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Designated Grant Distribution Overview

In February of each year, the Catholic Foundation is busy determining the amount our parishes, schools, nonprofits, and ministries can receive in designated grant distributions from their funds. We often get asked about what this is, so we thought an updated primer on endowment funds might be in order.

 

It is exciting to see how many more funds are eligible for distributions each year and how much is given out annually. In 2023, $1,903,346 were distributed through 209 designated grants to 91 organizations.

 

 

What is an endowment fund?

The parish endowment is a permanent fund established to sustain the mission of the parish long into the future. Endowments are intended to last forever. Gifts to the endowment funds are not spent, but rather are invested and protected (the principal or corpus of the fund). Over time, with market growth and new gifts, the funds grow and the market value of the endowment increases.

 

Gifts to parish endowment funds can be cash, appreciated stock, IRA distributions, real estate, bequests, life insurance, a portion of a business, and other appreciated assets. Most organizations are eligible for a designated grant distribution when the fund reaches $25,000. Some of the endowment funds have a higher threshold for eligibility which was established at the time the endowment agreement was signed.

 

Can we take out as much as we want from an endowment fund?

No. Endowment funds are not rainy day or reserve funds and are not intended to be borrowed from or spent out. There are regulations that govern how endowments are managed, particularly the Uniform Prudent Management of Institutional Funds Act (UPMIFA). The Catholic Foundation ensures that all endowments are managed in accordance with UPMIFA and the IRS.

 

What is a designated grant distribution?

The designated grant distribution is the annual grant from the fund for the intended beneficiary organization. Unlike the Catholic Community Grants and the Parish Enrichment Grants, which are considered competitive and require an application, no applications are required to receive the designated grant distributions. However, a form will need to be completed for the parish, school, or nonprofit, to receive the designated grant annually.

 

How is the grant amount determined?

Foundations establish spending policies to determine how much can be spent out of the endowment funds annually while also sustaining the fund to grow for the future. The Catholic Foundation established a conservative spending policy of 4% of the twenty-quarter rolling average of the market value of the fund. Every year, we look at the eligible funds and utilize the spending policy to determine how much can be distributed from the funds in the annual designated grants for the purposes for which they were established. After we make the determination of the eligible amount, we give each parish, school, and nonprofit the opportunity to state whether they want to take the eligible amount or whether they want to leave it in the fund to grow.

 

If we do not take the distribution this year, what happens to the money? Can we take double next year?

The money stays in the endowment fund, continues to be invested, and helps the fund grow. The distribution is only eligible once per year. If you think you might need it in the next year or so, you should take it now and put it in a savings or reserve fund.

 

What if a fund benefits more than one organization?

If a fund benefits more than one organization, the grants are sent automatically according to how the donor designated it. You do not have the choice to waive it.

 

What are the next steps to secure our designated grant distribution?

The forms with the eligible amount will be sent in early March by email and need to be returned by the end of March. Please be sure your form is completed and returned by the end of March, even if you plan to waive the designated grant distribution this year. If you do not return it, we do not know if you want to waive or if you never saw the request.

 

Questions?

Please contact the Catholic Foundation at 404.497.9440 or email info@cfnga.org.