Endowment Fund Management

Many nonprofit organizations create endowments to establish stable, predictable sources of income. Funds are almost always difficult to raise to support day to day operations, so an endowment can be an important source of reliable income. The Whatcom Community Foundation exists to manage funds permanently endowed by donors for the benefit of a specific charitable cause. In the case of agency endowments, that cause is the organization itself. This permanent pool of assets generates income and, hopefully, grows over time. Like your personal savings, a permanent fund for your agency can provide a reliable source of additional income each year.

Some of the advantages of creating an endowment
with the Whatcom Community Foundation:

  • Your agency fund enjoys the advantage of being invested in a larger pool of assets which can lead to greater growth, greater income, and lower investment fees
  • The Foundation handles: investment management and oversight; all accounting and financial reporting; and annual audit
  • Your agency can receive income at preset intervals from its portion of the total endowment held by the Foundation
  • All gifts to your fund are restricted for your use only. While co-mingled for investment, your agency's endowment will not be used for other purposes
  • Your endowment fund receives exposure in the Foundation's annual report reaching more, and perhaps different donors than those on your current list
  • All gifts are tax deductible at the highest levels allowed
  • You have the flexibility to choose to reinvest all or part of the income in years when it may not be needed, so the endowment can further grow

Considerations

All in all, the Foundation is an excellent vehicle for developing your agency endowment with maximum advantage. A few items to consider:

  • The IRS requires that funds within a community foundation be considered assets of the foundation (otherwise the foundation would operate like a bank.) While all gifts to your fund are restricted only for the use of your agency and you receive the income each year, you cannot:
    • spend the principal at will (of course, the agency would not do this anyway; funds are held as a true endowment),
    • remove your funds from the foundation unilaterally,
    • direct how the assets in your agency endowment fund are invested. In other words, you receive the benefits of the income on all gifts to your endowment fund, but do not manage the fund itself.

  • Community foundations invest endowment funds for both long-term growth and income. Foundations expect excellent, if somewhat conservative, investment management. You should expect long-term growth and a reasonable return, but not wildly speculative risk or unusually high income.
  • To help offset administrative costs, the Foundation charges a small fee for establishing and maintaining agency endowment funds.

We are proud to manage agency endowments for a number of Whatcom County nonprofit organizations including: Bellingham Festival of Music, Bellingham Public Library, Brigid Collins, Ferndale Public Schools, Ferndale Band Boosters, Fragrance Garden, Lydia Place, Mount Baker Theatre, Nooksack Salmon Enhancement Association, Northwest Youth Services, Whatcom Counseling and Psychiatric Clinic, Whatcom Land Trust Whatcom Museum of History & Art and Whatcom Symphony Orchestra.

Please contact us if you are interested in talking about setting up an endowment fund for your agency.