Libby Hanna is one of a group of locals hoping to build the groundwork for a foundation that will help Niverville organizations access grants and funding in the near future. Foundations are charitable organizations that already exist in many communities around Manitoba.
The purpose of a foundation is to facilitate the collection of donations from local individuals and businesses that wish to make a contribution to their community in lasting ways. In turn, the foundation’s administrative body disperses those funds to groups who need them.
“It’s for the organizations, small or large, in the community that don’t already have charitable status,” says Hanna. Some examples, she says, might be the Scouts, Brownies, sports teams, and schools.
The foundation would provide a place for these organizations to apply for financial aid, alleviating their need to knock on residential doors and solicit businesses in order to operate year after year.
Donors to such a foundation might include people who choose to bequeath a portion of their estate or who have life insurance policies that pay out after death. Businesses may also be interested in making end-of-year donations to keep the money local rather than paying it out in federal income tax. Community-minded people might choose to set up annual donations to the foundation automatically every year, as a way of giving back.
“The baby boomers are getting older,” Hanna says. “They are selling land, businesses, and what not, and this gives them an opportunity to donate some money that will benefit them or their company as well.”
Foundations typically operate in one of two ways. Foundation administrators can collect donations, essentially becoming the executors of those monies, and pay them out to designated organizations as needed until the funds are completely used up. Their ability to function in this capacity is dependent on new donations constantly coming in.
The second way, which is the one Hanna hopes the new Niverville foundation will operate, is an endowment fund. In an endowment fund, the principal donation is used as investment capital, thus becoming a foundation asset that generates an income through interest earned and possible dividends paid back to the foundation.
The investment capital, or the money originally donated, is never used to fund organizations. Grant monies are paid out solely from the income generated from the donation. In this way, the original donation is used as a tool to create ongoing income that never runs out. One person’s donation can keep paying out to the community indefinitely.
“That capital money never disappears,” Hanna says. “The money you give grows and the foundation disperses the growth. That foundation then is ever-growing, and the more it grows, the more money the foundation will have coming back to it every year.”
Administrators of endowment funds can also set up policies on how much of the interest earned will be paid out to organizations and how much will be retained and reinvested in order to grow the principal.
So, for instance, if a donor makes a $1,000 donation to the foundation, and it sees an eight percent return on investment after the first year, the foundation might choose to pay out only four percent to local organizations and add the remaining four percent to the principal.
Under this model, the size of the principal investment grows organically as the foundation reinvests a portion of the interest, but it will also continue to grow as new donations come in.
Hanna envisions a local foundation that will allow each donor the freedom to designate their financial gift to specific organizations such as Communities in Bloom or a local sports group. Or donors might choose to designate it to a specific initiative such as the Community Resource Centre. The foundation will also hold a general fund for money not specifically designated, apart from the donors’ wish to help build a vibrant, sustainable community.
The ad hoc committee has already met with administrators of the Winnipeg Foundation and Abundance Canada to get insight into starting and operating a community foundation. At this point, Hanna says they are leaning towards collaborating with the Winnipeg Foundation, who would be able provide the necessary administration for Niverville’s foundation.
Should they go this route, the Niverville foundation would operate under the Winnipeg Foundation’s umbrella, thus allowing their professional team of investment strategists, certified accountants, and endowment administrators to assume the bulk of the responsibility. This would leave the Niverville foundation committee free to simply accept and review applications from local organizations in need of funding.
The Winnipeg Foundation would collect an administrative fee of one to two percent of interest earned. It is a cost, Hanna says, that is easily substantiated when considering the alternative of hiring a team of outside professionals to do the same job on the community foundation’s behalf.
“Most of the foundations in Manitoba are [working with] the Winnipeg Foundation: Headingly, Steinbach, Morris,” Hanna says. “They’ve got a particular investment strategy that’s been utilized for years and they are a very large foundation so they help people like us. We are one of the only communities that doesn’t have an endowed fund. I think, in this day and age, it’s getting harder to raise money and yet we have a community that’s growing in need.”
No firm decisions have been made about how the Niverville foundation would operate. Hanna imagines that once the foundation is up and running, a committee would be elected to manage the foundation. While an ad hoc committee would lay down initial policies for the administration of funds received and distributed, the elected committee would later have the autonomy to amend the policies based on the changing needs of the community.
“There are Canada Revenue Agency rules to operate under and it takes quite a bit of time to start a foundation, to organize all of this and to fill out the non-profit paperwork,” Hanna adds. “It would probably take a year to two years before it’s ready to go.”
She hopes, though, that the eventual committee will provide for a broad list of local organizations to access the funds. They may also choose to run fundraisers of their own in the beginning years to build on the capital at a quicker rate.
As well, the Niverville foundation could work alongside town council and the existing Niverville Health and Community Foundation so that, between them all, every organization’s needs can be met.
“I’ve always been involved in this community,” Hanna says. “We’ve gotten so much out of the community in our lifetime, as well as our children. I see this as something that needs to be done for the community’s health and future.”
Right now, the foundation steering committee is looking for more people, including business leaders, to get involved with them in order to see this endeavour through.
