One of the most rewarding aspects of my work at the Community Foundation is to help those who want to give back to their community to do so in a way that best honors their intentions. Some of the most touching moments in my career have occurred spontaneously when a visitor just stopped by the office to chat about a family member who wanted to create a scholarship or community fund in memory of a loved one or a special mentor. Oftentimes, the money used to seed such funds is the result of years of hard work, living modestly and careful saving.
In some cases, it’s a lifelong passion for education, art and culture, animals or the outdoors that motivates a family or business to establish a fund. Or is may simply be the best way for a nonprofit to financially plan for the future, or for a community group to work toward funding a future goal.
What I have learned over 20 years of working in philanthropy is that everyone has a unique story to tell and a desire to make a difference in their own personal way. The diverse array of funds that the Community Foundation now oversees is an extraordinary reflection of our community and what matters most to us.
Just this past year, 22 new funds were established and as you look through the list, I hope you appreciate the variety of funds in just this sample. I encourage you to visit our website as well and look through the full list of funds that have been carefully invested to ensure they continue to give back to our community for good, for ever.
To better understand the nuts and bolts of how and why funds are established, I was recently asked to answer several questions and would like to share those with you. If you have additional questions, please contact me and I would be glad to talk with you at your convenience.
What does it take to set up a fund with CFNEM?
Interested donors should call or stop into the CFNEM office to talk about what their goals are for their fund. They will be asked to complete a simple fill-in-the-blanks fund agreement. That agreement will serve as their instructions to the Community Foundation as to how the fund should be administered. Then, when they’re ready, the donors make the gift.
Why do individuals or nonprofits do so? What are the benefits?
Individuals, businesses or nonprofits may open a fund with the Community Foundation and the benefits can be different. One benefit is to leave a legacy and keep your identity as a donor now and in the future, even after you are gone. For some, they feel a responsibility to give back after receiving so much from the community. Another benefit is that the donor can be certain that their fund will be administered exactly as they have instructed now and for generations to come. It’s also easy to establish a fund with the Community Foundation.
For nonprofits, it provides a mechanism for prudently investing funds set aside for future purposes and serving as an account for donor contributions. In some cases, community or regional projects need a trusted fiduciary agent to manage project funds and the Community Foundation can serve that purpose.
The Foundation board of trustees is comprised of local civic and business leaders and a staff that receives ongoing training and updates on changes in state and federal regulations and tax law, as well as best practices in philanthropy. As a member of the Council of Michigan Foundations and the Council on Foundations, as well as GuideStar, CFNEM has access to the most up-to-date accounting, finance, investment and legal expertise available. It also is accredited by the National Standards for U.S. Community Foundations. Founded in 1974, CFNEM has a 40-year track record of being an effective, trusted and transparent community partner with a solid, if not enviable, return on investment record.
Another reason donors set up funds with the Community Foundation is the benefit that comes with being part of a much larger portfolio. CFNEM’s overall rate of return ranked in the top three of all community foundations nationwide this past fiscal year (2013-14).
Of course, donors also receive federal and state charitable contribution tax incentives as determined by current law.
Can others contribute to those funds? How?
Once a fund is established, anyone may make a gift to it, at any time, in any amount. The donor may encourage others to make gifts, whether it might be family members, or if it’s an agency fund, to encourage board members or community members to contribute to build for the future. Gifts may be made with cash or checks, stocks and other investments, or online with a credit card.
Is there an incubation period for new funds?
CFNEM’s fiscal year begins on October 1. After that date each year, we determine what is available to spend in each of our endowment funds. So a fund established after October 1 will have to wait until the next October 1 to have money available to spend in the fund.
What advice do you offer to those considering setting up a fund?
We want the donor to really consider what their philanthropic goals might be. This is where talking with the CFNEM staff can be helpful. We listen closely to the donor and can discuss options for the best way to accomplish their philanthropic goals.
How do donors know how their fund is doing?
The donors or their designated representative will receive fund statements at least annually and can receive them quarterly, if they prefer. We can also quickly email a fund statement if a need arises.
Who watches over the fund to make sure it is being well managed?
All the assets of the Community Foundation are overseen by our board of trustees. We also have committees that are responsible for oversight of specific actions of the Community Foundation. Our investment committee works with our financial managers to keep a careful eye on the investments of the Community Foundation. CFNEM’s membership in the Council of Michigan Foundations and the Council on Foundations also keeps us informed of the most up-to-date policies and procedures.
What kind of average rate of return have funds with CFNEM been generating over the past five years?
The average rate of return on the total investment pool for the past five years is 11.31%. You can check out our annual average rate of return by calendar year since 2000 here.
How many funds does CFNEM manage all together?
As of March 31, 2015, CFNEM and its affiliates had 443 individual funds to meet the varied philanthropic goals of our donors.
How does the overall growth of CFNEM’s portfolio benefit individual funds?
As the Community Foundation’s assets continue to grow, so too do each of the funds. Each individual fund receives the growth earned by that fund’s assets. Since the Community Foundation uses a 5% spending plan and we charge very low fees of 1% to 2%, it is our investment goal to continue to grow our funds while still making grants to support the goals of our donors.
Have you observed any recent trends as to how or why funds have been established?
Since CFNEM has been in existence for more than 40 years, more and more folks are getting to know what we do and see us as a leader in northeast Michigan. We have shown that we are careful and thoughtful stewards of the community’s money. We care about the donors and their goals and insights. This makes it easier for donors to have a willingness to recommend us to friends, family and colleagues.
