Choosing to establish a nonprofit fund at the Foundation provides your organization with numerous advantages: the fund has access to well-diversified, professionally managed investment pools with world-class investment managers; the assets are legally transferred to the Foundation, adding a third-party layer of protection to ensure the future use of the assets remains consistent with the original fund purpose; and you receive technical assistance with major and/or complex gifts to your organization. You may also participate in our turnkey Planned Giving Partnership Program.

The primary difference is the circumstances under which your organization may access the fund assets. Both fund types receive an annual spending amount that is available for distribution to your organization. The amount is based on a carefully-calculated formula called a spending policy—currently set at 5% of the average balance of the fund over the last 36 months.

For a Nonprofit Endowment Fund, fund assets beyond the annual spending amount may only be accessed in circumstances of financial emergency or extreme need, and then only at the request of the organization’s board and at the discretion of the Foundation. This fund type is suitable for organizations that intend to maintain assets in perpetuity while providing annual support for programs and operations.

For a Nonprofit Reserve Fund, fund assets beyond the annual spending amount may be accessed without having to demonstrate circumstances of financial emergency or extreme need. Additional distributions are requested by the organization and are made at the discretion of the Foundation. Due to the nature of the investment pools, please note that this fund is not intended to be used as a “charitable checking account” to be accessed regularly but can be if needed. This fund type is suitable for organizations that intend to maintain assets in perpetuity but want to have the flexibility to access the entire fund balance.

No. The Nonprofit Endowment Fund and the Nonprofit Reserve Fund have a 1.0% fee.

No. Once a fund is established, the original terms of the endowment fund agreement cannot be rewritten and converted to another type of fund. However, an organization may choose to establish a new Nonprofit Reserve Fund or convert a Nonprofit Reserve Fund to an endowment fund.

Absolutely! Organizations may have both types of funds.

In the event that your organization ceases to exist, loses its nonprofit status, or the original purpose of the fund becomes irrelevant, the Foundation board maintains “variance power” (a requirement of all community foundations) to change the beneficiary or purpose of the fund. Your organization may designate a “contingency” beneficiary organization or field of interest when establishing the fund.

Per Securities and Exchange Commission regulations, a community foundation cannot manage assets that it does not own because community foundations are not registered investment advisors. A community foundation must demonstrate that it retains legal ownership of the assets it invests, manages, and administers.