Investing in the future of local not-for-profits

Close your eyes for a moment and consider a community without food pantries, parks, youth agencies, churches or social service programs.

Such organizations contribute greatly to our well-being. It is difficult to imagine the quality of life without them, yet more and more non-profits are struggling to survive.

Available funds have decreased while service demands have increased. There are many reasons an organization may close its doors, but more often than not the strain has come about by the combination of a greater reliance on new annual donations and special events. Staff, already strapped with delivering services, must continually raise funds and plan events to keep the lights on from one month to the next.

Some larger organizations maintain reserves for lean times, but managing large reserves can be overwhelming for most. For several organizations, the answer to investing in their future viability has been in establishing an agency endowment fund.

An agency endowment is a long-term fund held and managed by The Community Foundation of Howard County on behalf of a non-profit organization. The agency itself can set aside monies for an endowment or anyone can start a fund for the organization – a previous donor, board member, or the donor can remain anonymous to the agency.

The non-profit may receive annual distributions for unrestricted use. The advantages of an organization starting an endowment with our foundation are many.

• Generates an ongoing funding source. An endowed fund protects principal while creating an ongoing source of income from investments.

• Saves money. Placing funds with the foundation can reduce or in many cases eliminate the startup and ongoing costs of managing funds. Lower costs help ensure that funds are used where most needed, in community service.

• Saves time. Non-profit organizations escape a significant part of the demanding administrative functions associated with operating an endowment fund, saving time to deliver services.

• Grows donor base. Our trusted and experienced management team inspires confidence with potential donors. Donors receive assurance that their money will be managed in perpetuity even if the non-profit ceases to exist. Funds would be redirected for similar use.

• Gives donors options. Donors who structure all their gifting through one resource at The Community Foundation can easily name the non-profit as a partial beneficiary of their philanthropy.

• Offers planned giving. Donors can take advantage of local legal and financial advice for assistance in structuring complex gifts such as property or other lifetime gifts which require special consideration and current updates on new tax implications for charitable gifts.

• Provides speed and convenience. This can be especially important for year-end contributions and situations when stock or real estate is in the process of being sold and time is of the essence.

Although government budget cuts and unfavorable conditions in the economy have created difficulties, well-managed non-profits are reassessing how they do business.

Agency endowment funds provide a secure, innovative way to increase return on endowment capital, cut costs and offer more services.

Ron Harper

Community Foundation

of Howard County

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