Ensure your Trust’s purpose continues on forever

Kelvyn Eglinton
CEO
Momentum Waikato Community Foundation

Many in the business community put their time, energy and expertise into being trustees of not-for-profit organisations, incorporated societies or charitable trusts that distribute or use their funds to meet community needs. If this is you, you’ll know first-hand that the management of such groups’ capital or trust funds is not getting any easier.

Which is why many local Community Foundations are now in discussion with local Boards who are considering transferring their funds or assets to the Community Foundation’s long-term management and stewardship.

Board trustees’ most common challenges are:

• the growing complexity of their role, particularly around compliance requirements;
• their increasing obligations and potential liabilities;
• the trust’s original mission has been realised and their funds need to be appropriately reinvested and/or redirected to another community benefit;
• the recruitment of new trustees who are willing and able to meet the entity’s obligations is increasingly difficult;
• their fund is relatively small scale and they are spending more time on compliance and annual reporting than on distribution;
• the money is sitting in a bank account earning minimal interest and incurring ongoing fees.

A Community Foundation’s primary purpose is to focus and facilitate local philanthropy to build an endowment fund, so our regional community has its own financial resource to deliver the projects and programmes it needs. We’re here to make a better community for everyone, forever.

Placing your Trust’s funds under your local Community Foundation’s guardianship means you can take advantage of already existing professional services and get the security and greater investment returns that come from the scale of an already existing operation.

When you transfer the assets of your trust or society you can establish a dedicated ‘Named Fund’ with your preferred title, and then distribute grants in the group’s name every year, forever, to the beneficiaries and purposes you specify.

We work with you to develop a plan, a deed of gift and a charter that provide whatever level of control and involvement you desire.

A ‘Named Fund’ with your local Community Foundation retains your group’s identity and purpose, but gains our economies of scale, expert legal and financial management, experienced grant-making knowledge and dedicated investment support. As the original trustees, you can continue to make the decisions around distributing the fund’s income, but will be freed from the complexity, time, obligations and costs associated with operating your own legal entity.

As an example, the Gisborne Hearing Association has opened up their own ‘Named Fund’ with their local Community Foundation, The Sunrise Foundation.

For many years the Association maintained a space where the hearing impaired could practise lip reading, be shown how to get the full benefit from their hearing aids, join in recreational activities and gain companionship to break down their social isolation.

In recent times their active membership and the use of their premises had been steadily declining due to advancements in hearing technology. Coupled with the challenges described above, they could see they would have to close, although there was still a need to financially support some members of the deaf community.

Sunrise Foundation allowed them to achieve this goal by taking over the management of their capital and grant-making to establish ‘The Sunrise Hearing Assistance Fund’. The association’s capital fund is secured and still receiving donations and generating interest income to support hearing-impaired members of their local community.

Although changing times had forced the Gisborne Hearing Association to close, its legacy has continued. The Sunrise Foundation will continue on with their good work and enable a structure which will over time return more to the community.

At Momentum Waikato discussions are ongoing locally for the transfer of assets such as land and capital to our care. Because investment for philanthropy is what we do the more we grow and diversify our funding pool the stronger and more effective we can be, so these Trust transfers are a win-win for all involved.

If you would like to consider entrusting your group’s funds to your local Community Foundation, or simply want to know more, contact your local Community Foundation today. It could be the best call you make to ensure that your Trusts’ purpose continues on forever.