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Professional endowment management and investment services for nonprofits.
What is it?
A permanent fund set up by a nonprofit to hold assets transferred from it or donated directly by donors. The nonprofit receives annual distributions of the income from the fund, or may allow the income to accrue to help the fund to grow.
When is it used?
When a nonprofit wants professional management of its funds, or wants to set aside an endowment fund. An endowment fund can also be used to receive planned gifts and can provide assurance to donors that funds will be handled well. If The Minneapolis Foundation acts as trustee of your donor’s charitable remainder trust or issues your donor’s charitable gift annuity, the funds ultimately received will be endowed, and may go into a separate named endowment fund or into your organization’s endowment fund, as the donor directs.
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How does it work?
A nonprofit may transfer its own funds into an Endowment Fund, or donors may give to it directly.
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What are the minimums?
An Endowment Fund should maintain a minimum balance of $10,000.
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What are the fees?
Endowment Funds pay 1% of the trailing 12-quarter average fair market value of the fund as an administrative charge. Fees and expenses of the Master Fund or mutual funds in which assets are invested are assessed directly to your fund, and usually run 0.5% to 0.75%.
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How are the funds invested?
The Foundation has control over the investment and reinvestment of the Fund. Assets of the Fund may be commingled for purposes of investment with other assets of the Foundation. Ordinarily, funds are invested in the Master Fund for The Minneapolis Foundation. Investment policies are available for your review. Other options include a Money Market Fund, a Bond Fund, and a Socially Screened Mutual Fund.
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How are the assets treated for accounting purposes?
If all of the funds are transferred from the nonprofit, it is an agency fund, and the nonprofit may continue to list the assets on its own books and on its 990. If funds are given to The Minneapolis Foundation directly by donors, it is a non-agency fund. In such a case, the nonprofit may footnote it on their financial statements, but may not list it as the nonprofit’s own assets. A fund holding both kinds of gifts may be divided provided each fund meets the $10,000 minimum balance. Donors may make gifts online by credit card or directly to The Minneapolis Foundation for non-agency funds, but not to agency funds. Refer to FASB Rule 136.
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What do we need to do to receive income payments?
Unless you set it up differently, income payments will be made automatically. Let us know who at your organization is authorized to give us instructions if you may want to consider letting the income accrue from year to year so the fund may grow more quickly.
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How can we add to our fund?
Your nonprofit may transfer assets to your agency fund at any time. Your donors may contribute to your non-agency fund at any time, in any amount, using any of the following: cash, closely held stock, partnership interests, publicly-traded securities; real estate, and life insurance. Online credit card donations may also be made. Gifts of illiquid assets must be pre-approved and require the review of our Gift Acceptance Committee.
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How are gifts acknowledged?
All on-line contributors receive an electronic (e-mailed) receipt. Gifts of $250 and above are acknowledged by the Foundation in writing. Nonprofit organizations will receive a list of contributors to their funds with contact information so they can personally acknowledge the donations, unless donors have requested anonymity.
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What if our Nonprofit ceases to exist?
The Minneapolis Foundation is a community foundation, and as such has a “variance power”. If it is no longer possible to support the original charity, the following paragraph becomes effective:
The Board of Trustees shall have the power to modify or eliminate any restrictions, condition, limitation or trust imposed with respect to any funds or property the title to which has become vested in this corporation if, in the sole judgment of the Board of Trustees, such restriction, condition, limitation or trust becomes unnecessary, incapable of fulfillment or inconsistent with the charitable needs of the community or area served by this corporation.
The Minneapolis Foundation will then match as closely as possible the mission of the original nonprofit and distribute the income to a similar Nonprofit or for a similar purpose.
Contact Us
To learn more about The Minneapolis Foundation's services for nonprofits, contact Mary Ellis Peterson at (612) 672-3859, (866) 305-0543, or mepeterson@mplsfoundation.org.
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