In 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 AFE Board of Trustees (hereafter, “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 may demand that a decision be made immediately. In these instances, the GAC is empowered to make gift acceptance decisions; however, these decisions may be appealed by the AFE Board or 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 principal allocated to the Endowment Fund 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 invade this principal and use it for special needs, although the expectation is that this principal will be set aside for the long-term support of the AFE.
III. Named Endowed Funds Maintained as Part of the Overall Endowment Fund
Named endowed fund can be established either through a lifetime gift or by bequest. Unrestricted named funds can be established with a minimum gift of $25,000 or more, while a Restricted named fund requires a minimum gift of $50,000 or more.
When either type of named fund is created through a lifetime gift, the donor and the Executive Director sign an agreement that sets forth the terms of the 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, though 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 endowed fund is stated it can be implanted with a one-time gift, or a pledge over no more than 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, once the first $10,000 toward this fund is received, AFE will set up a separate fund for accounting purposes within their books. While the fund will be tracked separately, the funds will be comingled with the general funds of AFE for investment purposes. Restricted named funds for scholarships, internships, grants and research will be charged an annual administrative fee of 1%, which will not commence until the fund is fully established and the distribution of funds for the scholarship/research begins; however, once the separate accounting fund is established, the 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 within the Endowment, but not for a new named endowed fund, 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 the general AFE corpus will also be tracked through a separate fund for accounting purposes and comingled with the general funds for investment 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 invaded. 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. 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 and helpful in implementing these Guidelines.
VI. Outright Gifts
1. Gifts in the form of cash and checks shall be accepted regardless of amount unless, as in the case of all gifts, there is a question as to whether (a) acceptance will likely expose AFE to litigation or other liabilities; (b) the donor has sufficient title to the assets or 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 Committee shall come to an understanding with the prospective donor to re-issue the check in the name of AFE.
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 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. As with gifts of securities, AFE’s policy is to sell the donated property at their 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. Restricted Gifts
1. Unrestricted gifts provide AFE with the greatest flexibility to direct resources where they are most needed at any particular time. For that reason, unrestricted gifts are always preferred.
2. From time to time, a supporter will decide to restrict a gift. These guidelines will help AFE in responding to requests by donors to restrict their gifts.
a. A permanently restricted gift to create a named fund must be in the amount of $50,000 or more. Template agreement forms are available.
b. A gift to name a program shall only be accepted by decision of the GAC or Board.
VII. Deferred Gifts
A. Bequests and Life Estate Gifts
1. Gifts through wills (bequests) shall be encouraged by AFE. Unless restricted by the donor, bequests of less than $25,000 will be added to the general corpus of the Endowment. 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
1. 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
1. Donors shall be encouraged to name AFE to receive all or a portion of the benefits of life insurance policies, which they have purchased on their lives.
2. 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.
3. No insurance products may be endorsed for use in funding gifts to AFE without GAC’s approval.
4. In no event shall lists of AFE donors be furnished to anyone for the purpose of marketing life insurance for the benefit of donors and/or AFE. Such a practice represents a potential conflict of interest, may cause donor relations problems, and may subject AFE to state insurance regulation should the activity be construed as involvement in the marketing of life insurance.
D. Retirement Account Distributions
1. AFE will accept IRA roll-overs at the discretion of the GAC or persons duly acting on behalf of the Board and in partnership with a third party administrator.
VIII. 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:
- The amount requested to be transferred is no less than $2,000 and no more than $10,000.
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.
IX. Investment of Endowment Fund Assets
The assets of the Endowment shall be invested pursuant to the AFE’s “Statement of Investment Policy Objectives & Guidelines,” which may be amended from time to time.
X. Asset Structure
The separate funds within the overall Endowment Fund shall consist of all named endowed 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. Nevertheless, the 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.
XI. 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 return and CPI for the immediately preceding year and projections for the year in question. In addition to distributions for the designated charitable purposes, a certain percentage of the market value of the endowment, as determined from time to time by the board, shall be distributed for the AFE’s administrative expenses.
It shall be the responsibility of the Board to review the spending policy periodically in light of actual returns in order to make adjustments necessary for the preservation of the purchasing power of the Endowment Fund. Any spending policy for a particular endowment that is different from the general Endowment Fund spending policy requires approval of the Board.
The distributable amount for a fiscal year shall be determined in the preceding January, and it shall be based on the recent market value of the endowment and the distribution percentage set by the Board. Actual distributions shall be made during the course of the year as needed for the designated purposes.
XII. 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 the Board’s responsibility.
The Board has adopted these Policies to be effective as of the 13th of August, 2014.