How to Create a Named Fund at the UNC Chapel Hill School of Nursing
Presented by Barbara A. Senich, SON Foundation Board of Directors, March 12, 2008
While many of us respond to the annual requests for support for the School of Nursing, the thought of contributing to the School of Nursing to establish a fund probably never crosses most people’s mind. Those things are for the truly wealthy, of course. Or are they?
A designated fund at the School of Nursing is an enduring investment of a specified amount of principal designed to support something meaningful for students or faculty. It can be a special program in an area of nursing that has special meaning to the donor(s) or funding designated for a specific type of student or faculty member. All funds, by definition, result in a legacy that endures over time–for a specific time period, such as 5 years, or in perpetuity, according to how the fund is designed. People do this for many reasons–to leave a positive mark on the School, to be remembered and recognized in perpetuity or to remember or recognize a loved one, family member or friend. The idea of a named fund that endures over time, grows in value, and provides generous support 50 or 100 years from now is a very powerful concept.
Not me…I’m Paying a Mortgage, Putting a Child Through College, Leasing a Mini-Van…
We also have the perception that one must be wealthy to create such a fund. We are writing this to dispel that myth! You don’t have to be a Rockefeller to establish an endowment. It may take less than you think.
First, let’s explain that it is possible to create two types of named funds at the School of Nursing.
1. Expendable Fund. This is usually created by making a five-year pledge, making a minimum gift of $5,000 per year for the five year period, for a minimum total of $25,000. It can also be an outright gift for the total amount. It can be named for the donor or whomever else the donor wishes to designate (parent, honored faculty member, friend, spouse, etc.). The gift is spent annually and at the end of the five years the fund balance is zeroed out and the fund account is closed. Because it is not in the endowment fund, no interest is earned on the fund and it is not invested like endowment funds are. No annual reports are provided with an expendable fund. The fund can be designated for a specific purpose such as scholarships, faculty support or programs.
2. Endowment Fund. An endowment fund lives in perpetuity, can be made as an outright gift or as a five-year pledge. We are flexible about the time to complete a pledge. Some people make seven-year pledges. The University requests that a minimum of $50,000 be in an endowment fund before it begins to pay out support. That is because about 4.5-5% of the endowment is paid out annually in support, and anything less than $50,000 does not pay out a sufficient amount to be meaningful.
However, the School of Nursing will create an endowment fund with a gift or pledge of $25,000 minimum with the understanding that it will not begin to be paid out to support a student scholarship, faculty award, or program until it has a market value that is closer to $50,000. In this scenario, it could take several years before a fund begins to generate payouts.
It is important to note that undergraduate need-based scholarship funds are administered and stewarded by the University. Merit-based scholarships may reside in the School of Nursing Foundation, Inc. All other funds reside in the School of Nursing Foundation, Inc. and are administered and stewarded by the SON.
What types of programs and projects can endowment funds support?
This is called designating a fund for a specific purpose. We encourage donors to be as general as possible, since we have no idea what the specific needs of the School will be in 50 or 100 years, and we would like the fund authority to have as much flexibility as possible in order to meet the demands and needs of the time. A good compromise could be to designate a specific purpose for a limited time period—say 10 years–and then allow the designation to revert to more general needs.
The Fund Authority is a legal document signed by the donor and the executive director of the School of Nursing Foundation that establishes an endowment fund. It gives the SON the authority to create a fund account and to disburse funds according to the wishes of the donor. The original document is retained by the University Development office and copies are filed in the SON Foundation and accounting offices.
Endowment Funds can be created for:
- Undergraduate and graduate scholarships
- Service learning programs that create study abroad and internships experiences for students
- School programs, such as lecture series, visiting scholars, symposia, multicultural discussion, learning laboratories and clinical teaching tools
- Faculty support providing awards to recognize scholarship, research, teaching, community service
Donors can indicate areas of interest to support such as heart disease, oncology, women’s health, children’s health, mental health, chronic illness, gerontology and aging, etc. Donors can also help enhance the School’s infrastructure by making named gifts in support of the building fund (there will always be on-going building and renovation as structures age and technology enhancements are needed).
Process for establishing a named fund:
- Discussion between the donor and the SON Foundation executive director about wishes to establish a named fund, usually requested by the donor. Exploration of areas of donor interest and School’s needs.
- Executive director develops and presents a proposal to the donor that outlines several of the ideas generated, with costs to fund the areas of interest. The costs to fund programs, faculty support and scholarships vary.
- Donor indicates which area of interest s/he prefers.
- A document is prepared that is an agreement to establish an endowment fund that indicates the name of the fund, the amount of the gift to establish it, what it is designated to be used for.
- If the endowment fund is to be created as a pledge, 20% of the total amount will be requested at this time, with a pledge form completed and signed to establish the fund and begin the fund authority.
Recognition for Donors Who Establish Endowment Funds
Each year in September, the School of Nursing provides donors or their surrogates with an endowment report that includes fund performance (book value, market value and payout), and how the funds were used in the prior fiscal year (July 1 to June 30). We also hold periodic donor recognition events, introduce scholarship donors to recipients, and include announcements of named funds in various SON communications (magazine, web, blog, etc). If donors support scholarships, they also receive thank you notes from scholarship recipients.
What if someone starts a fund but can’t finish it?
The funds would remain in the endowment fund until they have gained enough value to begin to payout; or the donor and the SON would change the fund authority to make it an expendable fund; or friends and family members of the donor may wish to contribute to the endowment fund to complete it; or it could be completed as part of a bequest.
Creative, Non-traditional Approaches to Funding an Endowment
A named endowment fund can be established by making a five to seven year pledge with a gift of $5,000 per year until the pledge is completed. An individual, couple, family members and a group of friends can establish and contribute toward an endowment fund. A powerful approach might be to organize a group of SON friends who meet socially on a regular basis–donating smaller amounts of money on the occasion of each “round robin” dinner at members’ homes. You can even turn an annual “girls weekend out” into something that revitalizes you AND does good for someone else if a group wants to donate regularly to a fund.
Classes have established endowment funds in honor of a classmate who has died. Families have established endowment funds in honor of a mother who was an early graduate of the school (What do you buy an active senior who is downsizing their home?). Husbands have honored wives with a named fund. Families could request donations to the fund on the occasion of a special anniversary (in lieu of gifts). Couples have honored faculty members and the dean with named funds. All make a pledged commitment to contribute until the endowment is funded.
Others have combined their personal gifts with matching gifts from their employers to fund an endowment–the fund can be fully funded in half to one-third the time! Some have created an expendable fund that will begin paying out immediately, while they simultaneously fund an endowment that will start paying out when the expendable fund is retired.
It is not unusual to make gifts from highly appreciated stock, or from IRA’s and other retirement fund assets. Others have established a named fund and then will add to it through a bequest, or by creating a gift annuity. Even if you didn’t win the lottery recently, you may have received some “unexpected” assets that could become a catalyst for your fund. If you already donate to the School, it may only take an bit of an “upsizing” of your commitment (for 5 years) to go from being a wonderfully welcome supporter to making a lasting difference.
Whether or you are a Rockefeller or not, please consider creating a named endowment fund to benefit the School of Nursing. You can contact Anne Webb, Associate Director of Advancement at (919) 966-4619, to discuss areas that interest you.