Posts Tagged ‘endowment funds’

A community can die for the lack of a helping hand; however, it can survive hard times if resources are laid aside to maintain continuity.  You can help a community long into the future by supporting an endowed trust fund held by your local community foundation.  Through good times and bad, a community endowed trust fund ensures the community will not dry up and blow in the wind.

Asking The Big Question

An endowed trust fund asks every citizen, not just the obviously prosperous community leaders, “Will you consider adding a bequest in your will naming your community fund?”  The question is simple, polite, and appropriate when presented to everyone through community promotion.

Unifying The Community

Every community has several charitable needs such as the volunteer fire company, local ambulance service, community park, community center, public library, school athletics, and local food bank.  A community endowed trust fund asks you to give to support all of these without disrupting long-standing loyalties to individual charities.  It is a unique opportunity to add to the whole community.

Building A Reserve

Holding to a budget is a good thing but it does not protect from exceptionally long events such as a decline in population.  Like every individual, a community needs to build a reserve against rough times.  Timber, gas, coal, farming, and manufacturing will rise or fall eventually, but community needs remain.  A contingency fund can only be used once; it is not a long-term resource.

Ensuring Integrity

Placing an endowed trust fund with a community foundation means it will never leave the community with a bank merger, it will never become the private fund of one official or click, it will always be professionally managed, its records remain open to any citizen, and its safety is guarded by a community board, a local fund committee, and state supervision.

Avoiding Crisis Depletion

When faced with a desperate need for immediate funds, a local council or board will always turn to the easiest source, and the easiest source is  funds under their authority.  The problem is no trust account is protected from a raid during a crisis unless it has legally independent trustees protecting it as an endowment.  Nobody can ever raid a community foundation endowed trust fund–those endowments are held in perpetuity.

Expecting The Unexpected

New problems and charitable needs arise as some familiar needs receded.  No one can predict what future needs will be; but you can prepare your community by supporting a fund open to appeals based on contemporary needs.

Stimulating Good Deeds

When you see within your community the good work resulting from an endowed trust fund, you are often stimulated in other ways to reach out and help.  You see that good deeds are noticed and respected by your community.  You feel pride in being where you are.

Teaching By Example

Younger siblings, children, and grandchildren know your values by your actions.  They learn responsibilities and loyalties by modeling after you.  Your giving now can live on in memory and influence way beyond your lifetime.

Levelling The Giving

Giving to one fund means strength is gained through the number of participants rather than individual amounts.  Large and small donations help in the same way by working for a common cause.  Every gift improves the whole.

Memorializing Lives

Giving in memory of a loved one or family reminds the community to not forget how those lives were lived.  The memorial is not an unread plaque or a gravestone turned into a public marker, but a continually repeated list of honor kept alive through renewal and community appreciation.

Welcoming Home

You come home to visit and look after affairs needing your attention.  When your gift and your family name are tied to the community, the years don’t matter.  You have reason to return home.  A community endowed trust fund is a welcome home sign imprinted within each person who has given and each person whose family is memorialized.  Charles Marlin

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21.  Mr?Man, what are component funds?

Mr?Man can not believe his eyes.  Component funds is the very topic he wanted to write about.  Component funds are individual memorial funds that together form a larger field-of-interest or restricted fund.  The combined funds are usually referred to as a trust or an endowment.  One fund contract sets the purpose, fund committee, and rules for all the present components as well as new ones added in the future.

22.  Don’t multiple names of the component funds and the overall trust name cause confusion?

No, not at all.  The name of the trust becomes the brand name used to build public awareness and loyalty from one year to the next.  The fund contract sets rules on low and when the memorial component names are used so that any news announcement or program for an event will list all the current memorial component names.  When new components are added, the list grows.

23.  What are the advantages of a trust with memorial component funds?

Mr?Man has already mentioned a trust name works best as a brand name for community loyalty.  The brand name should be one that is not easily forgotten. 

Another advantage is the combined effort avoids the minimum administrative fee that would adversely affect new or small memorial funds.  Only one administrative fee would be charged for the trust.

Each memorial fund is honored equally.

A small fund does not carry the full cost of a project, but shares with other funds, contributing as each is able.

Starting and growing a new memorial fund is easy and allows family and friends to build the fund gradually.

Because the memorial funds are always listed in a uniform fashion, a family or nonprofit can create a new memorial without feeling they have abandoned their earlier memorial.  Multiple memorials are encouraged.

24.  Can you outline a good example?

Yes.  Suppose a group of friends wanted to create a memorial for a woman who believed strongly in the role of women in public affairs and in public speaking, but they were concerned they could not on their own raise enough money to make an endowed fund effective.

The solution is a field-of-interest fund supporting important women speakers in their community.  The endowment is branded Women Speak Trust.  With this brand name there is an energy flow from the first word to the last word, from the last to the first, and a flow in both directions from the middle word.  It is an easy name to remember.

Component funds may go by a name only, as for example, Lillian Gish Memorial Fund, or Michelle Obama Fund; or by a name, banner, and photograph.  For example:

                                            Lillian Gish  –Actress, Blacklisted Activist

                   Michelle Obama  —Wife, Mother, Advocate for Health Children

The list is never completed.  Nor is there a rule against honoring a living woman.  Such a trust would be open to all groups and families.  Charles Marlin

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There are two steps to making a bequest, first one is big but the second one is just one or two regular sized steps  It is easy and refreshing.  You will be proud of yourself after you complete the bequest.

Here is the big step.  Please consider a bequest or planned gift to benefit your home community through Clarion County Community Foundation.  Clarion County is your home and part of your identity.  It may have been your family’s residence for generations.  This is the place that cares about you.  Please let them remember you in the most favorable way possible.

When you make a decision that yes you want to do something for your home community, the next regular sized step is filling in the blanks.  This is not difficult.

Make certain your lawyer uses the full legal name, tax number, and location of the community foundation.  Without revealing your name the lawyer can ask for the tax number by calling our Executive Director Steve Kosak at (814) 677-5085.  Because CCCF is an affiliate of Bridge Builders Community Foundations, and the tax number in under the BBCF name, when naming the community foundation use the full name Clarion County Community Foundation/Bridge Builders Community Foundations, tax number _________, with the current business address of PO Box 374, 213 Seneca Street, Oil City PA 16301.

Next you identify what you want to give to the community foundation, either a set amount, a specific property, a percentage of your total estate, or the residual after all other distributions are made.  Your lawyer will word this for you.

After deciding what you want to give to the community foundation you select the way you want your gift to serve.  CCCF has three general funds, called field-of-interest funds by the professionals, you may decide to support.  They are 1. CCCF Operating Support Fund, 2. Rare Gift Fund, and 3. Unrestricted Grants Fund.

Or you may choose to create an endowment fund for one or more nonprofits working in the county.  Ask your lawyer to check on their legal name and address.

Or you may create a scholarship fund for one or all the high schools in Clarion County.  You may list the criteria for the scholarships as well as the membership of the scholarship committee who review applications.

Or you may strike out on your own with a new fund tailored to charitable needs you want to support.  There are always needs in the community for which there are no endowment funds.  What you do may inspire others to follow with their support.  There is always a frontier in front of us if we bother to look.

Whatever your choice, your bequest can become a memorial named as you wish.

If you select to support a current nonprofit or a charitable activity that may change in the next one or two hundred years, you should discuss with your lawyer and our Executive Director the wording of a sunset provision.  Typically a sunset provision will read: If the nonprofit or its successor ceases to exist or reside in Clarion County, the fund shall become an unrestricted grants fund.

After the will is completed, signed, and you have had time to reflect, you may want to discuss with our Executive Director the creation of a fund contract to set out all the details you want.  This contract will be closely reviewed by the CCCF Board of Directors and the BBCF Board of Trustees.  When everyone is in agreement and feel the contract can function in perpetuity, you and the board chairpersons sign the legal document.  The contract will not become public or activated until needed.  Preparing a fund contract in advance is a wise step.  Charles Marlin

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In our private thoughts we often think of ourselves as achievers, more successful than others because we are smarter, more alert, and more willing to make the right choices, more willing to study and work for future gains.  We know that what we have achieved is largely if not wholly to our own credit.  Hog pucky.  If you didn’t have a farm youth, I can tell you that hog pucky can penetrate steel coming out the other side without diminish in odor.

We are able to make something of ourselves because we are surrounded and nurtured by family, neighborhood, church, school, tradition, and nation, the total community.  Opportunities are made available for us.  Encouragement is given to everyone.  Destructive events are prevented from blocking our education and our progress.  If we miss the first time or are slow to learn we are not passed over.  Instead we are given a chance again and again, formally and informally.

One opportunity sets us up to take advantage of the next opportunity, so that we gradually build and mature into a successful happy person.  Yes, it took effort on our part, but that effort was and is even now backed by our community.

Now the question comes, who backs up the community?  Who safe guards those resources used to make us who we are?  The answers would fill a hefty book, and I am sure it would be futile to priortize to identify which are more or less important.  Our government, schools, church, family, heritage, ah the list goes on.  All are important.

An important guardian you may have missed is your community foundation.  By using your community foundation you can select those nurturing forces that lifted and supported you as you were growing up and later as you succeeded as a working adult, and give them an endowment to ensure they are there to help others for as long as there is a need.

Not every community is fortunate to prosper and remain a good place to live.  Economic factors can wreck havoc.  Cultural heritage can dissipate.  Populations can age and lose energy.  Your investment in an endowment can be a bedrock used by future generations to renew the community  and nuture the people within it.  Personal and community wealth can come and go but community foundation wealth stays where it is grounded.  It is always at home and at work.

Supporting the source of your prosperity is a solid way to acknowledge your achievements and to show respect for your past.  You honor your community and in doing so honor yourself when you endow the sustainability of your community.  The community foundation is your tool.  Charles Marlin

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Good friends are an investment of time, understanding, interaction, satisfaction, and a readiness to help when asked.  The friends we have kept over a long period of time are the very best, and this is no different when we think of our favorite charities.  Loyality to a charity you have supported for years gives stability that governmental programs can not.

You can ensure that support for unlimited generations by creating an endowment fund with the Clarion County Community Foundation dedicated to support your specific nonprofit charity.  For example, you want to establish a fund for Families In Transition, a nonprofit located in Clarion County working with families at risk such as families needing parental training, adjustments to single parent status, families struggling with disabilities, and families in conflict with the law or school.

First, you name the fund either with your name or someone you want to memorialize or you use the name of the nonprofit.  For example, you decide the name will be John And Nora Mohan Fund For Families In Transition.

Second, you state the purpose of the fund.  For example, the purpose shall be to support the work of Families In Transition of Clarion County.  The purpose is simple, direct, and not subject to interpretation.

Third, you write a sunset provision in case the nonprofit is no longer active in Clarion County so that the fund can be redirected according to your wishes.  For example, if Families In Transition or its successor ceases to exist or reside in Clarion County, the fund shall become part of the Unrestricted Grants Fund of the  CCCF.  Now you know that regardless of what happens to the nonprofit sector in the county, your fund will still have a job to do and it is one you approve of.

Fourth, you set a goal and schedule of when and how much you are going to contribute to the fund.  You can activate the fund at $5,000, but of course the larger the fund is at activation the better for its long term growth.  The administrative fee will be 0.70% annually or 0.0417% of the monthly asset value.  The fee is assessed at 0.0417% per month and is based upon the market value at the end of the previous month.  The current rate of payout for grants is set each year by the Bridge Builders Community Foundations Board of Trustees, and is usually in the 4.0 to 4.75% range.

The process is sinple and easy to complete.  When all parties sign the fund contract you have a legal document backed by the integrity of the CCCF under the jurisdiction of the courts of the Commonwealth.  No financial emergency at the nonprofit can affect the fund, and no new agenda can be imposed on it.  It is in perpetuity.  If you want to talk, contact Charles Marlin Board President at (814) 797-2233, or Steve Kosak Executive Director at (814) 677-5085.  Charles Marlin

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The Heartland Center for Leadership Development of Lincoln NE has developed a list and publication Clues to Rural Community Survival.  You can find the list on the Wyoming Community Foundation web page www.wycf.org and if you want to spring for the book you can get it at www.heartlandcenter.info 

It is a heavy duty list that begins with “1. Evidence of community pride,” and ends with “20. Conviction that, in the long run, you have to do it yourself.”  Well, amen.  When you check the list off according to how you see yourself and your willingness to participate if the resources and opportunities are made available, then your score may well be up there close to twenty.  If you check off as other community leaders perceive you, your score may not be nearly so high.

I want to concentrate on only the last clue –number twenty.  Everyone thinks it would be wonderful if new scholarships, new unrestricted funds, a fund for veterans and their families, a fund for food and nutrition, a fund for parenting, and a fund for county libraries would be endowed by someone with the money to spare.  Get real.  There is no someone, there is only you.

Waiting for a stranger to do the good deed means that neither you nor anyone else will ever see the good deed done.  The good deed hides within you and depends upon you to grow it into something wonderful.  The good deed is not dependent upon big numbers nor does it have anything to do with massive resources.  It has all to do with you deciding you will help, you will step forward because the time is as right as it is ever going to be.  It has to do with your belief that your kindness and generosity will be meet in someway by kindness and generosity in others.  Even if that does not happen and you stand alone, you know you stand in the right place and at the right time.  What more can you ask of yourself?

The community foundation movement would never have grown from its single beginning in 1914 to a world wide blanket if it had not been for one good person after another good person deciding to take action.  General goodwill is nothing.  Single, dedicated action is everything.  No one can predict the future, but a person can certainly influence how the future evolves.  When your good deed continues to work decade after decade into centuries, you have made possible your own renewal in that good deed.

The procedure is simple.  Call me Charles Marlin Board President of Clarion County Community Foundation at (814) 797-2233, or call Steve Kosak Executive Director of Bridge Builders Community Foundations at (814) 677-5085.  Charles Marlin

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     Details may differ between the Clarion County Community Foundation and other community foundations but these ten advantages of an endowment fund placed with a community foundation remain across the Commonwealth and the nation.  Trust accounts with a brokerage or mutual funds company are good but do not have all these advantages.  Job cuts or promotions may change who you talk to.  A family or private foundation creates administrative and legal burdens as well as costs that cut into the returns available for grants.  Good times and bad times, we are the best place to be.  Since 1914 community foundations have performed with open books and outstanding results.  From product warrenties to product recalls, you will know us in and out before you commit.  There is no 800 number to call or phone menue to select from.  With us you have to talk directly with the Executive Director or Board President.

     1. Professional Foundation Management  The fund is handled by experienced staff who have no other responsibilities to divert their attention.  Access to Foundation accounts is limited to select staff all of whom are insured.  There are no deadlines or forms for the donors or beneficiary nonprofit staff and board to worry about.  State and Federal compliance is taken care of by the Foundation.  All records are accessible to donors, nonprofit staff, board, and concerned individuals.

     2. Local Board Jurisdiction  The governing boards of Bridge Builders Community Foundations and the CCCF are composed of local citizens who have studied the details of your fund and are acquainted with the people involved with the grants from the fund.  There are no absentee officials to contend with.  Again, records are open to public review.  Donors may be elected to serve on either board.

     3.  Opportune Donor And Nonprofit Involvement  If the individual donor or donor family want to remain involved in selecting the nonprofits to receive grants they may do so.  As the donors make additional contributions and want to add to the designated nonprofit recipients they may do so.  If donors want to participate as members of the grant selection committee they may do so.  They are not, however, burdened with the administrative and record keeping tasks that must be perpetually maintained.

     4. Perpetual Efficacy  The donor is assured by legal contract that their purpose and instructions will be followed.  Continual reference will be made to the original instructions; however, with time a problem may develop because society has changed so radically that the original instructions clearly no longer work.  The original beneficiaries may no longer exist.  The original purpose is lost.  In the early history of community foundations this problem was called “The Dead Hand.”

     Community foundations now have a cautious public process in which the board clarifies a new purpose as closely allied to the original purpose as is efficient.  If such a purpose can not be found, then the problem is referred to the appropriate court for resolution.

     5. Private Client Investment  Regardless of the size of the new endowment fund it becomes part of a large diversifed investment pool managed by private client investment divisions of large banks.  Without the pooling of resources a small fund would never have access to this kind of management.  The investment policy is to match or exceed two published benchmark indices, one in stocks and one in bonds.

     6. Total Return Approach  The Foundation utilizes a “Total Return” approach to guide its investing and spending, as allowed by Pennsylvania Codes 5547, 5548, and 5549 pertaining to the use and management of trust assets by nonprofit corporations, and as permitted by its governing documents.  This approach allows the Board to establish an annual payout rate based on a percentage of the asset base over a three-year period.  The payout amount may be more or less than the actual income earned by interest and dividends, with capital appreciation (and in rare cases principal) used to help meet the established payout when necessary.  By using the total return approach, the Foundation is able to maintain and increase the value of donated assets while funding current needs at an appropriate level.

     The benefits of total return include: 1. The Foundation and its financial managers are not forced to focus investment strategies on required distributions from income alone.  2. Because investments can be managed for both growth and income, the Foundation can better focus on current needs while assuring adequate funding for future needs.  3. A larger and more predictable flow of funds will be available since distribution will not be determined solely by changes in current investment income, interest rates, etc.

     7. Low Costs  Every community foundation strives to maintain low administrative fees on endowment funds.  As a nonprofit our goal is to increase fund growth and money available for grants.  Here is our fee schedule.

     All funds existing before 2006, 1.50% of the average monthly asset value over one year.  New funds since 2006 are A. Scholarship Funds – 1.50% annually or 0.125% of the monthly asset value; B. Donor Advised Funds – 0.75% annually or 0.0625% of the monthly asset value; C. Restricted Permanent Endowment Funds – 0,70% annually or 0.0583% of the monthly asset value; D. Unrestricted Permanent Endowment Funds  – 0.50% annually or 0.0417% of the monthly asset value; and E. Temporary Restricted Funds – 0.25% annually or 0.02083% of the monthly asset value.  The fee is assessed at 0.02083% per month and is based upon the market value at the end of the previous month.  The minimum fee is ten dollars ($10.00) per month.

     8. Enhanced Integrity  The Foundation assures everyone involved that gifts to the endowment fund are never mixed with a nonprofit’s operational funds.  Personal gain and staff motives are never in question because contributions go directly into the foundation account.  Friends and family members know that contributions are never delayed or misdirected by another involved member because again the donor’s contact is directly with the Foundation.  The fund is professionally audited and reported to the state and to the Internal Revenue Service.  There are two volunteer boards vetting everything before a report is made.

     9. High Profile  Your endowment fund is not an orphan lost in the rush of a nonprofit’s business.  It has a published name with a signed contract protected by both state and Federal Courts.  It can never be removed from the county.  It has a community foundation home and is promoted in foundation publications.  The donor is not obligated to sing its praise or alert the public to the fund’s purpose.  Publicity is a service of the Foundation.

     10. Easy Setup  The donor dictates the specifics of the fund contract setting up the endowment fund.  Legal review is encouraged by the Foundation.  The fund lives by the signed contract.  The donor determines the name, as for example, Sister Emma Endowment Fund.  The donor determines the purpose, as for example, to support parenting and family life programs of the United Family Services.  The donor determines the sunset provision, as for example, if the United Family Services or its successor ceases to exist or reside in Clarion County the fund shall become part of the Unrestricted Grants Endowment Fund.  Charles Marlin

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