WHAT WE OFFER

ORGANIZATION ENDOWMENT FUNDS

CAPITAL CAMPAIGNS

RESOURCES

Learn more:
Glossary
 

FREQUENTLY ASKED QUESTIONS

1. How does my organization start a fund?
2. What are the available dollars from our fund?
3. How often will we receive statements for the fund?
4. What fees are charged?
5. What happens if our organization closes someday?
6. What is the legal relationship between the Foundation and our organization?
7. How is our fund treated on our organization’s books?
8. Can the Foundation use our assets for any other purpose?
9. Will the Foundation help us raise endowment funds?
10. Bottom line, what is the best reason to start an endowment at the Community Foundation?

1. How does my organization start a fund?
   Contact us. We will review your objectives and prepare, for your Board’s approval, a Fund Agreement confirming the intent and investment of your fund. Once your asset is transferred to the Community Foundation, your endowment fund is established. (back to top)
    
2. What are the available dollars from our fund?
   An endowment fund is an investment for the future. Our goal is to increase dollars available to your organization while ensuring that your fund’s balance grows over time. Currently, your organization may annually receive up to five percent of your fund, based on a three-year rolling average of your fund’s year-end balances. You are not required to make annual distributions from your fund and may choose, instead, to reinvest the earnings. A five-percent spending policy is standard practice among foundations and nonprofit endowments. (back to top)
    
   
3. How often will we receive statements for the fund?
   You will receive quarterly Fund Statements detailing your fund’s activities including investment performance, service and investment fees, and grants made to your organization. (back to top)
    
4. What fees are charged?
   The Community Foundation assesses a one percent fee which helps defray the administrative costs associated with managing the fund. In addition, a 60 basis point fee is charged to cover the costs of our investment program. Charging an investment fee is standard procedure for community foundations. There are no additional “hidden” costs. (back to top)
    
5. What happens if our organization closes someday?
   The law requires that the Foundation, through its variance power, finds the most similar and appropriate use for the fund. This is specified in the Fund Agreement. (back to top)
    
6. What is the legal relationship between the Foundation and our organization? According to law, when a nonprofit transfers assets to the Foundation, it has made an irrevocable gift. The component fund is wholly-owned and must be managed, in perpetuity, by the Foundation. (back to top)
    
7. How is our fund treated on our organization’s books?
   The fund would be considered an asset of the Foundation and covered by our annual audit. Donations from your organization’s own accounts are treated as liabilities due to the reciprocal nature of the transaction. Your organization should consult with your accountant to determine how best to identify these transactions on your books. (back to top)
    
8. Can the Foundation use our assets for any other purpose?
   Absolutely not. The fund exists to permanently benefit your organization as long as your organization exists. (back to top)
    
9. Will the Foundation help us raise endowment funds?
   While we cannot directly ask donors to contribute to your organization’s fund, we can promote the fund on our website, in the Annual Report, and through other marketing materials when appropriate. Fundraising events create liability, accounting, and deductibility issues which the Foundation must address with you in advance if the fund name and/or Foundation’s name or logo are used. (back to top)
    
10. Bottom line, what is the best reason to start an endowment at the Community Foundation?
    While nonprofit organizations fully appreciate the importance of an endowment fund, most delay building one because they simply lack staff resources to devote to long-term fundraising. As a result, nonprofits do not build a steady stream of permanent support, and they miss the opportunity to ask their likely endowment prospects to contribute. The Community Foundation offers a “turn-key solution,” providing experience and community credibility in endowment management. (back to top)