The following steps will apply to most Washington State foundations terminating in favor of a donor advised fund at the Greater Tacoma Community Foundation.    

Note:  A private foundation considering this transition should review their specific circumstances with their own legal counsel.    

1. Determine whether the foundation has current obligations regarding any of the following:   
          
         a) The 2% investment income excise tax or unrelated business income tax. (Foundations  normally    make quarterly estimated payments on these taxes.) 
          
         b) Outstanding grants that are still subject to expenditure responsibility.

         c) Fees for accountants, attorneys, investment managers, or other service providers. 

2. Transmit letter to Washington State Attorney General notifying the office of the proposed dissolution and plan of distribution at least 20 days before the Board authorizes dissolution and adopts the final plan of distribution.  

3. Transmit letter to Washington State Department of Revenue requesting tax clearance certificate.    

4. Satisfy all current obligations of the terminating foundation, and create a modest reserve for anticipated expenditures through the completion of the conversion process.  

5. Work with Greater Tacoma Community Foundation development staff to prepare the Fund agreement that will specify the terms of the donor advised fund. This agreement will reflect any purpose or endowment restrictions that will apply to the Fund as well as naming Fund advisors.  

6. File duplicate original articles of dissolution with Washington Secretary of State.  

7. File a final Form 990-PF with all the necessary information, and clearly mark the 990-PF as the “FINAL RETURN” in the header area on page 1 of the return. (This is the only step the foundation must take to notify the IRS of its termination.)  Attach a statement to Form 990-PF explaining the termination, listing names and addresses of all recipient’s of the foundation’s asset, and if there are any restrictions on said assets.  Also attach a certified copy of the final board resolution approving the termination.     

8. Once plan of distribution is approved by Washington State Attorney General and tax clearance certificate is received from Washington State Department of Revenue, in a final board meeting of the private foundation, vote to dissolve the non-profit corporation, as provided in the foundation’s bylaws.   

9. Transfer all of the private foundation’s assets, except the reserve funds mentioned above, to the donor advised fund. Typically this transfer simply takes the form of a grant to the newly created Fund at the Greater Tacoma Community Foundation.  

10. Communication to past grant recipients is of particular importance if the private foundation intends to significantly alter its grant making or grant application guidelines when it transitions to a donor advised fund.  Advance communication to grantees who may be impacted by the changes provides time for planning alternatives and helps to minimize potential disruption in the grantees’ programs or services.  

11. Archives: Financial and tax records should be kept for a minimum of seven years after their filing dates. Other business records, such as pension plans, Directors and Officers liability insurance contracts, personnel records, and property files should be kept for a minimum of ten years. Records such as board minutes, annual reports, contracts, bank statements, grant records, and financial reports can be kept on a discretionary basis for up to ten years.