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  • 1.  Distribution checks from outside investment funds

    Posted 01-14-2025 09:32 PM

    Good evening,

    I am wondering how other organizations handle distribution checks received from outside investment organizations. 

    For example, we receive a quarterly distribution from the Presbyterian Foundation for a fund that a donor created with that foundation who has since passed away, and we are listed as one of the beneficiaries on the account.  Currently, our Finance team handles the processing of these funds stating "These are not gifts, it's distribution income". The Presbyterian Foundation does send us an annual endowment report that coincides with the checks.   

    In a similar example, we received a distribution check from a different foundation; the memo line said "MV Disbursement" without any additional information. Finance processes the check as an outside endowment - distribution income.  

    Most of our staff is relatively new in advancement and finance, and this process is how it was done previously; before any of the current staff who are now in place. I have not located any gift documentation or agreements for these funds held at these specific foundations.  Before our gift officer attempts to contact these organizations for more information, I want to check with this group in regards to whether or not we could count these distributions as charitable contributions in our fundraising numbers.  

    Thank you in advance for your time.

    Best,

    Penny

    Director of Advancement Services



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    Penny Devins
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  • 2.  RE: Distribution checks from outside investment funds

    Posted 01-14-2025 10:01 PM
    Finance is essentially correct. These are similar to the endowments that you operate. You count the original endowment investment only - but never the distributions.

    Donors can establish similar funds at other institutions, naming you as the - or one of several - beneficiaries.

    In an ideal world, you would count the portion of the original investment that irrevocably names you when the fund is established. The subsequent distribution checks are income on that investment.

    Unfortunately, some organizations were never notified of the original fund establishment, so they never booked the original gift. In those cases, it's customary for the organization to record the distribution checks as gifts, regardless of how Finance wants to treat them.

    Finance is right about these. However, if you did not record the original donation, you would not be wrong to treat the income stream as a donation. However, if you did book the original gift, you should not record the subsequent checks.

    The CASE Standards address this topic in its Wholly Charitable Trust Administered by Others section.

    John

    John H. Taylor, Principal
    John H. Taylor Consulting, LLC
    2604 Sevier Street
    Durham, NC     27705

    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987






  • 3.  RE: Distribution checks from outside investment funds

    Posted 01-15-2025 09:14 AM

    Thank you, John!

    Your explanation was my thought process too.  To my knowledge, our organization never counted the original corpus.  

    Thank you again for your expertise!

    Penny



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    Penny Devins
    penny.devins@gmail.com
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