The Nebraska Community Foundation works with community, organizational and donor-advised affiliated funds serving 250 communities located in 80 counties. NCF and its affiliated funds have reinvested $269 million in Nebraska since 1994.
Your Fund Advisory Committee will likely receive requests from community members to raise money for various projects through your affiliated fund. In addition, your affiliated fund may decide to take on a community project or raise money to be used for a specific purpose. You may also have donors indicate they would like to make contributions for specific purposes for which you do not currently have an account established.
In order to document that contributions are expended in accordance with donor intent, NCF policy is that your affiliated fund must have a separate account for each purpose. You cannot mix or combine contributions intended for different purposes in one account or place contributions in an account not designated for that purpose. Contributions may only go into your General Account if the donor did not specify a particular use.
It’s important to establish the appropriate accounts, or know what accounts you can use, before you start raising funds for a particular purpose. Contact your NCF Development Staff member early in the process to ensure compliance with NCF policy.
Donor intent. The primary reason for separate accounts is to document that donor intent is being honored. The IRS, Nebraska Attorney General and National Standards for Community Foundations require us to comply with donor intent. Keeping restricted contributions in separate accounts is NCF’s way of documenting that contributions are used in accordance with donor intent.
Donor trust. The second reason for separate accounts is to provide good donor stewardship. Being able to show a donor how much money has been contributed and disbursed for the specific purpose they intended helps build their trust. Having separate accounts allows NCF to better describe the purpose of the contribution on the receipt the donor receives. As we know, happy donors are more likely to become repeat donors.
Accounting. Having separate accounts allows NCF to provide accurate permanent records of the activity in each account regardless of turnover in local FAC officers and volunteers.
How should your FAC handle requests for new accounts from the community and/or donors? You can act more intentionally if you have a strategy that includes knowing the types of activities your affiliated fund plans to support. Ask the following questions when determining whether to establish a new account:
Are you using proper language to solicit donations? The language you use in your fundraising materials and verbal donor solicitations must match the account purpose. You cannot use more specific language in your solicitation then put the money in a less restrictive account.
For example, if you are raising money to resurface the track at the high school and have stated that in your appeal, you cannot put the money into an account for School Improvements; you must have an account for resurfacing the track. In that instance, it would be better to state in your materials that you are raising money for school improvements, and your current project is resurfacing the track at the high school. It can seem like a subtle difference, but it matters.
Late in 2013, following the death of an anonymous donor who had lived in the area for many years, the Byron Community Foundation Fund received an unrestricted gift from the sale of a quarter section of land located in Kansas. This enabled the Fund to begin building its new community center much sooner than anticipated.Read more →