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AGENCY ENDOWMENT FUNDS

Agency Endowed Funds

Agency Endowed Funds can be established at CFAAC by the board of directors of a nonprofit organization. CFAAC handles the investment and management of the assets and the earnings from the principal are granted to support the programs or operations of the nonprofit organization. 

In honor of CFAAC’s 25th anniversary, we are offering nonprofits the opportunity to establish an Endowment Fund with CFAAC with no minimum contribution required and no set-up fees.  

Nonprofit Endowment Fund - Special Offer

Why Establish an Agency Endowed Fund at CFAAC?

Permanence
Building a permanent endowment is a critical step in ensuring your nonprofit’s long-term success. An endowment fund at CFAAC will assure your donors that they are contributing to a stable, growing organization, and to a purpose that will endure forever. If your organization should ever cease operations, CFAAC will redirect the income of the endowment to a foundation with a similar purpose. 

Efficiency 
An Agency Endowed Fund can be established at CFAAC with a minimum of $25,000. Your organization can add to the endowment at any time. The fund can be named after your organization, in honor of a major donor, or another name that reflects your organization’s mission. 

Your organization’s endowment monies are safeguarded to meet the future needs of the organization. CFAAC will manage your fund, report to the IRS and the State of Maryland, prepare quarterly statements, and distribute income to your organization. The assets in the endowment continue to be recorded on your organization’s balance sheet even though they are legally held and managed by CFAAC. 

Your organization will receive quarterly financial reports on the status of the endowment, including gifts, grants, fees, and investment returns. You will also have access through the online portal to review the status of your fund at any time. 

Investment Expertise 
Agency Endowed Funds are invested in CFAAC's Long-Term Growth pool for maximum return with reasonable financial risk. Your organization's endowment is pooled with the overall assets of CFAAC, which reduces investment management costs and allows exposure to sophisticated investment vehicles. Over time, your endowment should grow as the result of better-than-average investment results and low management fees. 

Income 
An endowment provides a relatively constant source of income for your organization. Distributions may be made annually according to CFAAC's spending policy. CFAAC's current spending policy rate is 4%. All income above fees accrues to your endowment. You may elect to save this additional income for future spending or return it to the principal. 

Visibility 
Through CFAAC’s promotional efforts, your organization’s endowment will be publicized throughout the community. In addition, your organization will become a CFAAC partner for community fundraising efforts such as Endow Maryland. 

The Endow Maryland tax credit applies only to gifts to permanent, endowed funds at qualified Maryland community foundations. These gifts will generate many times the initial value of the gift in benefit of Anne Arundel County forever. 

CFAAC is committed to helping ensure the stability of your organization. Our knowledgeable staff is happy to meet with you and share more, please call us at 410.280.1102.

Agency Funds as of February 7, 2024

Click on a link below to donate a special gift to that fund.

*Designated Funds for the benefit of a nonprofit with the goal of growing to become a permanently Endowed Fund.

 

Definition of Terms

AGENCY ENDOWMENT FUNDS: An Agency Endowment Fund is established by a nonprofit organization through the transfer of assets to CFAAC. The purpose of the fund is to provide financial support to the organization in perpetuity. Only the agency can make gifts to an Agency Endowment Fund. This allows the organization to report those assets as its own, with the offsetting activity reported in net assets. CFAAC also reports the assets, and the offsetting entry is classified as a liability. (See FASB* 136)

SISTER FUNDS: When a nonprofit organization establishes an Agency Endowment Fund, CFAAC also establishes a Sister Fund which allows CFAAC to accept contributions for an Agency Endowment directly from individual donors. The agency may choose the name of the Sister Fund and CFAAC will promote it on its website and donate page. A link will be provided to the nonprofit organization to encourage individual donor gifts to the Sister Fund. The individual donor(s) are eligible to receive Endow MD tax credits for their contributions to this permanent endowment fund, as available. 

DESIGNATED FUNDS: A Designated Fund is established by an individual donor or donors to benefit a nonprofit organization in perpetuity. The individual donor(s) are eligible to receive to receive Endow MD tax credits for their contributions to this permanent endowment fund, as available. 

CFAAC is the legal owner of all assets contributed to both Designated Funds and Sister Funds. For accounting purposes, the assets of these funds are reported on the CFAAC’s financial statements. The beneficiaries of these funds, the nonprofit organizations, should not record the market value of the funds as assets on their Statement of Financial Position. Rather, the nonprofit organization should record grants received from these funds in their Statement of Activity. The nonprofit organization can use footnote disclosure to provide a description of the Designated Fund. (See FASB* 116 and 136.)

ADMINISTRATION OF AGENCY ENDOWMENT FUNDS AND SISTER FUNDS:  Once an Agency Endowment is established, there are no additional costs or fees associated with the establishment of the Sister Fund. Although tracked and reported separately, assets are held in the same investment pool and annual distributions are calculated and disbursed in the same manner and at the same time as the Agency Endowment Fund.   

*Financial Accounting Standards Board

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