Nonprofits
Several nonprofits (and donors) have established funds at the Community Foundation of the Northern Shenandoah Valley with assets donated to them or accumulated over time. Starting a fund at the Foundation provides services that many nonprofits may find advantageous.
Sophisticated Professional Investment Management
Funds are professionally invested under the supervision of local, community-based financial experts who have experience in building and preserving funds in perpetuity. Agency funds are pooled with other assets of the Community Foundation for fuller diversification, with each fund accruing its own share of the earnings. An Agency Fund relieves your agency staff and board of responsibility for accounting and management of its invested funds.
Credibility of the Foundation’s Strong Reputation for Fiscal Stewardship
Nonprofits with Agency Funds at the Foundation may enjoy the increased visibility provided by being a part of our larger giving community. An agency fund may enhance a charity’s fundraising prospects because some donors may wish to support charity, but prefer the relative long-term security of the Community Foundation, particularly if they wish to insure that their gifts are endowed forever.
High Quality, Cost-Efficient Administration and Stewardship Services
Foundation staff process timely, personalized gift acknowledgements and quarterly statements of fund activity.
Acceptance of Unusual Assets Like Privately Held Stock, Mutual Fund Shares and Real Estate
Nonprofits can receive the benefits of gifts that are highly advantageous to donors, but difficult for charities to process.
Planned Giving Services
The Community Foundation administers Charitable Gift Annuities, Charitable Remainder Trusts, and Lead Trusts which direct gifts to endowed agency funds. This service is a way for agencies to avoid the costs and liabilities of offering their own planned giving program. The Foundation serves as a partner by administering the gifts, providing advice on marketing planned gifts, and by working with potential donors and their advisors to answer the technical gift planning inquiries.
Fundraising Advice and Counsel
While the Community Foundation is not able to serve as the fundraising arm of those charities with Agency Funds, our experienced staff is available to meet or consult with agency directors, board members, finance committees, development committees and even donor prospects to discuss fundraising strategies and techniques.
Important Considerations for Agencies:
Ownership of Assets
Both income tax and securities laws require the Community Foundation to own the assets in the funds it administers; therefore, establishing a fund requires the charity to transfer title to the assets to the Foundation.
Agencies may choose to make funds Permanently Endowed or Agency Advised
- Agencies can choose to endow funds permanently, with regular distributions in accordance with a policy established by the Community Foundation in an attempt to provide long-term protection of the principal; or
- Funds can be set up as agency advised with the right of the agency to recommend distributions of both income and principal whenever desired. It should be understood that, if so recommended, the Community Foundation is permitted to return the entire balance in this fund to the agency, but title to the monies in this fund is in the name of the Community Foundation of the Northern Shenandoah Valley.
Minimum Balance
It is not economical for the Community Foundation to administer funds with a long-term balance of less than $5,000, but that balance may be accumulated over a five year period of a rate of $1,000 per year. Amounts in excess of that minimum each year (including earnings from the fund’s investment) would be available for recommended distribution from Agency Advised Funds. Distributions from Agency Endowed Funds are not made before the $5,000 minimum is reached.
Fees
Nonprofit FAQ’s
How can the Community Foundation help my nonprofit?
When you establish an agency fund and/or designated fund (endowment funds that benefit only your organization), you can be assured of a stable source of income for the future. Several nonprofits have also established scholarship funds to fund scholarship programs offered by the organization. The Community Foundation also has a number of grants available to area nonprofits who qualify. See our grants/scholarship section of our website for details.
Why should my organization consider establishing an agency, designated or scholarship fund with the Community Foundation?
There is no cost to establish such a fund. You avoid the legal fees required to set up an endowment fund or trust on your own. And by pooling all our funds together, we can command the lowest fees for professional hands-on management while at the same time maximizing your funds.
By taking on the administrative and financial oversight of your funds, we reduce the responsibility and liability of your volunteer members.
We can also offer investment diversification options that are not practical or available for a smaller account on your own.
Once you have a fund in your organization’s name, you can promote it to your constituents and other donors who have an interest in your mission, encouraging them to not only donate, but also include your organization in their estate planning. We can help with personalized forms for your organization.
In addition, your organization’s fund will be listed in our literature, on our website and promoted via our social media. We will help promote your organization by disseminating this literature to the public, to donors and to estate planning professionals.
We can also offer flexibility as to the use of the money in the fund since there are no tax consequences should your tax-exempt organization have an emergency need to remove principle from the Foundation.
Does the Community Foundation compete with my organization for donor dollars?
No. Our goal is to help identify our community needs – and local nonprofits helping to meet those needs – and connect them with appropriate and interested donors. In addition, from time to time in doing our own research, we find other grants that are available and freely pass that information along to you.
Donor dollars – direct to my nonprofit or separate endowment?
First, we determine whether the donor is interested in helping with your ongoing, current needs, or if they like the idea of contributing to or setting up a designated fund that would benefit your organization forever. If they want to help you outright, we recommend they give the money directly to you. Otherwise, if they want to donate to or establish a designated fund for your benefit, we give them information about how they can do that easily and with no set-up costs. The donor makes the final decision.
How can my 501(c)(3) organization create a fund with the Foundation?
See Getting Started. We would be happy to make a formal presentation to your board or send you a sample agreement so you can see how it works.