Information for Nonprofits
Nonprofit Agency Endowments
Public charities in Wamego and the surrounding area are welcome to contact and consult with the Wamego Foundation and the Manhattan Foundation and their staffs regarding the many services and the wealth of charitable information they provide. There are many advantages to working with these Foundations which are reflected in the broad scope of resources, information and expertise they can offer to the nonprofit community.
The Manhattan Foundation and the Wamego Foundation advocate the creation and building of endowments long term because they can provide an important source of permanent capital formation. Endowments properly structured have the potential for constituting a significant component of a community’s long term plan to build a stable and secure financial future for a variety of nonprofit charitable organizations. Currently, there are numerous area nonprofit charitable entities in the process of creating and building endowment funds with these Foundations to benefit charitable organizations within their respective communities. These endowment funds are viewed as being critical to providing nonprofit charitable organizations with a reliable, ongoing source of financial support well into the future. The Manhattan Foundation and the Wamego Foundation contribute to and further enhance these efforts by providing and leveraging their expertise, information, systems and excellent financial management and oversight functions to and for these fund raising endeavors.
The Importance of Endowments
Structured properly and with adequate funding, endowment funds can provide a stable source of continuing annual financial support for a variety of charitable causes in the community. This source of funding can also prove to be an invaluable aid in uncertain economic times when other financial support funds or systems may no longer be viable or available to assist these entities. During more prosperous and healthy economic periods, the permanent endowment funds are available to provide funding support and financial resources for growth, expansion of services and increasing amounts for charitable grants and bequests. Endowments can also be created and structured to provide needed capital for the development of new programs and services and/or the expansion of existing programs and services.
Gifting to existing endowment funds also provides intangible benefits to both donors and the organizations that benefit from such gifts. Donating to an agency's endowment fund creates the opportunity for each donor to contribute and leave a lasting legacy of financial support in the donor’s name. Each nonprofit organization with meaningful endowment programs is also sending a message to its donors and the community at large that the organization is dedicated to building the resources necessary for fulfilling its mission for decades to come. This commitment alone can also act as a giving catalyst by encouraging increased donations and support for the endowments of these organizations.
An Explanation of Endowment
For those unfamiliar with the concept, an endowment is a pool of one or more types of assets, all or a portion of the earned income and earnings from which are available each year for distribution for the use and support of the charitable purposes and programs of the organization for which the endowment was established. The remaining assets, which represent permanent gifts to the endowment corpus, together with investment returns which are retained and which remain undistributed, will continue to be held in the endowment fund and will provide for growth of the endowment fund balance over time. Consequently, increasing amounts of funding are provided for from continuing investment of retained endowment assets and can be expected to be available for the support of the organization well into the future.
Reasons for Establishing Endowments with Foundations
Included as an important part of their missions and vision, the Manhattan Foundation and the Wamego Foundation both take their role seriously in being able to provide stewardship and expertise to nonprofit organizations that play a vital role in their communities. Of primary focus is the creation of permanent sources of community funding and capital in perpetuity for the benefit of residents and charitable causes domiciled in the Wamego community and surrounding area. Nonprofit organizations that chose to partner with the Manhattan Foundation and the Wamego Foundation in creating, funding and administering endowments can expect to benefit significantly from a variety of distinct advantages which such partnering can provide, including the following:
- Reduced overhead and administrative costs and major reduction in time consuming administrative activities. Between the staff of the Manhattan Foundation and the Wamego Foundation, all gift processing, record keeping, tax reporting, administrative services and audits and other administrative functions will be performed by either or both of these Foundations.
- Professional investment management is provided for each and every endowment established with the Manhattan Foundation and the Wamego Foundation. Investments are overseen and monitored by both the Manhattan Foundation Trustee Investment Committee and the Wamego Foundation Investment and Finance Committee, each of which includes local community professionals who represent both investment management and advisor disciplines among their members.
- Expert professional and continual investment management and oversight is currently provided by the investment manager and advisor to the Manhattan Foundation and its affiliates, The Trust Company of Manhattan (the “Trust Company”). The Trust Company provides investment management services through its professional staff located at its office in Manhattan, Kansas, as well as through staff from additional offices of The Trust Company which are located in various other Midwestern Cities. The Wamego Foundation, the remaining nine affiliates of the Manhattan Foundation and the Manhattan Foundation itself are in a position to secure the maximum return on investment of each of their definitive fund assets as the result of combining, leveraging and investment monitoring of these assets. This result has been achieved by pooling all Manhattan Foundation and affiliate assets together in a pooled investment structure with The Trust Company.
- The Wamego Foundation, together with the other affiliates of the Manhattan Foundation, are also able to receive competitive investment, administrative and other fees. This has been achieved from various economies of scale which have been made possible by the size and diversity of activities generated by the unified operating structure employed by the Manhattan Foundation and its community foundation affiliates.
- The Manhattan Foundation and the Wamego Foundation both seek to provide enhanced publicity regarding ongoing nonprofit and charitable fund endowment efforts and other charitable activities in their respective communities. This publicity is generated through a variety of publications issued by these Foundations, such as Foundation Annual Reports, publicity generated by their respective websites and other various social media sources and outlets, educational materials published and distributed by the Foundations and information disseminated by various media at community foundation seminars and at gatherings of numerous public interest groups and community organizations and associations.
- The Manhattan Foundation and the Wamego Foundation also possess the inherent capability through access to media sources and to their business connections to provide special recognition for donors who wish to either create a new named fund, or make a significant contribution to an existing fund, in each instance on behalf of and for the benefit of nonprofit entities that provide charitable services and grants for their local communities.
- The Manhattan Foundation and the Wamego Foundation endowment fund creation programs are designed to facilitate ease in donor giving and in the receipt of all forms and types of gifts. Such gifts may consist of those easily transferable such as cash, marketable and non-marketable securities, real estate and interests in real estate, insurance policies and private business interests, to facilitating and assisting in the transfer and receipt of gifts which may be more complex in structure or which may consist of non-cash assets.
- Professional staffs from these Foundations are available at each donor’s convenience to provide assistance to the donor in formulating and carrying out the donor’s gifting plan. Both the Manhattan Foundation and the Wamego Foundation welcome the opportunity to provide technical assistance and advice to donors regarding planned giving and the transfer of current and future gifts intended to benefit and enhance both current and future endowments.
- The staff personnel of both Foundations can also assist a donor with different types of planned gift options, including charitable gift annuities and more complex gift transfers, which afford donors a variety of choices for supporting and expanding endowment funds.
How Endowments Enhance Donor Satisfaction
Donors who contribute gifts to endowment funds do so with the expectation that their endowment donations will provide lasting benefit and result in an increase in amounts available for award to charitable causes as the endowment grows over time and for an indefinite period. The Manhattan Foundation and the Wamego Foundation can assist both nonprofits and donors through the many services they can provide, some of which among include the following:
- Staffs and the governing bodies of these Foundations, together with local investment professional financial managers and advisors engaged by nonprofits and donors, are able to provide continued monitoring of endowment and other funds and accounts and the investment return being realized from the investment of the assets held for these funds and accounts.
- These staff professionals provide services and guidance to nonprofit organizations, agencies and other entities relating to such subjects as marketing and tax deductibility of gifts. These services include a comprehensive and detailed analysis of the tax consequences and benefits that can result from planned current and future gifting opportunities. Further guidance is also available should changes in tax laws or other laws require a restructuring or replacement of an existing fund agreement, either to conform to or take advantage of a favorable change in such laws.
- Furthermore, these Foundations and their staff provide services, advice and planning concepts and support to the donor's professional advisor to guide and facilitate gift planning and giving, whether for endowments or for other funds.
Foundation Administrative Services Support
The Manhattan Foundation and the Wamego Foundation both accept and assume responsibility for the administration and investment of endowment funds and various types of expendable funds as well. Such service and support will likely free nonprofit and other organizations which maintain funds with these Foundations from both the additional costs and administrative burdens of gift processing, investment decision making and tracking and other record keeping duties associated with the management and investment of assets as well as the reporting requirements inherent in these various fund activities. Illustrations of how some of these services are rendered and performed are as follows:
- The Foundations make annual distributions from investment earnings on assets held and invested in the endowment to a nonprofit organization at the direction and request of the organization. These annual distributions can be used for general operating requirements and support of the organization, or for the award of grants to various charitable causes and projects as directed and requested by the nonprofit organization.
- Annual distributions under policy disbursement and guidance directives administered by the Manhattan Foundation and its affiliates are limited to a maximum of 4.00% of the value of the total endowment fund assets as determined in early January of each year. However, if the total amount of earnings available for distribution is equal to less than 4.00% in any given calendar year, the amount available for distribution is limited to an amount equal to or less than such earnings. Under existing law, cash and other assets donated to an endowed fund cannot be invaded and withdrawn and distributed for operating expenses, grants or other purposes to other parties without incurring significant tax liabilities, except under very limited circumstances. The distributable amount and computation method for distributions are reviewed annually and subject to change by the Manhattan Foundation Executive Board of Trustees and the Wamego Foundation governing board.
- The endowment fund receives a proportionate share of the investment earnings which are generated from the investment of assets in the Manhattan Foundation and affiliate foundations combined assets investment pool. Each foundation’s share of these earnings is calculated and confirmed by the investment manager and advisor engaged by the Foundations to handle the investment of these assets and then reviewed and approved by GMCF staff.
- Contributions to a nonprofit endowment, if structured and administered properly and adequately funded, can be expected to provide financial support to the nonprofit entity indefinitely, and even theoretically in perpetuity. The Foundations are also able to respond in the event a nonprofit organization ceases to exist or in the event the nonprofit should lose its charitable tax-exempt status for whatever reason. This response is made possible through policy directives and powers conferred on the governing bodies of the Manhattan Foundation and the Wamego Foundation, respectively, as well as through that nonprofit organization’s endowment fund agreement with these Foundations. These directives and agreements stipulate that the Foundations may take action to provide for the charitable assets of a fund affected by these events to be redirected to another endowment fund or funds supporting similar charitable causes. The ability of these Foundations to so act can, in large part, alleviate the concerns of donors that an endowment to which they contributed could be terminated. The policy directives so granted to the Foundations provide the assurance that the assets of that endowment will be secured, transferred and used by these Foundations following any such termination in a manner which will support the same or similar causes, both immediately and in the future.
- Donors and nonprofits are both cautioned and advised that an asset contributed by a donor to an endowment fund, regardless of the type of asset, becomes the permanent asset of the Manhattan Foundation and the Wamego Foundation. This vesting occurs by virtue of and as expressly provided in the agreement entered into by the creator of the fund and the Foundations in order to assure compliance with existing tax laws and regulations. However, donors are still permitted to provide suggestions, recommendations and certain general directives relating to use and expenditure of the proceeds of such assets, including the investment income derived therefrom. This donor input is often provided for and directed by fund agreements requiring distributions to be used for the support and benefit of the nonprofit organization for which the fund was established and/or for grants to certain charitable causes.
- Generally, the Manhattan Foundation assesses and collects an annual administrative fee of 1.00%, or the amount of $40.00, whichever is greater, for each fund (including endowment funds) administered by the Foundation, including the funds of the affiliates. This fee is assessed monthly (0.0833% per month) based on the market value of the fund as of the last day of the prior month. Each of the affiliates receives a portion of the administrative fee assessed on the asset base held in the funds of that affiliate foundation. This is available for use by the affiliate to cover the affiliate’s administrative costs not covered by the Manhattan Foundation. In addition to this administrative fee, the Manhattan Foundation assesses an additional annual 0.20% fee to pay the fee of The Trust Company, which acts as investment advisor and fund manager for the fund assets of the Manhattan Foundation and its affiliates. The annual administration fee (1%) and investment management fee (.20%) are deemed to be reasonable and very attractive when compared to the costs of administration and management of funds independently managed on a fund by fund basis and demonstrate the advantages of the pooled assets investment structure utilized by the Manhattan Foundation and its affiliates. It is also noted that scholarship funds held by these Foundations are subject to a different fee structure than that used for non-scholarship funds. Fund investment earnings and fund balances for all Foundation funds are posted in monthly and annual financial reports net of these fees.
For additional information that is available for interested donors and nonprofit organizations, including additional information regarding services and gift planning and programs, both donors and nonprofits alike are invited to contact the Wamego Community Foundation at 785-477-3277 and the Manhattan Foundation at 785-587-8995.
Investment Performance Parameters
The funds comprising the Manhattan Foundation and affiliated community foundations investment pool can be individually directed to be invested by fund in one or more of five different investment vehicles available for fund investment. These investment choices are ranked by both risk exposure and the amount of investment return as directly related to and affected by that risk exposure. To put it simply, the less risky the investment fund is, the lower the investment return, while investment in a higher risk alternative is viewed as having the potential to produce a higher investment return. Investment of assets in endowment funds are usually managed in such a manner as to strike a balance between minimizing investment risk to the extent possible with the goal of preserving principal over time and maximizing investment return, all in a manner which is deemed to be prudent and consistent with sound investment management principles. As described above, investment earnings generated by investment of assets in an endowment fund are available for distribution for the support of, and for grants conferred by, the, nonprofit organization in whose name the endowment fund was established, subject to certain limitations and policies applicable to distributions as adopted by the Manhattan Foundation.
To access the Web site which describes the investment policies of the Manhattan Foundation and its affiliate foundations, click on this link.
To access the Web site which provides an historical overview of investment performance and investment returns in recent calendar years for Manhattan Foundation and affiliate investment funds, click on this link.
Fund Accounting and Tracking
Nonprofit organizations establish endowment funds with the Manhattan Foundation and the Wamego Foundation for a variety of reasons. These include access to administrative services, investment expertise and maximizing return on asset investments, as well as efficiencies in fund administration, savings in administrative and other fees and costs and access to planned giving experts. In providing these various advantages to nonprofits, the Manhattan Foundation and the Wamego Foundation both strongly encourage each nonprofit organization to consult with its own auditors and advisors in researching and planning for the establishment of their endowments. As an accommodation to its nonprofit and other funds, the Manhattan Foundation and the Wamego Foundation provide an online service for nonprofit and other entities and organizations. This online service is referred to and designated as “Donor Portal” and upon obtaining a secure password from one of these Foundations, nonprofit and other entities can access various accounting, financial and other information concerning their respective funds, including fund balances and earnings as well as grant and gifting transactions, all of which is updated daily and is available 24 hours per day, 7 days a week. For access and directions in securing a log-in password and receiving information on navigating this website link, organizations having funds with the Manhattan Foundation and Wamego Foundation can click here to access the link to the Donor Portal.
Nonprofit Fund Creation
Nonprofit 501(c)(3) public charities in the Wamego community and the surrounding area have open invitations to establish an endowment fund with the Wamego Community Foundation. Nonprofit organizations desiring to establish such an endowment with the Wamego Foundation should contact the Foundation which will provide guidance and direction for the nonprofit entity to:
- Complete the appropriate fund agreement with the Wamego Foundation to establish the endowment. This documentation will be provided by the Wamego Foundation. For consultation in completing this step, nonprofits and other entities may contact the Wamego Foundation at 785-477-3277 or the Manhattan Foundation at 785-587-8995.
- Pursuant to policy guidelines provided and adopted by the Manhattan Foundation and the Wamego Foundation, an initial minimum contribution of $10,000 is required to be made to the endowment at the time of execution of the fund agreement, which may be contributed by the nonprofit organization and/or one of the nonprofit’s donors.
Upon completion of these two requirements, the newly created endowment fund is ready to receive additional contributions from donors at any time and in any amount.