Guidelines for Establishing Restricted Funds
Approved by the MAA Board of Governors on January 3, 2012
The following policies govern donations made to the MAA and the procedures to be followed to establish or augment existing restricted funds to support prizes, awards, programs or other MAA financial expenditures. Donors should consult with the MAA development officer and/or Executive Director in the preparation of a proposal for the establishment of a new fund or modification of an existing fund. Proposals for new funds and/or programs, prizes, awards or significant changes to established funds and/or programs, prizes/awards must be approved by the MAA Board of Governors. These policies are designed to ensure that a clear understanding exists among donors, the Board of Governors, and the staff of the MAA of the terms and conditions regarding restricted funds.
Minimum Gift Amounts
Donor Restricted Funds
A donor restricted fund is a temporarily restricted fund that is designated and used for a specific purpose until the funds are depleted. The minimum amount to establish a donor restricted fund is $25,000. However, the agreed upon amount may be higher than $25,000.
The assets used to create a restricted fund may be either cash or investments that can be readily converted into cash. If the fund is created with investments, the converted value less any applicable brokerage or other related fees will become the amount used to establish the donor restricted fund. Non-liquid gifts such as pledges, real estate, and investments that are not readily convertible into cash will only establish a fund at such time as these assets are converted into cash less any conversion or selling costs.
The minimum amount to establish an endowed fund is $500,000. An endowed fund is permanently restricted and designated to support a specific program. The fund is invested and managed in accordance with the Investment Policy and Guidelines approved by the MAA Board of Governors, which is intended to preserve the principal while smoothing expenditures in times of varying returns on investments. In accordance with the approved Investment Policy and Guidelines, periodic transfers are made from the permanently restricted fund to a temporarily restricted fund from which expenditures are made to support the purpose of the fund. Projected earnings from the endowed fund must exceed projected disbursements. At least half of the total desired principal amount must be received in the first year and the total received within three years in order to establish a permanently restricted fund. If the intended total is not achieved in that time, the amount raised will be held in a temporarily restricted account to be used for the intended purposes of the fund.
If a fund is depleted or reaches a level below the minimum required to generate sufficient earnings to support the designated disbursement, then the fund is dissolved and any established program, prize, etc. may be discontinued upon the discretion of the Board of Governors. If the program is discontinued for any reason, then the remaining assets of the fund may be used to best serve the needs of the Association while honoring as closely as possible the donorís intent.
The preservation and administration of both the permanently restricted and temporarily restricted funds to support prizes, awards, projects, etc. will be governed by policies set and periodically reviewed by the MAA Board of Governors and must conform to all applicable federal and local laws and regulations.
All funds are subject to an administrative fee, which will be charged to the fund on an annual basis. Administrative fees are set by the Executive Committee and are subject to periodic review. The applicable administrative fee will be specified in the agreement between the donor(s) and the MAA at the time of the establishment of the fund.
Donors may participate in an advisory capacity when a fund is established but may not serve in a decision-making capacity regarding fund beneficiaries or be involved in the ongoing management of the fund or related program.
The donor should consult with the MAA development officer and/or Executive Director in the preparation of a proposal for the establishment of a new fund or modification of an existing fund or its purpose. The proposal should lay out the details of the agreement between the donor(s) and the MAA; these details are subject to the terms and conditions specified in these Guidelines.
Changes to these guidelines must be approved by the Board of Governors. The Executive Committee will review these guidelines every three years to determine if any changes or modifications are needed and advise the Board of Governors accordingly.