Nonprofit Operating Endowments
Nonprofit operating endowments (also referred to as Nonprofit Endowments) are established by nonprofit organizations to provide a perpetual stream of operating revenue to sustain their work for generations to come. Nonprofit operating endowments may also be established by donors who wish to specify a particular charitable organization as a recipient of their generosity.
Community foundations are ideal partners to non-profits in establishing and helping to build an Nonprofit Operating Endowment fund. Our staff will help a non-profit organization build a basic plan to grow their endowment fund, provide endowment building tools and assist in planned giving conversations.
Benefits of Nonprofit Operating Endowment Funds
Economical: Even small nonprofit organizations can benefit from professional investment management, including diversification and lower investment fees.
Efficient: A fund can be established using a simple fund agreement. An nonprofit endowment is a simple mechanism for accepting planned gifts, such as bequests and charitable trusts.
Easy: The organization is not responsible for investing the assets or for any recordkeeping.
How does my organization create Nonprofit Endowment Fund through the Hancock County Community Foundation?
- Meet with the Foundation staff. They can provide you with the facts and benefits of the Nonprofit Operating Endowment Fund.
- Determine organizational readiness. It is highly recommended that the Nonprofit Board complete a staff and board assessment to determine organizational readiness. HCCF will provide this tool.
- If, after assessment, the Board determines that it is prepared to establish an endowment fund, they will meet with HCCF staff to discuss.
- HCCF will ensure that the nonprofit is qualified to receive grants according to IRS regulations.
- HCCF will draft an endowment fund agreement.
- The Nonprofit Board will review, sign, and return the agreement to HCCF with an establishing gift. (There is a $1,000 gift required to establish the fund and the fund must reach the minimum balance of $15,000 within five years, at which time it will begin to generate grants.)
- The fund will be invested with Foundation’s endowment pool, increasing its earning power.
- When the fund balance reaches $15,000, assuming it has been invested for no less than one year at the Foundation, the fund may begin making grants from the generated income to the establishing organization. The organization has the annual option to reinvest the income to help grow the fund.
- A fund statement will be sent on an annual basis showing all fund activity for the prior year.
The Hancock County Community Foundation offers the following services to assist:
- Presentations to your board
- Marketing materials and fund promotion documents
- Responding to inquiries from potential donors
- Meeting with major or planned gift prospects at the nonprofit’s request
- Managing complicated gifts (real estate, stock, etc.)
- Acknowledging all gifts to the fund
How does an individual create an Operating Endowment Fund on behalf of a nonprofit organization through the Hancock County Community Foundation?
- Meet with Foundation staff to discuss their philanthropic goals.
- Determine nonprofit to benefit from the fund.
- Determine restrictions that may be placed on the fund’s income.
- HCCF will ensure that benefiting organization is qualified to receive grants according to IRS regulations.
- HCCF will draft an endowment fund agreement.
- Founder of fund will review the endowment fund agreement outlining purpose of the fund to assure that charitable desires are correctly defined.
- Founder of the fund will sign the fund agreement and make contribution to establish the fund.
- Fund will be invested with Foundation’s endowment pool, increasing its earning power.
- When the fund balance reaches $15,000, assuming it has been invested for no less than one year, the fund may begin making grants from the generated income. The organization has the annual option to reinvest the income to help grow the fund.
- The fund founder will receive a fund statement on an annual basis showing all fund activity for the prior year.
