Grow Your Nonprofit’s Financial Future

An organizational endowment fund, also known as an agency fund, is a type of fund set up by a nonprofit. The organization transfers assets to the Community Foundation and names itself as the beneficiary. The Community Foundation manages and invests the funds for maximum growth, and also handles all of the accounting, financial reporting and annual audit. The principal (the original amount) is typically kept intact, while the income generated from investments is distributed back to the organization as grants or support. This allows the organization to have a reliable, ongoing income stream to support its mission, with the fund growing over time as it continues to earn returns. Essentially, it’s a way to help secure long-term financial stability for the organization.

Boreal Waters Community Foundation currently holds over [sixty] organizational endowments for local and regional nonprofits across northeastern Minnesota and northwestern Wisconsin. We partner with many different types of nonprofits, large and small, including: 

• Social service organizations
• Schools
• Museums, Libraries and Historical Societies
• Arts organizations
• Animal welfare organizations
• Local municipalities
• Environmental organizations

Many nonprofits wonder if an endowment is right for them. Before starting an endowment, it’s a good idea to make sure you have a solid foundation in place. Here are some key questions to consider about your organization that can help you decide if you're ready to start an endowment:

• Has your organization been in existence for at least 5 years? 
• Do you have a base of donors who give consistently?
• Have any of your donors notified you of a planned gift to your organization?               
• Do you have cash reserves that you would like permanently invested for maximum growth?

If you said "yes" to most of these, you’re likely in a great position to start an endowment.

These include:

• Allows your organization to focus on its mission and other priorities.
• Assures donors their conditions are perpetually met -- the fund agreement provides direction for the fund's use.
• Protection of your permanent assets from possible future Board neglect, shortsighted invasion, or improper use -- the Community Foundation serves as the guardian of the fund.
• The 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 Community Foundation handles investment management and oversight, all accounting and financial reporting, and the annual audit for funds held.
• Gifts to your organization’s endowed fund are tax-deductible at the highest levels allowed.