Montana Natural Resources Youth Camp Endowment Fund
What is an Endowment Fund?
A fund that is made up of gifts and bequests that are subject to a requirement that the principal be maintained intact and invested to create a source of income for an organization. Donors may set up an endowment to fund a specific interest; and a nonprofit's governing body may set up an endowment. In any case, an endowment requires that the principal remain intact in perpetuity, or for a defined period of time or until sufficient assets have been accumulated to achieve a designated purpose.
What are the purposes of this Endowment Fund
The Montana Natural Resources Youth Camp Endowment Fund (MNRYCEF) was established in 2004 to provide a channel for donors to present monetary and in-kind gifts to the Montana Natural Resources Youth Camp and its students. Some donations fund ongoing projects through the interest earned on endowments. Endowments of the MNRYCEF promote instruction and education. The specific purpose of an endowment may be chosen freely by the donor. Exception: The intent of the endowment may not offend the public welfare or violate constitutional law. The purpose of an endowment should not be defined too narrowly; the purpose must be flexible enough to allow for changing conditions (e.g., societal or developmental changes over time).
How is this Endowment Fund setup?
The endowment funds are invested in mutual funds through D.A. Davidson & Co. of Great Falls. The annual interest is used by the MNRYC to fund projects and scholarships as specified by the donors.
Who can set up an endowment?
Every natural or legal person (e.g., a company) who is legal to contract may set up an endowment.
What does this Endowment Fund support?
Endowments can be established to fund many types of projects through the MNRYCEF. The following are such examples:
- Materials and equipment for specific curricular areas (forests, soils, streams, geology, wildlife, range lands, recreation, etc.)
- Minority and Underserved programs
- Capital Equipment
How much needs to be donated to establish an Endowment?
Any amount of money can be donated to the MNRYCEF to be used as an endowment. The annual interest from $1,000 can make a significant difference to a curricular area or specific program.
- A contribution of $5,000 (assuming a 5% APY) provides funding for a scholarship for one camper of $250 annually.
- A contribution of $18,000 (assuming a 5% APY) provides full funding for one camper of $900 annually.
- A financial stock of $800,000 at an average annual return of 5% would fully support the current annual budget of the MNRYC in perpetuity.
Will others be encouraged to contribute to an Endowment?
The endowment for a scholarship can be established with less than $5,000 and then additional donations made until $5,000 is achieved. The MNRYCEF will work with donors to raise funds for endowments, if necessary.
What are the tax benefits of an Endowment?
Donors of endowed funds should work with their attorneys and accountants in order to take advantage of tax benefits available to them.
Endowment Contract and Charter
The basis for establishing an endowment is a declaration of intention written by the donor. This contract also contains the endowment charter, which defines the intentions of the donor. Specifically, the contract contains the following regulations:
- Name and seat of the endowment
- Purpose of the endowment
- Funds available to the endowment
- Organization of the endowment
When writing the contract for the endowment, the donor decides whether the endowment is to exist as long as he or she is still living or whether it is to be set up upon his or her decease (Last Will and Testament). Although the model charter should serve as an example, the donor is not required to follow it.
Will the donors of the Endowment have any say in the dispersing of the Endowment funds?
When an endowment is established, a memorandum of understanding is drawn up to be signed by the chair of the MNRYC and the donor so that the donor's expectations and desires can be fully implemented by the MNRYCEF throughout future years. Once they have specified criteria for the use of their endowed funds, donors generally do not retain decision-making authority over these funds. Instead, they rely on the MNRYC board to adhere to the criteria and make decisions on the use of the funds. The MNRYC, in turn, strives to report to the donor regularly on the use of the funds.
The MNRYCEF provides for the allocation of donations into three fund categories with different purposes and risk/return levels:
- A conservative category: Investment (No Minimum) in CD's and Savings Account - liquid assets for ongoing expenses to run camp.
- A balanced category: Investment ($5,000 Minimum) in 60% Equities and 40% Bonds and Income Funds - assets seeking average annual returns of 5% for perpetual scholarships.
- An aggressive category: Investment ($25,000 Minimum) in up to 100% Equities - for future growth and financial independence of the MNRYC.
How can I set up an Endowment?
In order to ensure a "lasting and sustainable" effect, the amount of capital available to the endowment should be sufficient for fulfilling its purpose in the long term. Although there is no minimum required by law as a minimum for endowments, a donation of at least $5,000 (assuming a 5% APY) is suggested to provide funding for a perpetual scholarship. Lower amounts are possible for donors who wish to add to the financial stock of an existing endowment.