Establishing an Endowment
Policies and procedures for establishing an endowment
The Trustees of the American Respiratory Care Foundation (ARCF) have established the following procedures for establishing an endowment. A checklist of basic questions is available to assist donors in determining a proposed endowment’s purpose.
Guidelines for Accepting Funds to Establish Named Honorary Awards or Scholarships
Any proposal to provide funds to the ARCF for the purpose of establishing a perpetual named honorary award or scholarship will be accepted with the understanding that the donor accepts the responsibility for contributing or causing to be contributed a principal sum of money commensurate with the amount of money to be distributed each year. ARCF Trustees have established a minimum of $50,000 for endowments.
It should be understood that the $50,000 level is a minimum level and, in many instances, will not provide enough earnings to cover larger awards along with travel expenses incurred by the recipient. If desirable, potential contributors are encouraged to identify an endowment level that will produce the necessary cash on an annual basis needed to underwrite all expenses associated with the award or scholarship.
The ARCF will charge ten percent of the amount distributed each year. There will be no other fees for endowment administration.
Recognizing that many potential contributors are not in a position to contribute the minimum endowment principal of $50,000 at one time, ARCF Trustees have developed the following policy.
In the event that the contributor is not able to provide the entire $50,000 initially, the first award for such an endowment will not be made until one year after the fund has reached the minimum endowment level of $50,000. (NOTE: This will allow the endowment to earn enough money to make the first award.)
An exception to the foregoing will be considered by ARCF Trustees under the following conditions:
- That the contributor commit to building the endowment to the minimum level of $50,000 within a five-year period.
- That the contributor agree to provide additional funds to cover the direct expenses of the award (award amount, travel, and lodging, if applicable). This would mean that a contributor wanting to operationalize a named endowment prior to the $50,000 minimum being met should expect to contribute:
- A minimum of $10,000 per year for a period of not less than five years.
- In addition to the endowment contribution, expect to pay for direct expenses incurred as part of the award itself. Under these circumstances, the ARCF will not charge a ten percent administrative fee on the amount awarded until the minimum $50,000 has been realized.
- Other arrangements mutually agreed upon by the donor and the ARCF.
At the outset, the contributor will be asked to specify the basis for the award as concisely as possible. In each case, the ARCF will draft guidelines for selecting the award recipient and submit these guidelines to the contributor for approval prior to implementation of the award program. Additional guidelines will be developed with the approval of the contributor for administering the fund on a contingency basis should the original basis for granting the award no longer be appropriate.
The American Respiratory Care Foundation invests in government securities only. This means that yields tend to be lower than investments with a greater degree of risk. Potential contributors are encouraged to give careful consideration to the endowment fund level as it relates to the annual expense of the award being considered. The ARCF will assist by offering projections of earnings, when appropriate, to facilitate identification of a target endowment amount for a specific award. All endowments’ principals must be sufficient to cover all expenses associated with the award.