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Nonprofit Fundsexpand category
- Is there a minimum amount to establish a fund?
Yes, the minimum amount to establish a fund is $50,000.
- How will our assets be invested?
Your assets will be combined with Grand Rapids Community Foundation assets and managed as a pool according to current investment policy. Click the link at the right to view the Community Foundation's investment policy.
- How much income will we receive from the fund?
Each fund generates an annual amount of spendable income. The amount of income you will receive is based on the Community Foundation's spending policy. The current spending level is set at 5.0% of a sixteen quarter rolling average market value. The level of spending will always be between 4.0-5.75% of the current market value, that typically falls in the 4.5% range. The Community Foundation's administrative fees are deducted from the spendable income.
- Does the Community Foundation charge a fee for this service?
Yes, there are two charges for funds held with the Grand Rapids Community Foundation. One is the investment manager fee and the other is our administrative fee. The investment manager fee is set by the various managers and will vary from year to year. Our administrative fee is per the schedule below. The fee income generated by this is used to defray administrative and program costs to the Foundation for managing each fund. The following fees will apply until revised by the Board of Trustees.
Nonprofit Funds:
- .5% of M/V +$15 per transaction if over 10 gifts per year
Community Funds:
- On the first $5,000,000 - 1% of M/V
- On the next $5,000,000 - .75% of M/V
- On the next $5,000,000 - .50% of M/V
- On the remaining balance - .25% of M/V
All fund fees will be per the fee schedule or a minimum $250 per year; whichever is higher.
- Can we spend the principal?
Grand Rapids Community Foundation is committed to growing endowment funds so the future of your organization is always well supported. To that end, the principal of your investment should be preserved. The Internal Revenue Service requires that funds within a Community Foundation be considered assets of the Foundation. The income earned from the fund is for organizational use only.
Potential partners should be aware that removing funds from the Foundation is discouraged and the investment strategies are decisions of the Grand Rapids Community Foundation’s Investment Review committee. We believe that with a fund at the Community Foundation, you will enjoy the ease of watching your fund grow and while using the income for key projects that help you remain true to your mission.
- Who may apply?
Any 501(c) (3) nonprofit organization in Kent County is eligible.
- What are the requirements and how do I apply?
Nonprofit organizations and communities must express a strong commitment to establishing and building endowment by:
- Submitting a signed leadership commitment form (available in blue box to the left)
- Submitting an Endowment Fund Application
- Agree to abide by the National Committee on Planned Giving Model Standards of Practice (available in blue box to the left)
- What do you need to know about accounting for Nonprofit Endowment Funds?
If the fund was created by the agency with the Foundation, it is subject to the provisions contained within the fund agreement. One of the provisions in the agreement, the variance power, concerns the power to vary some of the terms of the agreement.
As defined by United States Treasury Regulations, the Foundation has the right to modify the terms of the fund agreement if in the judgment of the Foundation's Board of Trustees the restrictions and conditions in the agreement become unnecessary, incapable of fulfillment, or inconsistent with the charitable needs of the community. The authority to modify restrictions is sometimes referred to as the “variance power” and is a legal standard imposed on all community foundations. As a result of the variance power all component funds are considered to be part of a single public charity, in this case the Grand Rapids Community Foundation. Therefore, the Foundation is the legal owner of all assets contributed to any of its component funds.
However, the reporting of financial information is determined by the Financial Accounting Standards Board. Statement of Financial Accounting Standard No. 136, Transfers of Assets to a Not-for-Profit Organization or Charitable Trust that Raises or Holds Contributions for Others, requires that if a community foundation accepts a contribution from an Agency and agrees to transfer those assets, the return on investment of those assets, or both back to the Agency, then these contributions are presented as a liability (instead of as a net asset) on the financial statements of the community foundation and as an asset on the financial statements of the agency. Please note this treatment is only for financial statement presentation purposes and that the legal ownership of the assets still remains with the community foundation.
For financial statement presentation footnote purposes the wording of the variance power follows:
- The Board of Trustees of the Grand Rapids Community Foundation shall have the power to modify any restriction or condition on the distribution of funds for any specified charitable purposes or to a specified organization if, in the sole judgment of the Board, such restriction or condition becomes, in effect, unnecessary, incapable of fulfillment, or inconsistent with the charitable needs of the community served.
In addition to agency gifts, individual donations may be made to the fund. In accordance with FASB Statement No. 116, Accounting for Contributions Received and Contributions Made, and as amplified by FASB Statement No. 136, Transfers of Assets to a Not-for-Profit Organization or Charitable Trust That Raises or Holds Contributions for Others (specifically paragraph 12), the Aegncy should not record the market value of these gifts as an asset on its Statement of Financial Position although it does have a current beneficial interest. The Agency should record as income grant distributions received from the fund in its Statement of Activity.
Grand Rapids Community Foundation pools its assets for investment purposes. Investment activity is allocated to individual funds based on the fund’s percentage share of the total portfolio value.