 Contact Gift Planning Officer Edgar Aguirre today at (213) 413-4130 to learn more about this topic. |
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In addition to grants and program-related investments, the California Community Foundation offers a variety of endowment building strategies and other philanthropic services to the nonprofit community of Los Angeles County.
Endowment Building Services for Nonprofit Organizations
Endowment building is critically important to the future stability of your nonprofit’s efforts. Creating a fund at the community foundation can be the first step in achieving your goal.
Nonprofit Organization Funds
A nonprofit organization fund may either be (1) a restricted endowment fund that pays out a portion (5%) of the value of the fund annually to your agency or (2) a “quasi-endowment” that allows for distribution of income and principal at the recommendation of your board or staff. You can arrange to receive the income from your fund or capitalize the income and appreciation from year to year.
Nonprofits also benefit from lower investment and administrative costs resulting from our economies of scale. Our administrative fee for a nonprofit agency endowment fund is .5% per year -- which, when combined with our investment costs of approximately .50%, means that overall costs for administering a nonprofit fund are about 1%.
For a nonprofit looking to build upon its success, teaming up with the community foundation can bring a much-needed boost.
Endowment Building Strategies
When your organization creates a fund at the community foundation, all of our gift planning resources are at your disposal. Complex gifts such as real estate and closely held business interests can be facilitated through your endowment at the community foundation. The community foundation can act as trustee for charitable remainder and lead trusts.
Lastly, nonprofit organizations that have not been licensed to offer charitable gift annuities in California can offer them through the community foundation’s charitable gift annuity service. The remainders of charitable gift annuities are placed in a designated endowment fund benefiting your nonprofit organization in perpetuity.
Endowment Partners Program
Every other year, the community foundation selects five agencies in Los Angeles County to participate in the Endowment Partners Program. Each partner receives a $10,000 grant that can be used for specific action items such as seminars, mailing pieces and consulting services. By forging a formal partnership with the community foundation, an organization can structure and run a beginner’s planned giving program, which is essential to building an endowment.
To help nurture our partners’ endowment efforts, the community foundation also established a competitive grant process for follow-up grants to Endowment Partners in years when new partners are not chosen. To qualify for the program, an agency must possess certain qualities that can lead to a successful planned giving program, including: fiscal stability, a committed and involved executive director and board and a good rapport with donors and volunteers.
Participants in the Endowment Partners Program establish an Agency Endowment Fund at the California Community Foundation, to which contributions may be made over time. The agency will receive a set percentage of assets of the fund as an annual grant for as long as the agency maintains its 501(c)(3) status.
If you have further questions, please do not hesitate to call Edgar Aguirre, development officer, at (213) 413-4130.
Charitable Gift Annuity Services for Nonprofit Organizations
Many nonprofit organizations in Southern California decline to start gift annuity programs because of the cost and burden of the application process to secure a license to offer annuities in California. As one of its many philanthropic services, the California Community Foundation can partner with agencies wishing to offer gift annuities as a tool to build their endowments.
How the Program Works
First, a donor enters into a gift annuity contract with the foundation — we take on all fiduciary obligations with respect to the payment of the annuity to the donor. Second, through our trustee bank, we make payments to each donor for life. Upon the death of the donor, the remainder of the annuity may be treated in one of two ways:
- Endowment. The foundation directs 5% of the remainder of each annuity to an additional reserve for annuities in effect. The remainder is placed in a restricted endowment fund at the foundation designated for the agency. This fund produces a perpetual income stream to the agency (currently 5.5% of the fund annually).
- Outright Grant. The foundation retains 25% of the remainder for its general purposes with the rest distributed outright to the designated charity.
Administrative Costs
Our trustee bank charges a fee for its services and the community foundation charges a .5% per year administrative fee on gift annuities established by non-profit organizations. Our minimum size gift annuity is $10,000.
Typical Situations
This service may be ideal for nonprofits in a number of situations:
- Those wishing to test-market gift annuities without going through the licensing process;
- Those with small constituencies that may produce too few annuities to justify getting a license;
- Those approached by a donor about an annuity that have not yet secured a license; and
- Those finding that their board or finance department are not currently equipped to manage the fiduciary responsibilities of offering gift annuities.
We hope this service helps nonprofits market and offer services to donors interested in life income programs — thereby also increasing donor interest in bequest programs and other planned giving options.
If you have further questions, please do not hesitate to call Edgar Aguirre, development officer, at (213) 413-4130.
Charitable Remainder Trust Policy for Nonprofit Organizations
The California Community Foundation can act as trustee of charitable remainder trusts. This philanthropic service for nonprofit agencies may be especially useful to agencies in situations involving complex assets such as real estate or business interests. It may also be helpful when a donor wishes to benefit one or more charities through the trust or when a donor wishes to create a permanent endowment fund through the trust.
The community foundation will prepare charitable remainder trust gift proposals and deduction calculations. We will also prepare trust documents for review by the donor and the donor’s advisors.
The community foundation’s annual administrative fee for charitable remainder trusts is currently 0.5%.
In its role as trustee, the community foundation sets investment policy and monitors trust investments. A third party manager, a bank trust company, administers each trust and prepares trust tax returns. There are additional costs charged by the community foundation’s third party trust manager. The minimum size trust we administer is $100,000.
Upon the death of the income beneficiary, the remainder of each charitable remainder trust may be used in one of two ways:
- The remainder of the CRT may be placed in a restricted endowment fund at the community foundation, the income from which (5.5%) would be payable annually to one or more specific charities named to benefit from that fund; or, in the alternative,
- Up to 50% of the remainder could be disbursed directly to one or more specific charities, with 50% staying at the community foundation in a restricted endowment fund for the named charities.
For more information about the community foundation's nonprofit endowment building services, contact Gift Planning Officer Edgar Aguirre at (213) 413-4130.
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