Your Partner in Community Philanthropy

Scholarships & Funds

Types of Funds

There are two basic types of funds: Endowment funds and Special purpose (or non-endowed) funds:

 

Endowment Funds

An endowment fund is one in which funds contributed remain intact and are not expended. Only the earnings on such a fund are expended, which allows the fund to continue giving perpetually.

 

Types of endowment funds include:

  1. Unrestricted funds
  2. Field of interest funds
  3. Donor advised funds
  4. Restricted funds
  5. Scholarship funds

Unrestricted Funds

     Unrestricted funds are those funds available to the Foundation for any of the charitable purposes encompassed by the Foundation’s mission. The Board of Directors or a duly appointed committee determines how the unrestricted funds are used.

 

     Unrestricted funds enable the Foundation to respond with maximum flexibility to changing community needs, to support innovative responses to community problems, and to enhance the quality of community life. No restrictions are placed on how these funds are to be used, leaving their most effective charitable application to the discretion of the Foundation.

 

     Unrestricted Funds are not specifically designated for use by a particular agency, cause, or area of interest. The Foundation’s Board of Directors would oversee the use of the named unrestricted fund and set priorities for its use. Unrestricted funds give the Foundation the greatest latitude over the years in how to direct grants, based on the Board’s assessment of changing community needs.

 

     Types of unrestricted funds include the Foundation’s Administrative Fund(see below).

 

            Administrative Fund

     As with any worthwhile organization, the Foundation has operating costs associated with its day-to-day operations. To offset these costs, the Administrative Fund was established. Local businesses and individuals have supported the Foundation through contributions to the Administrative Fund. Continued support through this fund is needed and appreciated.

 Field of Interest Funds

     Field of interest funds are those restricted or preferred by the donor to be used for a specific charitable purpose, without designating the recipient organizations or programs though which such charitable purpose shall be served. The Board of Directors or a duly appointed committee determines which organizations and programs receive grants from field of interest funds, and the amount and timing of such grants.

 

     Field of interest funds support a broad area of concern, which the donor has specified, such as health, youth services, or the arts.

 

     This type of fund allows the donor to support an area of charitable interest, defined broadly (such as education) or narrowly (such as math tutoring). They also can select a defined geographic area or specific community to benefit from their named fund. In determining suitable grant recipients that meet the fund’s criteria, the donor can stay involved, appoint an advisory committee, or leave the work to the Foundation’s Grants and Distributions Committee.

 Donor Advised Funds

     Donor advised funds are established by donors for unrestricted charitable purposes, with the donor or persons designated by the donor retaining the right to offer recommendations to the Foundation regarding the recipients and amounts of grants from the fund. The advice of a donor advisor cannot be binding on the Foundation, which must retain final authority to determine distributions from the fund.

 

     Donor advised funds provide a more “hands on” approach for donors, allowing for recommended distributions to specific charities, changing these as interests and community needs change.

 Restricted Funds (aka Designated Funds)

     Restricted funds are earmarked for a particular charitable organization, and all grants made from such funds must be made to or for the purpose of the designated recipient organization. The Board of Directors of the Foundation or a duly appointed committee determines the timing and the amount of grants from restricted funds. If the recipient organization ceases to exist or changes its status as a charitable organization, the Foundation’s Board of Directors will select an alternate charitable use for the restricted fund compatible with its original purpose. This important feature ensures that the gift will never be wasted or rendered inoperable by changing societal circumstances.

 

These funds are ideal if the donor wants to support one or more specific organizations of their choice. Designated funds often are endowed in perpetuity with the income used to support the specified organizations on an on-going basis. The Foundation ensures that disbursements are made to the appropriate charitable agencies as specified in the establishing fund document. Nonprofit groups can establish this kind of fund as part of their organization’s own fundraising strategy.

Scholarship Funds

     Scholarship funds are dedicated to providing grants to individuals for educational purposes. They may be restricted in one of several ways, such as for use at a designated educational institution or for a particular course of study.

 

Special Purpose Funds (aka non-endowed funds aka pass-through funds)

Special Purpose Funds are generally held for a shorter period of time and often support special projects, a community initiative, or a variety of charities. The fund comes to an end once the special purpose is fulfilled. These are not endowment funds – all principal and earnings are distributed.

 

 

 

Affiliated Funds

Another community foundation or charitable organization (with or without their own 501(c)(3) status)  may affiliate with the Wamego Community Foundation for mutual benefit, including negotiating greater rates of return on pooled investments, assistance with marketing and donor development, assistance with accounting and reporting, and other services that may be required. Affiliation may include the establishment of an unrestricted fund for general grant making purposes by the Affiliate or the establishment of other, named funds that may be unrestricted, field-of-interest, donor advised, restricted, or organizational. Each affiliation agreement will specify the mutual goals and purposes of the Foundation and the Affiliate.

 

Organizational Endowment Funds

These are endowment funds created by other nonprofit charitable organizations to which the Foundation provides financial, investment management, and other services. The organization that creates the fund has its own Board of Directors, which makes decisions as to disbursements from the fund.