The Standard
A community foundation maintains a written record of the terms and conditions of each component fund and all such records must reference the variance power.
Underlying Rationale
Careful documentation of the terms and conditions under which a fund was created is essential so that the community foundation can ensure those funds are used in a manner that is consistent with the donor’s intent. At the same time, the variance power (the power to modify or remove a donor restriction under certain circumstances) gives the community foundation the flexibility it needs to ensure that those funds are available to serve the long-term interests of the community. Beyond simply providing flexibility, the variance power is also required under the community trust rules in order for a fund to be considered a component part of the community foundation rather than a separate private foundation. Finally, the variance power is necessary under financial accounting rules in order for assets to be considered unrestricted. Under these rules, it is essential that the variance power be granted to the community foundation not only in the governing documents, but also in the fund agreement.
Potential Outcomes
Insures that donors clearly understand that the governing board has the responsibility to amend the fund purpose in order to keep it current in light of changing conditions.
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