JARS v58n1 - The Endowment Fund - Building a Solid Foundation for the ARS

The Endowment Fund - Building a Solid Foundation for the ARS
Bill Mangels
Endowment Fund Chair
Baltimore, Maryland

In 1984 a few dedicated members of the Society decided it was time to start a memorial fund. It was generally agreed that this fund should be endowed (meaning never to touch the principal) for the purpose of assuring our ability to print publications and provide education about the genus Rhododendron . Some even felt it could provide an avenue to ward off dues increases forever, and opted to launch a campaign to have $1 million in the fund by 1995, marking our 50th anniversary. The group thought they could just write an article in the journal now and then and the endowment would grow. However, at that time, the idea of asking members for donations above their dues commitment or otherwise soliciting for the newly proposed endowment fund brought general disfavor.

By 1995, with less than $70,000 in the fund, the income from the endowment had sometimes been used for operating expenses to help balance the budget. Sometimes the income would be placed back into the fund, but no concrete rules had been established except to use the fund for education and publications. In 1998 the Board of Directors took action to formally cancel the million-dollar campaign and use the income from the fund for our needs.

In 2000 the Society received a $320,000 bequest from John Swisher. People who hadn’t been heard from in years began expressing what they believed John Swisher intended us to do with this wonderful gift. Some had known him personally, and "knew" what he would have wished. However, only the donor can restrict the use of a bequest. Dr. Swisher had left the money to the Society for the "benefit of mankind and the quality of life on our planet," but nothing more specific than that. Our very mission is to "benefit mankind and the quality of life on our planet," and the unrestricted fund will forever be recognized as just that. The Board of Directors at the time of the bequest, opted to place the Swisher money into the Endowment Fund to protect the principal, and indeed that is precisely what will happen as long as the money is held in the Endowment Fund. The income will be available for any committee, individual, chapter or affiliated groups qualifying for projects that are in keeping with our mission "to educate and disseminate information about the genus Rhododendron ".

In 2002 the grant procedure was developed by the Endowment Committee and approved by the Board of Directors. The new granting application procedure was to be applied to all requests for monies from the Endowment Fund. Only five grant applications were received and four grants awarded to chapters and affiliated groups to further education in the form of public gardens and publication development.

Recently, the use of the funds for these grant programs was questioned. The Middle Atlantic Chapter pointed out that the early donations were given in response to journal articles describing the use of the fund for publications and educational projects for the Society as a whole in order to limit future dues increases, and not for specific chapter use. After an extensive investigation into previous correspondence, minutes, and journal articles, the Board of Directors concluded that it was possible that implied promises had been made with those earlier donations.

As a result the Board of Directors decided that it should honor those donations by forever restricting the income from these donations to be used solely for publications that benefit the Society as a whole. This income is now held in a Donor Restricted Endowment Fund account, for publications only.

The Board of Directors and the Endowment Fund Committee appreciated that the Middle Atlantic Chapter raised this issue. It provided an opportunity to investigate the history of the fund and formulate an equitable solution concerning many earlier promises and clear up many rumors concerning the intent of the fund. It is important to note that income cannot be used to offset dues because this would jeopardize the Society’s non-profit status.

When money is given to the Endowment Fund directly, but without specific instructions, another Endowment category applies. The principal becomes a permanent part of a Restricted Endowment (General) Fund and will forever be preserved. The income will be used to further projects of the Society that qualify under the rules of the granting program, and as approved by the Board of Directors.

As a result of unanimous Board approval at the Hyannis meeting we now have three distinct accounts within the Endowment Fund:

1. Donor Restricted Endowment Fund (Publications) . The donor contributions to the Endowment Fund up to January 2000, have all been placed in an account called Donor Restricted Donations (Publications). The income from the funds in this account will forever be restricted to use for Society publications only. Any future donations to this fund should be specified as the Endowment (Publications).

2. Donor Restricted Endowment Fund (General) . Donations given to this Endowment Fund account will be forever protected as the principal. The annual income from this account will be used as directed by the Board for granting purposes in keeping with furthering the mission of the Society. Any future donations to this fund should be specified as the Endowment (General).

3. Board-Designated Fund . This fund account consists of gifts given to the Society with no restrictions, which a board has temporarily placed in the Endowment Fund. As long as the board wishes to protect the principal and govern the use of the fund under the Endowment Fund policies, the money will remain in the Endowment Fund. A future board may decide to remove the money from the Endowment Fund to use for the benefit of the Society. The Board cannot permanently restrict an unrestricted donation. Only a donor may restrict his or her donation on a permanent basis. Many donors prefer to give to the Society without any restrictions, trusting that the Board will determine the best way to utilize the donation. The Swisher bequest was given in this spirit. Since 1984 we’ve needed to clarify the mechanism by which we accept and distribute gifts within the Endowment Fund. With a great deal of counsel and assistance from both from our accountant Tom Martin, and attorney Jeff Cheyne, the Board of Directors understands that the Society’s IRS tax exempt status prohibits the use of endowment funds that could be construed as self gratifying. The Board, with assistance from the Endowment Fund Committee, has now created a very strong foundation for the future of the Society’s Endowment Fund.

You can now feel very confident that the gifts you give to the Endowment Fund will clearly be used for your intended purposes. If you are interested in establishing other donor restricted funds, please contact either the Endowment Committee Chair, Bill Mangels, or Executive Director, Dee Daneri. Generally, only large sums of money given to the Endowment Fund will be accepted for other donor restricted uses, as these restrictions impose a great deal of administrative detail and special accounting.

So how do you designate which fund you wish to contribute to? It’s easy! When sending a check to the ARS Endowment Fund, you can simply state that it’s for the Endowment (General) or Endowment (Publications). If you designate Endowment (General), the principal will be held in the Endowment (General) account and the income used for the Society’s mission. If you designate Endowment (Publications), the principal will be held in the Endowment (Publications) account and the income used solely for publications of the Society at large. By giving to the Endowment Fund education and outreach to the gardening public can be provided building a solid foundation for the ARS.

Finally, the Board of Directors and the Endowment Committee sincerely thank the Middle Atlantic Chapter for its diligence with respect to the use of income from the Endowment Fund. Not only was the board able to tidy up nineteen years of roads paved with good intentions, but also it has provided solid new footing for the future of the ARS Endowment Fund.