How much money that is donated is best to go directly to meeting needs, and how much should be invested in an endowment fund to put the organization in a position to weather downturns in donations or unexpected expenses? The Flint Street Fellowship has about $164,000 deposited with investment company, Vanguard, and has established an endowment fund worth about $141,000 with the Carroll County Community Foundation (CCCF). Overall, the Fellowship has about $364,000 in assets not including real estate.
“Flint Street made a wise choice for their financial future by creating a quasi-endowed fund with the CCCF,” CCCF Executive Director Janell Robertson said. “We advise many non-profits statewide to use this funding model. This allows the funds to be invested and partially endowed with a portion available to be granted for immediate needs. The full amount, along with any growth through investment is accessible to the non-profit after three years – and sometimes organizations wait on a major spend if there is a planned expansion, expected major expense or community initiative in the works.”
Robertson said Arkansas Community Foundation and its Carroll County affiliate encourage nonprofits to have healthy operating reserves.
“This can look like six months to three years of savings, sometimes less depending on the organization,” Robertson said. “A healthy operating reserve is a safety net in case of a pandemic, leading to a sharp increase in demand, other natural disasters that require the organization to mobilize, or even a volatile economy. As important, operating reserves are critical for maintaining a sustainable plan for day-to-day expenses, appropriate technology, utilities, building maintenance, insurance, vehicle upkeep, salaries, employee benefits, reductions in operating revenues, and unexpected emergencies as well accumulating funds to execute any future growth initiatives their governing boards have planned. A non-profit does not operate with the same kind of profit and loss model as for-profit companies, nor is it like one’s personal savings account.”
Robertson said non-profit organizations often choose to establish organizational endowments as a permanent source of annual income to support operation and programs. They also create Quasi-endowed funds to grow their donations in support of planned growth in service to their community.
“Funds and endowments held at the Community Foundation allow us to help nonprofits accept complicated gifts (stocks, property, IRA charitable rollover donations, and much more), provide cost effective back-office support for the nonprofit (we acknowledge gifts and provide tax receipts to donors), offer a customized URL for online gifts, and offer our expertise to their donors who are considering creating a charitable legacy through planned giving,” Robertson said. “Donors know that having a fund or endowment at the community foundation conveys stability and permanence to the community. By partnering with the Community Foundation, the nonprofit’s executive leadership and board members can remain focused on their primary mission and programs.”
Since being established in 2001, CCCF has given more than $1.3 million in grants in the area. CCCF works closely with area nonprofits on initiatives and grantmaking that address local needs, and Robertson said they also work closely with donors to help them invest in causes they care about.
“Our mission, which is the same as the other 28 affiliate offices of Arkansas Community Foundation statewide, is to engage people, connect resources, inspire solutions and build Arkansas communities forever,” she said. “CCCF takes its fiduciary role in relation to its fundholders and donors seriously. Ours is a trusted partnership in support of the good work being done in and for the people in our county and our state. We do provide advising for donors and nonprofits, but we do not make decisions on how our fundholders should spend their funds entrusted to our care, or how programming is implemented by nonprofits. Whether we’re working with generous individuals, nonprofit organizations or charitably inclined businesses, our primary goal is to build a better Arkansas for all who live here.”