PHOTO: Chris Fulton, Executive Director of the Community Foundation is pleased to see local nonprofit organizations who invest in their future by having an endowment at the Community Foundation.
The Grand Rapids Area Community Foundation manages 40 Agency Funds. These are endowments established by nonprofit agencies to protect and support their future operations. The Community Foundation management of these funds makes it possible for nonprofit boards to focus on their mission to support individuals and families in our community.
An endowment is a fund that is invested in the financial markets and managed to provide annual distributions to support the fund’s mission while the principal continues to grow. The original gift and any added gifts (donations) form the principal, or corpus, of the fund. The Community Foundation invests this principal and then provides close oversight of a diversified and professionally managed investment.
Endowment funds are different from operational funds. “All of our local nonprofits rely on your generosity on an annual basis to support annual operations,” says Chris Fulton, Grand Rapids Area Community Foundation Executive Director. “Gifts to annual operations generally come out of your checkbook or through your credit card as recurring donations.”
Fulton goes on to add, “On the other hand, endowments are best grown through donations of assets such as appreciated stock, naming your favorite nonprofit as a beneficiary of an insurance or retirement plan, or through planned estate gifts. In either case, we are extremely fortunate that we have generous community-minded citizens who have a tremendous impact on our local non-profit organizations.”
Endowments Provide Annual Distributions
As long as an endowment is at least one year old, has a balance of $10,000 or more, and the investment markets move in a positive direction, the Community Foundation is able to provide an annual distribution. Those three minimum qualifications are important; investments need time to grow, and taking distributions from a fund that is smaller than $10,000.00 is not going to create the desired impact. The Community Foundation’s ultimate objective is to always protect the “principal”, so if the market drops to a value below the principal (this was the case for most endowments in 2008/2009), then making a distribution is not possible.
Growing an endowment
There are numerous reasons and ways to grow an endowment. Some endowments have a specific goal. A good example of this would be an organization that wants to use their endowment to fund a particular program or event on an annual basis. Let’s say a children’s organization wants to hold an annual mud pie contest for local eight year olds. The event costs $2,000. By growing their endowment until they have an annual distribution of at least $2,000, the organization should be able to pay for the Children’s Annual Mud Pie Contest with their endowment distribution – every year - forever. Think of the advantage of not having to fundraise every year for mud pies.
Another growth technique is designed to allow the organization to exist or be self-sustaining in the future. Most nonprofit organizations rely on annual grants, donations and fundraising in order to survive. What if these organizations didn’t need to take the time and energy to hold fundraisers every year, but were able to have a regular stream of money that provide the dollars needed to operate? These “operational endowments” are extremely important for the permanent health of a nonprofit organization.
The Foundation Fund is the Community Foundation’s operational endowment. Since the Community Foundation is a nonprofit organization, the Foundation Fund will one day provide key operational support every year to keep the Foundation financially healthy and self-sustaining. Sarah Copeland, the Community Foundation’s Director of Grants and Programs, has this to say about endowments, “The Foundation Fund was started in 1994. Most of our early donations came directly from Board Members. Establishing our own endowment was a vital step to becoming a permanent, vibrant organization. Why do we talk, talk, talk about endowments? We practice what we preach. If you want to support the long-term viability of an organization, support their endowment.”
Current Agency Endowments at the Community Foundation
If you are interested in investing in your community by supporting one or more of our area nonprofit organizations, or even starting your own, give us a call at (218) 999-9100 for more information.
Advocates for Family Peace
Bigfork Valley Hospital Endowment
Bridges Kinship Mentoring Endowment
Children's Discovery Museum Endowment
Deer River School Endowment
Deer River Activity Boosters/Band Fund
District 318 Endowment
Itasca Driftskippers Snowmobile Club Fund
Edge Center Endowment
Edge of the Wilderness National Scenic Byway Fund
Foundation Fund (Community Foundation Endowment)
Friends of the Forest History Center Fund
Grace Christian School Endowment
Grand Itasca Foundation Fund
Grand Rapids Area Library Foundation Fund
Grand Rapids Band Endowment
Itasca County Habitat for Humanity Fund
Itasca County Historical Society Fund
Itasca Hospice Foundation
Itasca Life Options Fund
Itasca Orchestra and Strings Endowment
KOOTASCA Community Action, Inc. Fund
MacRostie Arts Center Endowment
Wayne Mills/Chet Johnson Rotary Fund
Wayne K. Mills Salvation Army Fund
Minnesota Deer Hunters Association Endowment
N-K Alumni and Friends Foundation Fund
Northern Community Radio Endowment
Northern Minnesota Builders Association Endowed Fund
Reif Arts Council Endowment
Remer Depot Endowment
River Watch Fund (Itasca Soil and Water Conservation District
Second Harvest North Central Food Bank Endowment
Star of the North Humane Society Endowment
United Way of 1000 Lakes Endowment
Youth for Christ Endowment Fund
1000 Lakes and Rivers Fund (Itasca Soil and Water Conservation District)