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HomeMy WebLinkAboutAgenda - 10-09-2012 - 1 1 ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: October 9, 2012 Action Agenda Item No. 1 SUBJECT: Community Giving Fund for Orange County DEPARTMENT: County Manager PUBLIC HEARING: (Y/N) No ATTACHMENT(S): INFORMATION CONTACT: County Department Survey Results Frank Clifton, Jr., County Manager, Triangle Community Foundation — Nuts (919) 245-2306 and Bolts of Nonprofit Agency Funds Michael Talbert, Assistant County and Agency Fund Services and Fees Manager, (919) 245-2308 Bob Marotto, Animal Services Director, (919) 968-2287 Colleen Bridger, MPH, PHD, Health Director, (919) 245-2412 PURPOSE: To update the Board of County Commissioners (BOCC) about a staff initiative to create a Community Giving Fund to raise and receive donations intended to support, enhance, and extend County services and County-supported activities. BACKGROUND: A staff initiative has been underway to explore creating a centralized Community Giving Fund for Orange County. The fund would allow residents of Orange County (and others) to donate money, property, or stocks and bonds to Orange County in a targeted manner. The notion of a Community Giving Fund has been evaluated to take into account some key considerations. It is intended to be an encompassing fund for Orange County government so that funds could be given to any department or activity through this fund. All gifts would be tax deductible and earmarked according to intent or wishes of the donor so that they are used for the purpose for which they are given and acknowledged as such. By creating such a fund, it would become possible to have unified communication about giving to County government for Orange County. There could be a branding process, and all departments would be able to include the campaign brand on their outreach literature to inform residents that it is possible for them to give to the County in designated ways. Additionally, a fund would create a framework for receiving and holding substantial donations, whether cash, stocks, bonds or real property. Logistically, it would become easier to receive and direct gifts toward targeted uses, and it would allow the County to properly acknowledge such donations and provide donors with tax-related paperwork. 2 The notion of a Community Giving Fund evolved through a process that involved the County Attorney and Financial Services Director as well as the County Manager and interested Department Directors. The steps of this process to date have included the following: • A survey of Department Directors in January 2012 to gather information about whether and if so how different departments now receive donations from the public (see attached results). • A review of the survey results at the February 2012 monthly meeting of Department Directors with the County Manager. • A meeting of two Department Directors on May 3, 2012 with the Director of Development and Community Partnerships with the Triangle Community Foundation (TCF) to discuss the possibility of a community fund partnership. • A meeting on May 31, 2012 with the County Manager, Assistant County Managers, County Attorney, and interested and/or involved department directors to identify concerns and next steps in light of the discussion with TCF. • A meeting of two Assistant County Managers (one being the County's Chief Financial Officer), the County Attorney and two department directors on June 22, 2012 with TCF's Legal & Policy Advisor/Director of Planned Giving and Director of Development and Community Partnerships. • A meeting of several Department Directors and one Assistant County Manager on July 11, 2012 with the Executive Director of the Chapel Hill/Carrboro Public School Foundation. Initially, a driving issue was whether Orange County should create its own foundation or partner with an existing foundation to create a community fund. As the process unfolded, staff became unanimous in their opinion that a partnership with a well-administered foundation such as the Triangle Community Foundation is the preferred approach. The primary reason for this preference is that the framework for receiving, acknowledging and investing donations is already in place. Also, costs related to staffing and governance would be held to a minimum by this approach. One concern was whether the Community Giving Fund could be identified effectively as a homegrown pursuit if it was created through a foundation partnership. However, staff has become confident that this concern can be addressed and resolved by partnering with an interested and flexible foundation. In the case of TCF, for instance, there was agreement among staff that the Community Giving Fund could not only have a Hillsborough address, but also be wholly identified and branded as an Orange County pursuit. In other words, there is no need to identify an Orange County giving fund as a TCF fund or pursuit. As the preceding comments suggest, involved County staff have come to consider TCF as a strong fit for the development of this fund. Currently, the foundation has no local government partnerships of this kind, but is very interested in developing in this direction Another reason TCF appears to be a very good fit is that it has its own real estate foundation. As a result, TCF is capable of receiving property, appraising property value, and liquidating property. Moreover, the foundation already does outreach to the estate planning community and it is capable of doing so in a unified way for Orange County. This would entail notifying estate planners that Orange County residents may designate part of their estate through the Community Giving Fund and specify the use to which the gift will be directed. 3 Finally, staff has been favorably impressed by the fact that TCF is concerned with Orange County itself as well as community issues throughout the region. According to TCF staff, the foundation has representation on its board from Orange County and it currently disburses approximately a third of its annual funds within Orange County. FINANCIAL IMPACT: None. The hope is that creation of a Community Giving Fund will, over time, garner substantial donations that may support, enhance, and extend County services and County-supported activities RECOMMENDATION(S): The Manager recommends that the Board receive the update on the effort of staff to create a Community Giving Fund and provide staff with direction regarding this initiative. 4 Orange County Foundation: Department Survey Results Department Directors in Orange County were recently asked to respond to a survey about if and how they receive donations from the public. Questions included what types of donations were received,whether those were routed to the general budget or specific causes, and whether outreach and solicitation were being done. Of the 17 respondents, nine reported that they do not currently receive donations. None of these nine departments reported initiatives or plans to change this in the near future. Of the eight departments that do currently receive donations, money and volunteer time were among the most notable ways in which this is being done. The Department of Aging had the most goods donated, but mainly in the form of large one-time gifts, such as a grand piano valued at$10,000. Animal Services and the Library had more quantities of smaller goods donated, such as food/bedding and cds/books, respectively. Volunteer time was a major way in which departments receive assistance from the public, with Animal Services, Orange County Partnership to End Homelessness,the Department of Aging, and the Health Department relying most heavily on volunteer time. Money was the most traditional way in which donations are being given, with a range of whether such donations go into general operating budgets or specific line items and causes. Most departments receiving donations to at least minimal outreach, mainly in the form of flyers and online presence. Only Animal Services is currently receiving donations online. A summary of survey responses can be seen in the tables below. Departments Currently Receiving Donations Department Donations Primary Estimated Other Types? Estimated Donation Online Notes now? Type of Amount Amount destination Donations? Donation Aging Yes Money $5,000+ not Volunteers $557,046 Both specific No Use friends group for and including and general some; do outreach goods goods Animal Yes Money& $25,000 not Volunteer time ^'S FTE in General budget Yes Outreach done for Services Goods including hours and dedicated donations goods DEAPR Yes Money $2,000 - Goods& General No Some outreach for $10,000 Volunteertime categories recreation Emergency Yes money $1,000 Volunteer time 1 FTE General budget, No Outreach done for Pink Services except pink Campaign campaign Health Yes Volunteer Goods Less than Specific line No time $3,000 items allowed 5 Library Yes Money& Over$3,000 Volunteer time At least No Use a friends group goods $2,000 Housing, Yes Money $6,000 for Volunteer time Over Specific Outreach done Human Rights Project $100,000 initiatives & Community Connect; Development $1,000 for Job Partners Social Yes Money $50,000- Volunteer time Specific line Only for Services $70,000 items Toys for Tots Departments Not Currently Receiving Donations Department Donations Primary Estimated Other Types? Estimated Donation Online Notes now? Type of Amount Amount destination Donations? Donation Asset No N/A N/A N/A N/A N/A N/A management Services BOCC No N/A N/A N/A N/A N/A N/A Board of No N/A N/A N/A N/A N/A N/A Elections Child Support No N/A N/A N/A N/A N/A N/A Economic No N/A N/A N/A N/A N/A N/A Development Human No N/A N/A N/A N/A N/A N/A Resources IT No N/A N/A N/A N/A N/A N/A Register of No N/A N/A N/A N/A N/A N/A Not allowed by law Deeds Solid Waste No N/A N/A N/A N/A N/A N/A Tax No N/A N/A N/A N/A N/A N/A Administration Prepared by Bob Marotto and Andi Morgan February 2012 6 triangle community Nuts and Bolts of FOUN�ATION Nonprofit Agertcy Funds Triangle Community Foandation partners with nonprofit organizations by o#fering an array of services for endowments or operating reserves. Having a fund at TCF allows a nonprofit to concentrate on its core mission rather than investment management and reporting. What is a Nonprofit Agency Fund? By definition, an Agency Fund is established by a charity at a community foundation for the charity's own benefit. Agency funds: > are created by 501c3 publiclysupported nonprofits with a transfer of assets > make grants back to the nonprofit(and to no other organization) on a scheduled basis or on demand > maintain a$10,000 minimum balance Investment Options Upon the transfer of assets, a nonprofit selects one of TCF's investment portfolios based on the nonprofit's � ,risk tolerance, financial goals and donor restrictions. Details about the asset allocation and managers that 'comprise TCF's investment portfolios are available upon request. � Agency funds can be invested as: > Permanently Endowed > Equity Oriented Nonendowed > Fixed Income Oriented Nonendowed > Pass-through Nonendowed (not invested) Endowed vs. Nonendowed Endowed Agency Funds are permanent funds which can distribute up to 5% of the fund's value (the "Spendable") on an annual basis. Endowments help ensure the long-term sustainability of an organization by providing a permanent source of support. TCF offers one investment portfolio for endowed funds. . > The spending policy (currently 5%) is set by TCF's Board of Directors. Each quarter the Spendable is calculated on the balance of the endowed fund. In order to minimize market volatility, the calculation takes into account the fund's daily average for the present quarter and the average balance for the trailing 12 quarters. > The nonprofit can request distributions of the fund's Spendable every quarter or every year, reinvest the Spendable into the endowment, or allow the Spendable to accumulate. The Spendable is not invested and does not earn income for the fund. Nonendowed Agency Funds are invested funds that allow greater flexibility because distributions are not limited by the 5% spending policy. The nonprofit can request distribution in any amount above the required fund minimum. Nonprofits choose from three investment portfolios for nonendowed funds. 7 Accounting of an Agency Fund on Form 990 Financial accounting standards require that assets transferred by a nonprofit to an Agency Fund be accounted for both as an asset of the nonprofit and as a liability by TCF. The nonprofit includes the assets on its books and reports the balance of its Agency Fund as of the ciose of its fiscal year. (Line 10, Part IV on Form 990 or Line 24, Part 1 on Form 990-EZ) TCF issues quarterly statements which show fund balance, earnings, gifts and distributions. For assistance with completion of Form 990, nonprofits should seek professional tax advice. Legal Control Distinct from the accounting rules above, a nonprofit transfer of assets to an Agency Fund at TCF also transfers legal ownership and fiduciary responsibility of the assets. As a result, all distributions from Agency Funds are subject to approval by TCF's Board of Directors. Approval is routinely granted from nonendowed funds and from the accrued Spendable of endowed funds, Can.a Nonprofit Request More than 5%of its Endowed Agency Fund? Approval of a distribution in an amount greater #han the accrued 5% Spendable triggers the fiduciary responsibility vested in the Foundation's Board of Directors, TCF's Board holds a variance power over all Foundation assets, which is the power to modify a restriction or condition on the distribution of funds for a specified charitable purpose. The reservation of variance power to TCF's Board of Directors is necessary to the Foundation's tax-exempt status as a publicly-supported charity. , � nonprofit may request a single distribution from an endowed Agency Fund beyond the accrued 5% 5pendable provided one of the following conditions is met: > The distribution is for the purpose of enabling the nonprofit to acquire or renovate a capital asset; � or > The nonprofit faces unexpected financial needs not likely to recur which the distribution will address. Requests for such distributions are not binding on the Foundation and will be submitted to the Foundation's Board of Directors for approval. Gifts to an Agency Fund from Nonprofit Supporters Donors can contribute unrestricted gifts directly to a nonprofit Agency Fund at TCF, whether endowed or nonendowed. Cash contributions can be made online by credit card and by check made payable to TCF or to the Fund by name. TCF also accepts gifts of publicly-traded securities, business interests, or reai estate, The Foundation staff can assist with complex gifts, and will provide written acknowledgement of all gifts to , Agency Funds. TCF Services for Agency Funds Nonprofits that create Agency Funds at the Foundation enjoy a variety of unique benefits and services. ' > Expert Financial Management. TCF offers diversified investment portfolios overseen by an investment committee and an independent investment advisor under a sound investment policy. > Personalized Consultation. �Foundation staff can work with a nonprofit on complex gifts, planned giving and nonprofit best practices, > Recognition. Organizations that have Agency Funds are recognized as nonprofit partners in TCF print and online publications, > Convenient Fund Access. Fund activity and TCF news can be reviewed online. Printed fund statements are mailed within 45 days after the end of each quarter. > Connections. Be part of the broader TCF family; join Foundation convenings on community issues and needs. For more information on Agency Funds,contact Libby Richards,TCF's Nonprofit and Community Engagement Officer 324 Blackwell Street,Suite 1220,Durham NC 27701•919.474.8370•libby@trianglecf.org 8 triangle community AGENCY FllIVD SERVICES AND fEES �OUNDATION 6WLDING COM64tJNITIES THROl1GH PHILANTHROPI' Triangle Community Foundation helps advance the missions of a growing core of nonprofits through expert guidance and a wide array of services. TCF provides fiscal management, investment options, capacity-building resources, and other services to meet the full spectrum of nonprofit needs. Our goal is to provide a cost- effective solution that strengthens capacity and enables an organization to focus on its programs and mission. Fund Services Provided by TCF GIVE Weekly gift processing and acknowledgements for donations made to agency fund at TCF Expert assistance with gifts of estate, retirement,tangible property and other complex assets Planned giving training and resources for agency staff by TCF Director of Planned Giving Personal consultation available for deferred gift planning for agency fund donors GROW Diverse investment options based on time horizon and risk tolerance � � Professional investment oversight by TCF board of directors and its investment advisor , Prudent financial management and accounting of charitable dollars Monthly investment performance reports and quarterly fund statements CONNECT Dedicated TCF staff assigned to agency fund to assist with gifts, resources, distributions Convenient,secure online access to fund and TCF information Recognition as nonprofit partner in TCF print publications and social media Invitations to private TCF events with donors, nonprofits,civic and business leaders Capacity-building grants available to agency fundholders for consulting with ESC on board governance,strategic planning, executive coaching, and/or financial diagnostic reviews GRANT Weekly grants processing available for non-endowed fund distributions Endowment monitoring and quarterly distributions of spendable • Fees for TCF Services Administrative Fee to TCF: 1%annual fee; minimum$300(based on fund balance) o Administrative fees cover the cost of all fund services listed above. � o Assessed quarterly,withdrawn from fund's principal and reflected on each quarterly fund statement. �i Investment Mana�ement Fee:0.62%to 0.82%annual fee(collected by investment managers) o Investment management fees (IMF) include all custodial, advising, and asset manager fees. o IMFs are separate from TCF administrative fee and vary based on investment portfolio selected. o IMFs are embedded in all portfolio returns; investment performance is reported net of IMF. o TCF does not receive fee revenue from the investment management of funds, Contact:Jess Aylor, Director of Development and Community Partnerships , Triangle Community Foundation ♦ 919-474-8370 ext 142♦ lessica@trianglecf.org Rev 4/2012