WHAT IS AN AGENCY FUND?
An Agency Fund is established by a tax-exempt nonprofit organization or “agency.” It allows the organization to focus on its mission rather than spend time identifying and supervising investment managers. It also helps nonprofits with gift planning and endowment-building to ensure their long-term financial sustainability.
WHO SHOULD CONSIDER AN AGENCY
Nonprofit organizations seeking a diversified pool of investment managers. For example, many investment managers require high minimums, often upwards of $1 million, to manage a fund. When the nonprofit creates an agency fund, and its assets are pooled with other ACF assets, it can more easily focus its efforts on growing its organization rather than managing its assets. Nonprofit organizations that have a solid individual donor base may wish to consider an Agency Fund to build an endowment.
“It’s been a busy and great year at Calypso Farm. Our vegetables are enjoying this warm, sunny summer, and the community is enjoying the vegetables! We are always trying to reach the community in new ways, and hope that The Alaska Community Foundation will help us do that in the future.”
WHAT ARE THE BENEFITS OF AN AGENCY FUND?
- Allows the nonprofit organization to focus on building an
- endowment, without the burdens of managing one
- Grants are typically made back to the nonprofit “agency”
- that opened the agency fund for a variety of uses, based on the agency’s needs
- Accepts complex or unusual assets at fair market value (e.g., real estate, closely-held stock, etc.)
- Funds can be established with a strict spending policy to protect longevity, a spending policy that allows for
- emergency spending with board approval or a short-term spending strategy with no maximum expenditure set
- Gives donors peace of mind to contribute a “restricted” gift that he/she does not want managed by the beneficiary nonprofit agency, but rather by a neutral third party (i.e., CCF)
- An efficient vehicle to support meaningful issues and causes in Alaska
HOW DOES AN AGENCY FUND WORK?
Frequently Asked Questions
What is the purpose of an agency fund?
The purpose of an agency fund is to provide a long-term, stable source of operating revenue for a nonprofit.
Why set up an agency fund?
An endowed agency fund shows potential donors you are serious about your sustainability. It provides an organized and accessible opportunity for donors to contribute to your organization and also a vehicle for your donors to make planned or legacy gifts. Instead of spending valuable time and energy managing your endowed fund, your organization can focus more on fulfilling its mission.
Can the nonprofit dissolve the fund if there is an emergency?
It depends on the emergency. An agency can petition the ACF Board of Directors to dissolve its fund; however, such a request would only be granted in extreme circumstances.
Is fundraising for an agency fund permitted?
Yes. We encourage nonprofits to let their donors know about their endowment. We are happy to meet with a potential donor and have staff available to help you develop a communication and marketing strategy around planned giving.
Do disbursements have to be made every year?
No. Many agency funds start small, intending to grow for many years before beginning to receive disbursements.
How does a nonprofit make recommendations for its fund?
Complete and return the Agency Fund Grant Recommendation Form. Recommendations can be submitted by mail, email, or fax, but an original signature is necessary.