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pinktulipsIn recognition of its fiduciary responsibility, the Board of Trustees of the American Floral Endowment (hereinafter “the Board”) has adopted the following policies pertinent to the operation of the Endowment Fund established by the American Floral Endowment (hereinafter “AFE”). These policies shall amend all previous gift acceptance policies.
 
A Gift Acceptance Committee (hereafter, “GAC”) is appointed by the Board to review special requests associated with gifts to AFE and to make final recommendations to the Board. 
 
While strict adherence to these Policies provides consistency in making decisions, flexibility must be allowed to consider complex gift situations.  In some instances, the merits of a particular gift request may demand that a decision be made immediately by the GAC.  In these instances, the GAC is empowered to make gift acceptance decisions; however, these decisions may be reviewed and modified by the Board or appealed to the Board by the Donor.

I. Committee Composition and Relationships

A.     GAC shall consist of the Executive Director of AFE and the AFE Executive Committee. GAC shall exercise the oversight and responsibilities specified in these Guidelines.  GAC, or a member of the Committee, shall report to the Board as necessary at regularly scheduled Board meetings.

B.     GAC functions as an adjunct to the Board and may call on members of the Board for additional guidance in reviewing and making determinations on gifts. 

II. Allocation of Assets to the Endowment Fund by the AFE Board of Trustees
 
The Board may allocate any unrestricted gifts, bequests, or other assets to the Endowment Fund. Distributions attributable to the investment earnings of the principal of the Endowment Fund as approved by the Board shall be used for such purposes as the Board shall from time to time decide. The Board also reserves the right to access the principal of the Endowment Fund and use it for special needs. However, the expectation is that the principal of the Endowment Fund will be set aside to generate ongoing investment income for the long-term support of the AFE.
 
The amount of the market value in excess of the value of the Endowment Fund shall be considered “Excess Corpus” and shall be used for the benefit of AFE’s activities as deemed appropriate by the Board.
 
III. Named Endowed Funds Maintained as Part of the Overall Endowment Fund
 
Named Funds can be established either through a lifetime gift or by bequest.  An Unrestricted Named Fund can be established with a minimum gift of $25,000, while a Restricted Named Fund requires a minimum gift of $50,000. 
 
When a Named Fund is created through a lifetime gift, the donor and the Executive Director sign an agreement that sets forth the terms of the Named Fund. When the donor executes a will or a living trust agreement containing language directing that a Named Endowed Fund be established, no other documentation is required.  The donor or donor representative will be encouraged to execute a Named Endowed Fund agreement in addition to the will or the living trust agreement.
 
When the intention to set up a Named Fund is made, it can be established with a one-time gift, or a pledge with a funding commitment of not to exceed five years.  In either case, a signed fund agreement will be executed outlining the gift or payment schedule.  If the agreement outlines a payment schedule, an initial payment of $10,000, is required for AFE to l set up a separate Named Fund for accounting purposes within their books.  While the NamedFund will be tracked separately, the funds will be comingled with the principal of the Endowment Fund for investment purposes. Restricted Named Funds for scholarships, internships, grants, and research will be charged an annual administrative fee of 1%, which will commence when the balance of the Restricted Named Fund reaches $50,000. The Restricted Named Fund will be subject to a prorated share of any fees charged by AFE’s Investment Management Firm, as well as any investment gains/losses.
 
Contributions of any amount to existing Unrestricted or Restricted Named Funds, require only a transmittal letter or bequest language stating the donor’s intention. 
 
A Named Endowed Fund for a more specific purpose (other than scholarships, internships, grants, and research) may be established subject to the consent of the GAC, and approval by the Board. The amount required for such a fund and the annual administrative fee will depend on the objectives to be accomplished and will be negotiated between the donor and AFE Executive Director.
 
Unrestricted Named Funds established for non-specific purposes shall be added to the principal of the Endowed Fund for investment purposes and tracked through a separate fund for accounting purposes. These Unrestricted Named Funds are not subject to the 1% administrative fee.
 
The principal deriving from gifts that donors have specifically designated for a Named Fund shall not be accessed. The value of the principal of the Named Fund may change due investment portfolio activity. Distributions shall be limited to those authorized pursuant to the Spending Policy for the Endowment Fund (see below).
 
IV. Non-Endowment Gifts to AFE
 
AFE accepts gifts of any size. For gifts $10,000 and over, a formal Letter of Understanding or a Stipulation Agreement will be entered to make sure all parties are in agreement to the use of the funds. This Letter of Understanding must be approved by the GAC.
 
Non-endowment gifts will be accepted and will be added together with other sources of annual income such as distributions from the corpus and the fall fundraising dinner at the SAF meeting.
 
Non-endowment gifts shall normally be spent within the fiscal year following the year the gift is made. If the GAC determines that the contribution is too large to be prudently spent within the fiscal year, then a distribution schedule will be documented with the donor’s input and reflected in the Letter of Understanding.
 
Non-endowment gifts may be directed by the donor to any existing AFE scholarship or research fund. If the donor does not specify the purpose, the gift will be treated as unrestricted, to be applied by the Board at their discretion. The donor may not stipulate that the funds are to be used for any particular research project, school or the work of any particular researcher, or for a particular scholarship, unless approved by the GAC and Board.
 
Once a gift has been made, the donor cannot withdraw or redirect the gift to other purposes.
 
While the above policies will apply to the majority of non-endowment gifts, the GAC and Board may, on a case-by-case basis, agree to establish a separate fund for a specific purpose. The amount required for such a fund will depend on the objectives to be accomplished and will be developed by the donor and the GAC and approved by the Board.
 
V. Special Projects – Non Corpus

The Endowment may take on Special Projects to fund research or other initiatives that are not funded through our normal budget process. These Special Projects would have a cost of $100,000 or more and typically be funded by individuals, companies, or organizations who have a particular need for specific research or those wishing to support an important initiative outside of the normal spending policy of AFE.
 
Should AFE approve a Special Project, AFE would serve as the administrator providing management functions as we normally would to projects approved and overseen by AFE’s Committee or Board. The funds to conduct research and/or other related projects or activities would be funded by individuals, companies, or organizations with the understanding and agreement that these funds would be paid to AFE and held in a cash or cash equivalent fund for the duration of the project with little or no risk of principal loss and would not be invested in AFE’s Corpus Investment Portfolio. It is understood that these special project funds are to be used immediately and within an agreed upon period (no more than three years) for the specific project outlined.
 
It takes considerable time and effort of the AFE staff and volunteer leadership to administer these special projects. This may include assistance in soliciting additional funding sources to support the project, engagement of research facilities/researchers or project managers, periodic review of progress, communication of progress with donors, administering payments to various parties engaged in project activities, reviewing reports or results of the project, and formulating and producing useable materials for distribution of the results to the floral industry and concerned parties.
 
In order to offset the cost of AFE’s administrative time and efforts, these Special Projects will be charged an Administrative Fee similar to the annual Administrative Fees charged to AFE’s Scholarship and Grant Restricted Funds.
 
AFE Special Projects will be charged an Administrative Fee of the greater of $10,000 or ten percent (10%) of the funds collected for the project. AFE shall immediately collect the Administrative Fee when the initial funds are paid to AFE. In the event subsequent payments are made to AFE specifically for this project as a result of the scope and overall size of the project being expanded or increased beyond the original agreed project amount, AFE will collect ten -precent (10%) of the funds remitted as additional payments toward the total Administrative Fee for the project. The initial Administrative Fee and any subsequent Administrative Fee payments will immediately be transferred to the AFE Corpus Investment Portfolio. The project will begin once the initial $100,000 (or more) is received by AFE, and the administrative fee is paid.
 
At the conclusion of the Special Project, any remaining funds in the Special Project account will be transferred to the AFE Corpus Investment Portfolio as unrestricted to be used for AFE’s programs.
 
Ownership of the research results, or of any materials or resources created by the Special Project become the property of the American Floral Endowment for the benefit of the entire floriculture industry.
 
VI. Acknowledgments and Other Procedures
 
A.     AFE will acknowledge the receipt of all gifts in writing and in a manner that satisfies the IRS substantiation requirements for the deduction of charitable gifts by individual donors currently found in IRC Section 170(f).

B.     Should the IRS change its requirements with regard to valuation or substantiation, AFE will comply with such additional requirements.

C.    GAC shall establish such staff procedures as it determines to be necessary in implementing these Guidelines.

VII. Outright Gifts
 
A.     Cash

  1. Gifts in the form of cash and checks shall be accepted regardless of amount unless, there is a question as to whether (a) acceptance could potentially expose AFE to litigation or other liabilities; (b) the donor is mentally competent to legally transfer the funds.
  2. All checks should be made payable to AFE. A) In the event a check is made payable to an employee, agent, or volunteer for the credit of AFE, the GAC shall request the prospective donor to re-issue the check in the name of AFE.

B.     Securities

  1. Securities that are traded on the New York, NASDAQ, American, or other recognized major national exchanges shall be accepted by AFE.  In accordance with accepted best practices for nonprofits, donated securities will be sold as soon as possible by AFE, unless the GAC and Board determine otherwise.  A receipt will be sent to the donor outlining the date of transfer, number of shares transferred, and other information as required by IRS guidelines.

C.    Real, Tangible or Other Personal Property

  1. Property of any description including real estate (residential, farm or commercial), jewelry, art work, collections, mortgages, notes, copyrights, royalties, easements (real or personal), shall only be accepted by decision of the GAC and Board.
  2. AFE’s policy is to sell the donated property at AFE’s earliest convenience, with the sale price used to establish the donor’s taxable value.
  3. When immediate sale of the donated property is not desired or possible, AFE will seek an independent, qualified appraisal to determine the donor’s taxable value.

D.    Unrestricted and Restricted Gifts

  1. Unrestricted gifts are always preferred as these gifts provide AFE with the greatest flexibility to direct resources where they are most needed at any particular time.
  2. A supporter may decide to make an unrestricted gift through the establishment of an Unrestricted Named Fund for recognition purposes with a gift of $25,000 or more. A.) A supporter may decide to restrict a gift through the establishment of a Restricted Named Fund to support a specific purpose with a gift of $50,000 or more.

VIII. Deferred Gifts

A.     Bequests and Life Estate Gifts

Gifts through wills (bequests) are encouraged by AFE.  Unless restricted by the donor, bequests of less than $25,000 will be added to the principal of the Endowed Fund.  The use of bequests of more than $25,000 will be at the discretion of the GAC and Board.

B.      Charitable Remainder Trusts and Pooled Income Funds

AFE will accept charitable remainder trusts and pooled income funds at the discretion of the GAC or persons duly acting on behalf of the Board and in partnership with a third-party administrator.

C.    Gifts of Life Insurance

Donors are encouraged to name AFE to receive all or a portion of the benefits of life insurance policies, which they have purchased on their lives.

AFE will not, however, as a matter of course agree to accept gifts from donors for the purpose of purchasing life insurance on the donor’s life.  Exceptions to this policy will be made only after researching relevant state laws and recommendation of counsel assuring that AFE has an insurable interest under applicable state law.
No insurance products may be endorsed for use in funding gifts to AFE without GAC’s approval.

D.    In no event shall a list of AFE donors be furnished to anyone for the purpose of marketing life insurance.  Such a practice represents a potential conflict of interest, cause potential donor relations problems, and may subject AFE to state insurance regulation. .

E.     Retirement Account Distributions

AFE will accept IRA roll-overs at the discretion of the GAC in partnership with a third-party administrator.

IX. Transfer of Funds from Unrestricted to Restricted Categories
 
It is the policy of the AFE that all funds donated for unrestricted purposes will be regarded as completed gifts and are not available for future transfer or re-designation for restricted purposes. However, limited transfers of unrestricted funds to restricted categories will be considered provided that:
 
A.    The amount requested to be transferred is no less than $2,000 and no more than $10,000.
 
B.    An explanation describing such request and the justification for it is submitted in writing to the AFE GAC, who will then make a recommendation to the Board for final approval.

X. Investment of Endowment Fund Assets
 
The Endowed Fund of the Endowment shall be invested pursuant to the AFE’s “Statement of Investment Policy Objectives & Guidelines,” which may be amended by the Board of Trustees from time to time.

XI. Asset Structure
 
The Endowment Fund shall consist of all Restricted and Unrestricted Named Funds, plus such other funds as the Board may from time to time establish. The assets of all funds shall be commingled to facilitate investment and AFE shall employ a method of accounting that will enable each fund to be tracked as if the funds were kept in a separate account.

XII. Spending Policy 

The annual distributions, expressed as a percentage of market value of the Endowment Fund, shall be determined on a year-to-year basis by the Board. In determining the distributions for a given fiscal year, the Board shall take into consideration total investment return of the Endowment Fund, the   current CPI for the immediately preceding year, and the funding projections for the year in question. In addition to distributions for the AFE’s designated purposes, a certain percentage of the Excess Corpus, as determined from time to time by the Board, shall be distributed for AFE’s administrative expenses.
 
It shall be the responsibility of the Board to review the spending policy periodically in order to make adjustments necessary for the preservation of the purchasing power of the Endowment Fund. Any spending policy for a particular Named Fund that is different from the Endowment Fund spending policy requires approval of the Board.
 
The distributable amount for a fiscal year shall be determined in the preceding January and shall be based on the market value of the Endowment Fund as of a specific date and distribution percentage set by the Board. Actual distributions shall be made during the year as needed for the designated purposes.

XIII. Governing Use of Legal Counsel
 
A.     AFE shall seek legal counsel for any agreement or transaction that does not fall within the scope of these Guidelines.  The decision regarding which agreements do not fall within the scope of these Guidelines shall be determined by the Board’.


The Board has adopted these Policies to be effective as of the 13th of August, 2014.
The Board revised these Policies August 2023.

 

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