I'm sorry to hear about your sister-in-law. People who agree to raise the children of others are selfless heroes in my book...you've clearly given those kids a gift in what must be a horrific time in their lives.

However, I do want to caution: In the United States, a 501(c)(3) charity cannot exist for the benefit of one or two people. You say you've set up an endowment fund to benefit these kids--endowment funds typically are held by non-profits. You've probably set up a trust fund, and unlike a charitable donation, there are no tax benefits to the donors when they give to a trust fund.

(Obviously, you should always view with skepticism things you read on the internet. I'm not an accountant or tax lawyer, so before anyone decides they can't take itemize a donation to one organization or another, they should check with a qualified tax professional.)