Annual Nonprofit Endowment Fund Distributions

ErikaWarren

Each year at the start of Fall we calculate and process annual distributions from our nonprofit agency endowment funds. In the past we would simply cut a check for every endowment and if the nonprofit wanted to reinvest the distribution back into their endowment fund they would either send the check back, or they would deposit it then write a check back to us. Very laborious and not very efficient. Last year we sent an email to every fund advisor to ask them to let us know if they would like their distribution reinvested, otherwise, we would cut and mail a check. We tracked responses through an excel spreadsheet.

We were hoping there might be a button or check box that a fund advisor could click to notify us that they would like to reinvest their distribution, and we could simply run a report to know which checks to cut but that is not a capability in the software yet. Do any other community foundations out there have a similar process with better efficiencies?

CelesteCarlson

We don't cut the check until we are asked to. A letter goes out to all fund advisors with their distribution amount available, and then they can choose to reinvest by not asking for a distribution.

BettieStammerjohn

We actually give our beneficiaries 3 choices (what was I thinking??)

To preface: we determine our distributions at the end of each fiscal year (12/31). We remove the amounts from the endowment, put in an interest bearing account.

A letter is sent to each beneficiary organization along with a fund report letting them know the amount available to them (or for a donor advised fund - amount available for granting)

They are given the choices of 1) having a check sent to them; 2) having us hold the amount for distribution at a later date in the year or build for a subsequent year; and 3) return the amount to the endowment (reinvest.)

Most ask for the check to them. We have one organization that asks us to hold the amount to be used in a future year. That's been the case for nigh on 16 years. Some take their distribution in the fall. A few reinvest - true for smaller endowed funds. A handful have said - don't ask us, just send us the check.

We've had to track this also on paper. Now that we are using CSuite, it would be nice to track it there.

And every year I swear that I'm going to stop giving them choices and just send a check. Except for the one that wants us to hold it. I know they want it that way because the fund is for maintenance/repairs of a historic log courthouse building. And if they need the money, they'll need more than the fund could pay out in one year.

Bettie Stammerjohn

MarieFelver

Erika,

We determine our distribution amount every fall, then cut the checks by March 1st. When the distributions are determined, we mail a letter to each designated recipient letting them know the next year's payout and that the check will be mailed in March. We ask them in that letter to notify us if they don't want the payout. We started this process a few years ago. We found that the nonprofits like this letter notification because this is normally the time they are preparing their budget for the following year (assuming calendar year end). We have about 80 designated funds.

Before we cut the checks in March, we make a point to email anyone who reinvested in the prior year just to confirm they want this year's distribution. Not everyone reads the letter we send in the fall closely :) We have maybe 5 we touch base with so it is manageable.

LindaYoder

This is the first year that we are using CSuite. We annually send distribution letters and would like to know if a) you have a distribution letter template you could share with us and/or b) you have a "step by step" process you follow to accomplish the same.

Thanks in advance for any help!

mattgreer

We send a letter with the option to take a check for the entire amount, take a portion and reinvest the rest or reinvest the entire amount. It has been quite cumbersome at times but it works for the most part.

Would anyone be willing to share their process for reinvesting funds when they don't cut checks?

We have a process but keeping the information straight for our FASB 136 reporting is always top of mind so I'm curious how everyone else is doing this.

Thanks!

MarshaStrauss

We do what Matt does. Granted, we are not a huge organization. I email out a letter about the distribution and the percentage info (below) with the form for them to make their choice attached (attached). They email it back to me and I enter the payment (if any) straight away and attach the pdf to the grant. I've created a a grant letter template for when I enter their choices and make payments.

Dear «Salutation»:

Enclosed please find the 2022 special interest endowment distribution for your organization from the «Fund_Name». This distribution is designated «Purpose».

The current distribution is based on the Foundation’s 2022 payout percentage of 4%, applied to the average of the fund’s market value for up to 12 previous quarters. The target endowment payout percentage for 2023 will remain at 4%. This payout percentage will help preserve the long-term value of the endowment, yet still provide a stream of current funding.

As always, Foundation staff is available to assist in any aspect of your giving plans.

Thank you for your support of our community and the continued opportunity to work with you.

Org Endow Page 2 template.docx