How to Create an Organizational Fund with the Humboldt Area Foundation (HAF)
These funds can be used to help cover
basic operational costs, pay for special projects and/or fundraise for
a capital campaign. They offer a new option for current and potential
contributors to your organization.
An organization may create a fund with a minimum gift of $2,000. However, HAF asks the organization to reach a minimum fund balance of $10,000 within five years.
Creating the fund
First, please read “Information about Organizational Funds,” to make sure that creating a fund is the right thing at the right time for your organization.
If it is, the donor services staff looks forward to working with you to define and describe your new fund. With your instructions, we will compose a “new fund agreement letter” that tells the Foundation how to administer the fund in accordance with your intentions as the years go by. You can make changes in the agreement at any time, simply by notifying the Foundation in writing.
We will help you write a description of your fund and include it each year in the HAF Yearbook. We also would be glad to include your logo. The Yearbook is distributed in November to approximately 9,000 people throughout the United States and is a good marketing tool for your organization.
To set up a new fund, you’ll need to decide:
|Several local non-profit agencies, schools and faith-based
organizations have started their own organizational funds to support
and sustain the work they do.
- What will be your fund’s exact name or title?
- What type of fund will it be?
- What will be the fund’s purpose?
1. Naming your fund
For marketing purposes, it is a good idea to include your organization’s name in the fund title, preferable at the beginning.
2. Types of funds
Most organizational funds are endowment funds. That means that expenditures are made in accordance with our spending policy which at present is, to make annual grants of 4% of the fund balance, averaged over the past 16 quarters. This policy allows grantmaking in years when market returns are low as well as when they are high. With the market returning an average of 8% a year, the fund will continue to grow and provide funding forever.
However, some organizations choose to establish expendable funds from which a portion of the principal balance as well as the available income can be spent to accomplish the funds’ purposes. As an example, a non-profit organization might create an expendable fund to build a new building.
If the organization itself establishes the fund, it is called an organizational endowment (or expendable) fund. If one of your supporters creates the fund to benefit your agency, it is called a designated endowment (or expendable) fund.
3. Fund Purpose
Do you want your fund to support the ongoing work of your organization? Or, are you saving for a specific goal, such as a new building? Defining and describing your fund’s purpose will give potential donors the information they need.
After you’ve had some time to think about this, give us a call or stop by to talk with staff. We will draft the new fund agreement letter and send it to you for your review. When it’s just the way you want it, we will formalize it as an agreement with your signature and the signature of HAF’s Executive Director, Peter Pennekamp. We will ask for a copy of your IRS Tax Exemption letter and a copy of your Board minutes in which the Board voted to establish the fund with HAF
Any questions? Please feel free to get in touch with the HAF Donor Services Director,
. Thank you for your interest. We look forward to working with you.
Services for Organizational Funds
• Statements for each fund, including investment activity and itemized lists of donations and disbursements
• Acknowledgment of gifts made to the fund, receipts meeting current IRS regulations, and donor thank you letters
• Independent audit of all financial transactions
• Annual IRS tax form 1099 for reporting fund investment income activity for your 990 tax return preparation
• Inclusion of fund description in HAF’s Yearbook with annual circulation of 9,000
• Upon request, assistance with press conference at fund’s inception and/or press release at time of grant award
• Professional charitable estate planning assistance for potential donors to the fund
The Humboldt Area Foundation (HAF) manages $55 million in assets and currently pools investments for over 600 funds. Investing on a pooled basis produces significant economies of scale, including: (a) enhanced diversification of assets across investment styles and money managers; (b) enhanced access to money managers that might otherwise be unavailable due to account size minimums; and (c) reduced costs due to the application of size-sensitive fee schedules to an expanded asset base. Fiscal oversight of investments is provided by the HAF Investment Committee and Board of Directors in alignment with California Prudent Investor Rules.
HAF participates in the American Funds Community Foundation Program. Specific American Fund mutual funds are joined with selected funds from the mutual fund family of DFA (Dimensional Funds Advisors) to acquire optimum pool returns. Angeles Investment Advisors, Inc. provides an in-depth third party review of HAF’s investment strategy each year with results available to the public on the HAF website at www.hafoundation.org
The Humboldt Area Foundation also offers non-risk fixed income investments for short-term expendable funds. These returns vary in alignment with prime rate fluctuations.
HAF's assets are diversified to reduce risk and maximize returns over long-term horizons as follows:
||Fixed Income Fund
|Real Estate Securities
HAF's investment strategies have consistently produced competetive returns in the community foundation field. The following fiscal year returns are reported net of investment fees as of June 30 of each following year.
The annual rate of support for the above Foundation services for organizational funds is:
- 1.5% of the principal balance for funds with a balance less than $100,000
- 1.0% of the principal balance for funds with a balance of $100,000 - $500,000
- .75% of the principal balance for funds with a balance over $500,000
- There is a minimum fee of $150 per year for expendable funds.