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AHRF Endowment Funds

Policies
Procedures

Definition
An endowment fund is an endowed fund established under agreement with the Foundation by a gift to the Foundation for the benefit of a single nonprofit agency as agreed with the Foundation at the time the fund is created.

Policies for AHRF’s Endowment Funds

  1. Establishment of AHRF’s Endowment Fund

An endowment fund is established under an arrangement between an agency (or donor on behalf of an agency) and the Foundation for the donation of money or property from the agency (or donor) to further carry out the charitable purposes of the Foundation for the benefit of the agency.

Each agency endowment fund shall be the property of the Foundation, unless the agreement is revoked as provided below. The Foundation shall have the ultimate authority over and control of all property in the fund, and the income derived therefrom, for the charitable purposes of the Foundation. Each fund shall be recorded on the books of the Foundation as a separate fund and may be named by the agency or donor.

  1. Limitations

Since the Foundations purpose is to support research into hearing and balance disorders related to the inner ear, any agency endowment fund must similarly serve such research.

The minimum amount to establish an agency endowment fund is $100,000. Following IRS regulations, the Foundation cannot certify to a donor the value of a contribution of property.

Distributions shall be made only from the net income of an agency endowment fund. No distributions will be made from the principle of the fund or from capital appreciation. The foundation, as a public charity, shall not make any distribution from an agency endowment fund except as a distribution from the foundation for its charitable purposes.

Distributions may be made for unrestricted purposes, or restricted to an existing program or fund within an agency. The Foundation reserves the right to remove or modify any restrictions if warranted by a change or termination of the specified fund or program.

  1. Investment of Assets

The Foundation has the responsibility and authority for the investment of the assets of each advised fund. The assets of any fund may be commingled with those of other funds of the Foundation for investment purposes.
Decisions with respect to retention, investment, or reinvestment of assets or commingling of assets shall be made by the Finance Committee or by a committee or agent authorized by the Board, in accordance with the Foundation’s investment policies.

  1. Revocation of Endowment Found

In the event that the Board of the beneficiary agency determines that, due to unforeseen emergency, the agency’s future existence is jeopardized due to lack of funds, the agency’s Board of Directors may petition the Board of Directors of the Foundation to receive some or all of the principal.

  1. The Board of Directors of the agency must submit a resolution passed by a 2/3 majority requesting the withdrawal of funds from the agency’s endowment fund.
  2. Only the original principal and any additional gifts received directly from the agency and its pro rata earnings (less distributions which have already been made) are subject to withdrawal.
  3. Any principal and allocable earnings in the agency endowment fund received by the Foundation directly from anyone other than the agency are not subject to withdrawal.
  1. Termination of Existence of Beneficiary

In the event that the legal existence of a beneficiary of an agency endowment fund shall terminate, the Foundation’s Board of Directors may identify another organization similar in mission to receive distributions or may elect to add the funds to a relevant field of interest fund or to the Foundation’s general endowment fund.

  1. Exceptions

Any exceptions to these policies require approval by the Board of Directors.

Procedures

  1. Preliminary Discussion with Agency

When an agency expresses an interest in establishing an agency endowment fund, the staff will ascertain the agency’s wishes and objectives and will acquaint the agency with the Foundation’s current policy and procedures, including the requirement for an appropriate agreement to establish an agency endowment fund.

  1. Approval in Concept

If the agency wishes to proceed, the staff will notify the Finance Committee and request approval in concept and authority to proceed with drafting an agreement.

  1. Staff Review and Report

The staff will review the proposal, determine that it is in accord with the Foundation’s established purposes and policies, that the Agency is a public benefit charity under section 501 ( c ) (3) of the Internal Revenue Code, and that it meets the Foundation’s normal standards for acceptable grant recipients.

The staff will prepare a report of its findings and recommendations, including a draft agreement, for the recommendation of the Finance Committee (or the chairperson acting on its behalf) and subsequent submission to the Board.

  1. Board Approval and Authorization

The recommendations of the Finance Committee and staff will be presented to the Board of Directors for action. If the Board approves the creation of the agency endowment fund, it will authorize an officer of the Foundation or its Executive Director to sign the agreement and accept the donation on behalf of the Foundation. (If the agreement calls for the contribution to be paid in installments, the authorization shall cover acceptance of the remaining installments.)

  1. Investment Review

The Foundation’s Finance Committee shall review the investment of the fund annually to determine if the asset allocation is in the best interest of the agency.

The fund will be valued on December 31 for the following calendar year. In January, all fees will be deducted and net income distributed to the Agency.

At that time, the donor shall be provided with summary information on the investment of the fund and shall be accorded the opportunity to express views thereon if desired.

  1. Distributions to be Current

An amount approximately equal to the net income of an agency endowment fund shall be distributed during the fiscal year in which such net income is realized or before the end of the next fiscal year, unless the Board of Directors determines that it is in the best interest of the Foundation to accumulate net income, in whole or in part, for a specific project which will be accomplished in a reasonable period of time.

  1. Expenses of Management and Administration

There shall be an annual administrative fee for agency endowment funds based on the current fee policies of the Foundation. The fee is payable on January 1st and is based on the preceding December 31st market value. The fee is for the calendar year commencing January 1st, and shall be drawn from the income of the fund. In addition, the fund shall pay its proportionate share of the investment fees charged by the Foundation’s professional money managers.

  1. Annual Agency Review

The staff shall review the Agency annually and determine whether its activities continue to be in accord with the Foundation’s policies and standards for grant recipients. They will provide a brief written report for the Board of Directors, bringing to their attention any significant deviation.

  1. Additional Contributions

An agency or donor may make additional contributions to an established agency endowment fund.