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Fundraising
Planned Giving & Endowments |
Planned Giving & Endowments
"Planned Giving is the donor's
process of providing financial support to an organization, while achieving estate
planning and financial planning objectives. Planned Giving gifts come in three
forms unusually - donations, bequests or deferred gifts. Endowments fall under
the category of Planned Giving. Endowments are funds that are set aside, invested,
and a portion of the earnings are used to fund a particular activity or purpose
of your institution. Endowments are not "rainy day" funds, a saving
account, or a deficit filler.
Endowments are attractive for a number of reasons:
- Increasingly, grants and allocations
are highly restricted;
- Endowments are a great vehicle
for accepting deferred gifts;
- Useful tool in major gift campaigns"
-Source: Linda London, Nonprofit Advisor, CCSNYS Leadership
& Management Institute
Endowing
Your Library | Public Libraries & the Law [PDF
version]
An endowment is a permanent fund that provides income each year
to support your library. Here
are some important things to know when considering the establishment of endowment
funds:
Special District /
Municipal/ School District Public Libraries:
- May establish and manage
investment funds on their own, using the financial vehicles defined under
NYS General Municipal Law*.
- Are prohibited under
General Municipal Law from using third parties like community foundations
to hold endowment funds on behalf of their libraries.
- To establish an endowment
fund through a third party, such as a community foundation see the section,
"Public Libraries (all types)," below.
Association Libraries
- Although association
libraries do not fall under General Municipal Law MHLS recommends that they
follow these guidelines especially if they receive funds in part due to a
successful Chapter 414 vote or plan to do so in the future.
*Under NYS General Municipal
Law and subsequent court rulings, all funds (including privately raised
moneys) must be invested in the following limited number of financial vehicles:
- Time deposit accounts
or certificates of deposit in commercial banks and trust companies located
and authorized to do business in NYS;
- Obligations made by the
United States of America or guaranteed by the United States of America, and
obligations of the State of New York;
- Under very limited circumstances,
obligations of municipalities and other municipal corporations.
[Excerpted from the Handbook
for Library Trustees of New York State, 2005 edition]
Public Libraries (all
types):
- A separately incorporated
Friends Group with 501(c)(3) status may establish endowment funds for the
library with a third party (i.e. community foundation).
- Individuals who wish
to set up separate endowment funds (designated funds) through a third party
like a community foundation may do so and are not subject to General Municipal
Law. The library is the beneficiary of the fund but does not have any direct
authority over the fund(s).
- Funds received via tax
revenues (including 414 monies) may not be turned over to a third party.
- MHLS recommends that
association libraries also follow these guidelines even with non-414 monies.
- The library should still
cultivate/steward donors including thanking donors in writing and/or by phone,
even if endowment funds are held by a third party.
- The library may advertise
the endowment fund(s) in their publications and online.
Friends Groups:
- If your Friends Group
is separately incorporated (i.e. has their own 501(c)(3)
designation):
- They may establish
an endowment fund with a third party for your library.
- They may fundraise
to build the endowment fund(s).
- Friends should consult
with the library board president or director regarding access to the fund(s)
- If your Friends Group
is not separately incorporated:
- They may not establish
an endowment fund.
- Funds raised in the
name of the Friends may not be transferred to an endowment fund held by
a third party.
Individuals
Individuals may establish endowment funds:
Friends can fundraise
to grow the fund(s) if they clearly state that monies raised will be added to
the fund. Neither the Friends group nor the library has any direct authority
over these fund(s).
Related Resources
Questions?
Contact Rebekkah Smith Aldrich, MHLS Coordinator of Member Information:
845.471.6060 x39 or rsmith@midhudson.org
updated
4.23.08
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