular communication with all participating donor investors to share news about new deals as well as impact. Donors will receive written reports and be invited to an annual briefing.