Your Nonprofit and the Community Foundation: A Perfect Partnership
Position your nonprofit for long-term support and success with an Agency Endowment Fund
What is the benefit of creating an agency endowment fund with the Community Foundation?
When a nonprofit establishes an endowment fund for their agency, it provides a permanent source of income, flexibility and options for its donors, and opportunities for short- and long-term giving campaigns. As the fund grows through additional gifts and investment income, the amount generated each year for your nonprofit increases as well.
The Community Foundation handles all gift management, online gifts, acknowledgments, investment, reporting and administration of your fund - all for a minimal fee.
Agency funds are invested with the funds held within the Straits Area Community Foundation, as well as our lead foundation, Community Foundation for Northeast Michigan's 500+charitable funds. Investment and management of our funds are overseen by a knowledgeable Investment Committee, and the expertise of our financial advisor.
What is an agency fund?
An agency fund is established by a nonprofit organization to support its own needs, and to provide lasting support for its projects and mission. Once the fund is established, anyone can make a gift to it (including your nonprofit) at any time, in any amount.
Is there a benefit to our donors if we establish an agency fund?
Yes! Among those benefits are permanence and flexibility.
- Permanence - Some donors want to give a gift that can be used immediately. Others want to support your nonprofit long-term. An agency endowment fund allows your donors a giving option that will support your nonprofit in perpetuity.
- Flexibility - The Community Foundation can accept many different types of gifts including cash, checks, credit card donations, gifts of stock, life insurance policies, IRA distributions, real estate, bequests and more.
- Tax benefits for donors - Gifts made to your agency fund will provide the donor with the maximum allowable tax benefits.
How much money do we need to establish an agency endowment fund?
A fund can be established with a minimum of $5,000.
Are there administration fees?
Agency funds are charged an annual administrative fee of 1.35%.
How much will we have to spend each year?
The Community Foundation uses a 5% spending plan, which is calculated using a 12-quarter rolling average. (The balance of your fund at the end of each quarter for the previous 12 quarters is averaged, and 5% of that amount is what is available that year for your nonprofit to use.)
How are the funds disbursed to our nonprofit?
That is up to your nonprofit. The Community Foundation can cut a check at the beginning of our fiscal year directly to your organization, or a written request can be submitted to request specific amounts for expenses or projects. A simple “fund agreement” provides us with instructions for disbursements from your fund.
Can we ever get the money back?
Any money placed in an endowment fund is a permanent asset of the Community Foundation, to be used for the benefit of your nonprofit.
Endowment funds have an “endowed” portion, which is never spent. They also have a “spendable” portion, where the money generated to spend is placed. Gifts may be made to the endowed portion of the fund or the spendable portion of the fund. Spendable gifts can be used at any time.
What if our board is not ready to establish an endowment fund right now?
If your organization wants to create a non-endowed, non-permanent fund, we can help you do it. These funds are invested with all of our other funds, but the entire amount of the fund remains available for use. There will always be the option to convert a non-endowed fund to a permanent endowment fund.
This sounds great! Now what?
- Contact us. Give us a call (989-354-6881), stop in for a visit to our lead foundation office (100 N. Ripley, Suite F, Alpena, MI), or send an e-mail (pheraghty@cfnem.org). We want to help support your nonprofit.
- Invite us. We would be happy to attend one of your board or committee meetings to discuss the benefits of establishing an agency fund and to answer questions.
- Request information. We can provide sample fund agreements, access to our investment, spending and gift acceptance policies, and more.
- Research us to learn more about what we do. You can also see other nonprofits that have established agency funds at the Community Foundation so you can learn first-hand how it works for other nonprofits like yours: