Nonprofit Agency Funds

The Community Foundation makes it easy for your organization to set aside and invest funds for the future. Agency fund services include:

• A cost-effective option for accessing investment options that might not otherwise be available to your organization.
• Agency can focus on building assets without the burden of managing investments.
• 24/7 online access so your organization can view the fund balance, contributions, grants, and investments anytime.
• Donors have peace of mind that investments are well managed.
• A member of the Agency Fund Team can meet with your staff, board, or finance committee to review the investments of a fund(s).
• Familiarity and expertise with a wide range of planned giving options, including serving as a sounding board for growing your fund and assisting with accepting complex assets.
• Adept financial knowledge in navigating the specific accounting standards that are unique to this type of fund.

Contributions may be made by your organization into a fund at any time.

• Cash contributions may be delivered by check or wire transfer.
  • Checks should be made payable to the Community Foundation for the Fox Valley Region with the specific fund name listed on the memo line.
  • Large cash contributions may be transferred by wire directly to the Community Foundation’s bank account. Contact the Community Foundation for wiring instructions and notification prior to making the transfer.
• Publicly traded stocks, bonds, and mutual fund shares are accepted. Please contact the Community Foundation for assistance with stock contributions. Please contact us prior to transferring shares to let us know the stock name and number of shares to be transferred. We request notification before a transfer is initiated.
• Contributions of complex assets, such as business interests or real estate must be reviewed and approved before they are accepted (via the Community Real Estate and Personal Property Foundation, a supporting organization of the Community Foundation) and additional requirements or fees may apply.

Third Party Contributions – Individual donors may not make contributions to an agency fund at the Community Foundation. Individual donors may contribute to your organization for the purpose of supporting the agency fund, or they may create a designated fund at the Community Foundation to benefit your organization. (Ask our gift planning staff for more information about designated funds.) The Community Foundation does not support fundraising activities by your organization and cannot accept gifts into the fund from donors generated by those activities.

Estate or Legacy Contributions – The Community Foundation can receive distributions from charitable trusts or bequests from an estate on behalf of your organization and create a designated fund. We work with your donors across the full range of planned contributions, including bequests, beneficiary designations, and charitable trusts to receive assets for the future of the designated fund. Again, individual donors, or their estates, may not contribute to an agency fund.

Minimum Initial Contribution – A minimum contribution of $10,000 is required to establish an endowed agency fund. There is no minimum for a non-endowed (spend-down) agency fund.

Future Contributions – Additional contributions may be made by your organization to an established agency fund in any amount and at any time.

An agency fund can be set up to distribute grants to your organization annually (automatically), or the fund advisor can request grant distributions through the fund advisor portal. Please contact us if you have questions about the distribution schedule for your organization’s fund.

The Community Foundation provides an online fund advisor portal to provide a secure and easy way through which you can access fund information. Depending on the type of fund you advise and your role with your organization, you may be able to view the latest fund balances, make grant recommendations, and/or review gift history.

Log into your Fund Advisor Portal here.

Who can use the fund? Agency Funds allow one person affiliated with your organization to be Fund Advisor. Only the person(s) authorized are able to discuss fund information with the Community Foundation, request a distribution, and/or change investment options. If a transition in staff or board members has occurred in your organization and you’d like to change who is authorized, please email AgencyFunds@cffoxvalley.org.

How many logins do we get to access the Donor Portal? While there can only be one authorized Fund Advisor, multiple people within your organization may have View Only access to the Fund Advisor Portal to review Fund Statements.

I want to update the fund’s information. Can I do that in the Fund Advisor Portal? If you want to update details for the fund, please email AgencyFunds@cffoxvalley.org.

How will I know if I submitted a grant successfully? You can check the status of the grant in the Fund Advisor Portal, on the Grants tab.

How long does it take to process a grant recommendation? Grant recommendations received by end of day Friday will be in the que for due diligence review the following week. On average, grants are processed within two weeks of recommendation being received. Processed grants are paid out via check or EFTs on the Tuesday following the week of due diligence.

What does Grants Payable under Outstanding Fund Liabilities mean? Grants are recorded in the month they are recommended regardless of scheduled payment dates.This accrual accounting entry simply ‘reserves’ the funds for future payment. The funds are NOT pulled from the investment account until right before the grant is actually paid out and continues to earn interest and gains/losses until that point.

How do I access a copy of the fund agreement or other related documents to the administration of the fund? The Community Foundation provides all Agency Fund holders a copy of the fund agreement at the time a fund is established. The Fund Advisor may request a copy at anytime. Please email AgencyFunds@cffoxvalley.org for document related requests.

The Community Foundation takes very seriously the obligation to steward the charitable funds with which we have been entrusted. The overarching investment strategy for all portfolios is to preserve and grow capital, helping to ensure that donors’ charitable assets benefit causes now and for generations to come. All investment guidelines and options are reviewed at least annually by the Community Foundation’s Investment Committee for approval by the Board of Directors and may change from time to time as the Board of Directors determines.

Endowed vs. Non-Endowed (spend-down) Funds

Funds are classified at the Community Foundation based on the timeframe for use of the fund selected by your organization. Nonprofits have the option to create an endowed fund that will be managed by the Community Foundation in perpetuity or a non-endowed fund that allows flexibility to grow, spend, or sunset as needed.

Endowed Agency Funds are permanent funds

The decision of your organization to restrict an agency fund as an endowment is binding on your current and all future boards of directors. The spending restriction is enforced by the Community Foundation Board of Directors.

Assets in all endowed funds are managed with the goal of preserving and growing the principal in perpetuity. Only the “spendable amount” is available for distribution each year and is limited to the spending rate of the fund’s average balance. An endowed fund should only be chosen to preserve the principal of the fund for future generations, not for short-term needs.

Endowment Spending Policy – Endowed agency funds are administered under the spending policy approved by the Community Foundation’s Board of Directors and guided by the Wisconsin Uniform Prudent Management of Institutional Funds Act (UPMIFA). The Community Foundation’s standard endowment spending policy is up to four and half percent (4.5%) of the rolling 12-quarter average of the principal market value of the fund, excluding undistributed amounts for distribution. Endowment funds having a principal value less than $10,000 as of June 30 of any year, shall not be subject to the calculation.

Non-Endowed agency funds are not permanent funds. Non-endowed funds (also known as “spend-down” funds) allow the organization maximum flexibility in structuring the fund because the entire principal is available for distribution. Non-endowed funds have the option of three investment pools – short, intermediate, or long term to align with your organization’s intended purpose of the fund.

Investment Committee Oversight – The Community Foundation’s Investment Committee sets investment strategy and monitors investment performance against industry benchmarks. Committee members have extensive expertise in business, investments, and financial matters.

FEG Investment Advisors – As of March 1, 2020, the Community Foundation’s investment strategy is managed by our Outsourced Chief Investment Officer (OCIO), FEG Investment Advisors. FEG works with our local volunteer investment committee members who are experts in investment and finance.

More Investment Information – For more investment information, please visit our website here.

Administrative Fees – The Community Foundation assesses an administrative fee to each charitable fund to cover the cost of administration and to continue the Foundation’s important work within the community. Administrative fees are calculated using the average daily fund balance from the prior month. The growth of the Community Foundation has provided the ability to retain a reasonable fee schedule for agency funds. Please visit our website for more information.

Investment Management Fees – In addition to the administrative fees, each fund is assessed a pro-rated share of investment management fees charged by the investment managers hired. The investment fees depend on the portfolio the fund’s assets are invested in and may vary.

Creation of the fund:
Debit: Beneficial Interest in Assets Held by community foundation
Credit: Cash
(Assets and net assets are measured at present value based on the expected future cash flows to the non-profit)

Ongoing entries:

The nonprofit’s interest in the endowment fund at the Community Foundation is similar in nature to an interest in a perpetual trust – in that the non-profit has an interest in a future income stream from the trust. As with a perpetual trust, the non-profit generally does not have access to the principal value of the assets held in the Community Foundation endowment fund (under the terms of the fund agreement).

Based on the premise that a non-profit endowment fund is like a perpetual trust, the following accounting entries would be made throughout the life of the fund to account for changes in value and distributions from the assets held at the community foundation.

Income payments during the holding period (distributions received)
Debit: Cash
Credit: Investment Income

Periodic Valuation (changes in value of the endowment fund)
Debit: Beneficial interest in assets held at community foundation
Credit: Gain or Loss

What is an agency fund?

An agency fund is a type of designated fund established by a charity at a community foundation for the charity’s own benefit or the benefit of a related entity. The donor or resource provider and the beneficiary recipient organization are the same entity. When the agency establishes the fund, the variance power and legal ownership over the asset is transferred to the community foundation.

What types of organization can establish an agency endowment at a community foundation?

A public charity under Section 509(a)(1), 509(a)(2), or 509(a)(3) may establish an agency endowment at a community foundation. This may include an endowment created by a government unit. A community foundation should not establish an agency endowment for a private foundation or non-charity.

When a public charity establishes an agency endowment at a community foundation, which organization owns the contributed funds?

The community foundation has legal ownership of funds contributed to an agency fund. As such, the community foundation’s board has fiduciary responsibility over the funds. The legal ownership of the funds is a frequent source of confusion between agencies and community foundations.

Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 958-605-15-8 requires that an agency recognize a beneficial interest in the assets held by a community foundation as an asset on the agency’s books. While ASC 958-605-15-8 requires the agency to recognize a beneficial interest in the assets held by a community foundation, the ASC only affects the accounting treatment of the funds, not the legal ownership.

Since the agency is releasing legal ownership of the transferred assets, how can the agency’s board agree to the transfer of assets to establish an agency endowment without violating its fiduciary duties?

The agency’s board must make the decision regarding whether transferring legal ownership of the funds to establish an agency endowment is consistent with its fiduciary duties. An agency’s board may decide that such a transfer is prudent and consistent with its fiduciary responsibility to the organization because of the benefits provided as a result of the relationship with the community foundation. For example, the agency may benefit from the expertise of the community foundation in long-term management of assets, the flexibility the community foundation may provide by accepting types of non-cash contributions not accepted by the agency, or the protection that the transfer will provide by establishing an endowment at a separate organization.

Can a community foundation accept a non-endowed fund from an agency?

If established properly, a community foundation may accept a non-endowed (aka spend-down) fund from an agency. The key is that the agency may not reserve the right to unilaterally withdraw the fund from the community foundation. Instead, grants to the agency must be subject to the community foundation’s approval.

Who can donate to an agency fund?

Third Party Contributions – Individual donors may not make contributions to an agency fund. Individual donors may contribute directly to the organization for the agency fund, or they may create a designated fund at the community foundation to benefit the organization. The Community Foundation for the Fox Valley Region does not support fundraising activities by your organization and cannot accept gifts into the fund from donors generated by those activities.

Legacy or Estate Contributions – A community foundation can receive distributions from charitable trusts or bequests from an estate on behalf of your organization and create a designated fund. Our team members at the Community Foundation for the Fox Valley Region work with your donors across the full range of planned contributions, including bequests, beneficiary designations, and charitable trusts to receive assets for the future of the fund. Designated funds are different from agency funds; please ask our gift planning staff for more information.

Sources:  

• Council on Foundations article “FAQ: Agency Endowment Funds”
• Council on Foundations article “Accounting for Agency Endowment Funds Held at Community Foundations.”

Caveat:  

The above information is being provided with general information related to the agency agreement between a non-profit agency fund and the Community Foundation for the Fox Valley Region.  Each non-profit organization should consult with its own auditors, tax professionals, and legal counsel in determining the best solution for its needs. The above is not to be construed as tax, accounting, or legal advice.  

Questions? Contact the Agency Funds Team here.

Brochure: View and Download our Agency Funds brochure, and learn how we partner with you to achieve your goals:

A Guide to Your Agency Funds: View and Download the Community Foundation’s comprehensive guide to Agency Funds:

Frequently Asked Questions: View and Download our FAQs to keep in your files for reference:

Meet Your Agency Funds Team: Our team will work collaboratively with you to address any needs you have, whether it is assistance with portal login, financial information, questions on grants, or assistance in growing your fund(s).