A charitable trust is a sturdy vehicle to protect your donor intent. Once your organizational structure and funding guidelines are in place with a trust, they can only be amended by court order unless a donor allows for such changes in the trust instrument. While trusts offer some of the best protection against breaches of donor intent, they are not without risks. Below we describe several keys to protecting your intent through a trust.
• Be certain in your mission: Keep in mind that the same rigidity that may serve to protect your donor intent will also prevent you from amending the trust instrument without legal action. Unless you are committed irrevocably to certain philanthropic goals, don’t opt for a trust vehicle.
• Thoroughly vet financial institutions: In choosing a financial institution to hold your trust, don’t assume that the close relationships you currently enjoy for your personal or business banking will last through possible mergers and consolidation.
• Put it in writing: Make clear in writing your philanthropic intentions, clarifying your values, your charitable purpose, and your operating principles (including spending policy and timeframe).
• Correctly structure your governance: Design a governance structure in which the trustees you select hold majority control and establish a succession process with criteria tied to your donor intent.
• Know your people: Work directly with your initial trustees for a period of time so that they better understand your values and principles and your preferred strategies for evaluating grantees.
• Provide alternatives: Don’t leave the mission of your trust to chance. Avoid potential court challenges by specifying alternative funding options for objectives that may be impossible to pursue in the future.
• Know your jurisdiction’s laws: Take the time to understand the charitable laws and judicial treatment of trusts in the state in which your trust will operate.
Guidelines for safeguarding your intent with a charitable trust
The risks of a charitable trust: The Jackson Family Trust
Seven keys to protecting your intent in a charitable trust