Non Profits | Community Foundation Of Northeast Alabama

FUND SUMMARY

The Foundation provides nonprofit organizations the opportunity to establish and administer an endowment fund. Specifically, this group is comprised of 501(c)3 public charities; subsections of the state, such as schools, museums and libraries; religious institutions, private schools, civic groups and associations. Starting an Institutional Endowment Fund is simple, flexible and at no cost.

The assets will be part of the Foundation’s investment pool, which includes a diversified portfolio, professional money management and reduced management fees due to the combined financial strength of the Foundation. The investment policy is based on a long-term horizon with approximately 65 to 75% of the portfolio allocated in highly diversified equities. In addition, the Foundation handles all accounting, financial reporting, statement preparation, and audits. The fee for an Institutional Endowment is published in the separate Fee Policy located in the About Us/Financials section of this site.

The IRS requires that funds within any community foundation be assets of the community foundation. However, all gifts, contributions, and investment growth are posted directly to the organization’s account and are restricted for the charitable use of the agency, institution or organization, as defined in a fund agreement. Once the fund has reached a level to begin meaningful distributions, annual payments of approximately 5% of the fund’s value are made to the beneficiary organization.

Establishing or placing an existing endowment at the Foundation reassures your donors that their contributions are earmarked for a permanent purpose and will only be used for long-term financial support. Also, endowments gains added exposure by being listed as a fund of the Community Foundation and publicized in the Foundation’s annual report. In addition, donors can create sub-endowments to support specific programs, causes or services offered by an organization.

GUIDELINES & REQUIREMENTS

The following information is offered to assist in the deliberation process prior to establishing or the transferring an endowment to the Community Foundation.

1. Consider the long-term future of an endowment by addressing the following questions:

- Has the organization defined the clear intended use or the purpose for the endowment?

- How will this “case for giving” be defined and communicated to friends, donors or clients?

- Has every board member agreed to complete an immediate gift, pledge or planned gift to the endowment?

- Has the organization outlined a marketing plan or an ongoing vehicle to continue to fund or grow the endowment?

- Has the institution outlined a process to honor or thank donors?

If these steps have not been completed, then an institution should not embark on establishing an endowment with the Foundation.

2. The minimum amount required to establish an Institutional Endowment Fund is $10,000, or $5,000 with a commitment to increase the fund to $10,000 within three years. Additional contributions can be added to the fund at any time, in any amount.

3. All gifts to the fund are restricted for the organization’s charitable use only. While co-mingled for investment purposes, the endowment fund receives a separate quarterly statement directly from the Foundation’s investment manager.

4. The IRS requires that all community foundations include a “variance power” as part of all fund documents. This gives community foundations the authority to modify or redirect endowment funds that support organizations that terminate, fail to continue their stated charitable purpose(s) or lack sufficient financial support to sustain an endowment. Since the first community foundation was established in Cleveland, Ohio (1914), the variance power has been used twice.

5. The Federal Accounting and Standards Board requires that contributions to endowments be recorded based on the source of the donation. This means that any assets transferred or donated by the agency be recorded as a “liability” since they are “owned” by the agency. Other donations from the general public in support of the agency’s endowment are “restricted” since the donor believes that they are giving to a permanent endowment.

6. Distributions from the Institutional Endowment Fund to the agency are determined in the written fund agreement. It is recommended that the board of directors for the nonprofit organization establish endowment fund goals and the terms under which distributions from the endowment will take place.

7. The agency, organization or institution may not spend the principal at will, remove the funds from the Community Foundation of Northeast Alabama unilaterally or direct how the assets in the endowment fund are invested.

8. The Foundation is not obligated to engage in any direct fund raising on behalf of agencies placing their endowment funds at the Foundation. The Foundation can provide technical, donor development and marketing assistance based on the cost of these services.

9. A legal document is required to establish the Institutional Endowment Fund, which is provided by the Foundation at no cost.

	Establishing an Endowment FUND SUMMARY The Foundation provides nonprofit organizations the opportunity to establish and administer an endowment fund. Specifically, this group is comprised of 501(c)3 public charities; subsections of the state, such as schools, museums and libraries; religious institutions, private schools, civic groups and associations. Starting an Institutional Endowment Fund is simple, flexible and at no cost. The assets will be part of the Foundation’s investment pool, which includes a diversified portfolio, professional money management and reduced management fees due to the combined financial strength of the Foundation. The investment policy is based on a long-term horizon with approximately 65 to 75% of the portfolio allocated in highly diversified equities. In addition, the Foundation handles all accounting, financial reporting, statement preparation, and audits. The fee for an Institutional Endowment is published in the separate Fee Policy located in the About Us/Financials section of this site. The IRS requires that funds within any community foundation be assets of the community foundation. However, all gifts, contributions, and investment growth are posted directly to the organization’s account and are restricted for the charitable use of the agency, institution or organization, as defined in a fund agreement. Once the fund has reached a level to begin meaningful distributions, annual payments of approximately 5% of the fund’s value are made to the beneficiary organization. Establishing or placing an existing endowment at the Foundation reassures your donors that their contributions are earmarked for a permanent purpose and will only be used for long-term financial support. Also, endowments gains added exposure by being listed as a fund of the Community Foundation and publicized in the Foundation’s annual report. In addition, donors can create sub-endowments to support specific programs, causes or services offered by an organization. GUIDELINES & REQUIREMENTS The following information is offered to assist in the deliberation process prior to establishing or the transferring an endowment to the Community Foundation. 1. Consider the long-term future of an endowment by addressing the following questions: - Has the organization defined the clear intended use or the purpose for the endowment? - How will this “case for giving” be defined and communicated to friends, donors or clients? - Has every board member agreed to complete an immediate gift, pledge or planned gift to the endowment? - Has the organization outlined a marketing plan or an ongoing vehicle to continue to fund or grow the endowment? - Has the institution outlined a process to honor or thank donors? If these steps have not been completed, then an institution should not embark on establishing an endowment with the Foundation. 2. The minimum amount required to establish an Institutional Endowment Fund is $10,000, or $5,000 with a commitment to increase the fund to $10,000 within three years. Additional contributions can be added to the fund at any time, in any amount. 3. All gifts to the fund are restricted for the organization’s charitable use only. While co-mingled for investment purposes, the endowment fund receives a separate quarterly statement directly from the Foundation’s investment manager. 4. The IRS requires that all community foundations include a “variance power” as part of all fund documents. This gives community foundations the authority to modify or redirect endowment funds that support organizations that terminate, fail to continue their stated charitable purpose(s) or lack sufficient financial support to sustain an endowment. Since the first community foundation was established in Cleveland, Ohio (1914), the variance power has been used twice. 5. The Federal Accounting and Standards Board requires that contributions to endowments be recorded based on the source of the donation. This means that any assets transferred or donated by the agency be recorded as a “liability” since they are “owned” by the agency. Other donations from the general public in support of the agency’s endowment are “restricted” since the donor believes that they are giving to a permanent endowment. 6. Distributions from the Institutional Endowment Fund to the agency are determined in the written fund agreement. It is recommended that the board of directors for the nonprofit organization establish endowment fund goals and the terms under which distributions from the endowment will take place. 7. The agency, organization or institution may not spend the principal at will, remove the funds from the Community Foundation of Northeast Alabama unilaterally or direct how the assets in the endowment fund are invested. 8. The Foundation is not obligated to engage in any direct fund raising on behalf of agencies placing their endowment funds at the Foundation. The Foundation can provide technical, donor development and marketing assistance based on the cost of these services. 9. A legal document is required to establish the Institutional Endowment Fund, which is provided by the Foundation at no cost.
Upcoming Events View All Events Due Dates View All Events Contact Information Community Foundation of Northeast Alabama P.O. Box 1826 Anniston, AL 36202-1826 1130 Quintard Ave, Ste 100 Anniston, AL 36201 256.231.5160 256.231.5161 Fax