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Establishing Endowed Fund from Bequest Document

  • 1.  Establishing Endowed Fund from Bequest Document

    Posted 01-05-2024 12:43 PM

    Greetings!

    We received dollars from an unanticipated bequest with accompanying documentation from the will outlining the donor's intent. There is no documented gift agreement.

    Our Finance partners doubt that we can create an endowed fund from an estate document, citing that an endowment requires a gift agreement that is prepared and submitted prior to establishing an endowment fund.

    Provided we can honor the donor's intent, I judged the documentation to be enough to establish the fund as it is not in conflict with any of our existing institutional policies (it meets our threshold, etc.). Can others weigh in so I can share additional support for this approach with Finance? Or, do we need to get additional documentation or work with the executor of the estate before establishing this fund?
    Thank you!
    Leah


    ------------------------------
    Leah Richards
    St. John Fisher University
    lrichards@sjf.edu
    ------------------------------


  • 2.  RE: Establishing Endowed Fund from Bequest Document

    Posted 01-05-2024 12:50 PM
    I am unaware of any law requiring a gift agreement to establish an endowment. I've used wills and their instructions in the past to establish endowments.

    However, provided the endowment criteria conform to state and federal law, it seems that the Executor or Trustee is empowered to execute any form or agreement deemed necessary by your Counsel.

    John

    John H. Taylor
    Principal
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987






  • 3.  RE: Establishing Endowed Fund from Bequest Document

    Posted 01-05-2024 03:19 PM

    Thank you, John! This is exactly what I was hoping to hear.

    My best,
    Leah



    ------------------------------
    Leah Richards
    St. John Fisher University
    lrichards@sjf.edu
    ------------------------------

    Original Message


  • 4.  RE: Establishing Endowed Fund from Bequest Document

    Posted 01-05-2024 03:39 PM

    It is in everyone's best interest to establish an agreement, however. If for no other reason than to put UPMIFA language in the agreement. Otherwise, you may have an issue down the road if the funds are no longer usable. 



    ------------------------------
    Jeff Baynham
    NC State University
    jtbaynha@ncsu.edu
    ------------------------------

    Original Message


  • 5.  RE: Establishing Endowed Fund from Bequest Document

    Posted 01-05-2024 07:30 PM
    I've been having this same struggle.... I believe trust law indicates that there must be expressed intent to endow in order to endow a bequest or any other restricted donation (it is a further restriction - a time restriction.)  My understanding is that creating an endowment is a restriction that must be imposed by the donor???  Would love to hear other's thoughts.

    Thanks,
    Suzanne




    Original Message


  • 6.  RE: Establishing Endowed Fund from Bequest Document

    Posted 01-05-2024 08:57 PM
    Didn't the donor impose the restriction in a legally binding Co tract - a will?

    John

    John H. Taylor 
    919.816.5903 (Cell/Text)

    Big Ideas; Small Keyboard



    Original Message


  • 7.  RE: Establishing Endowed Fund from Bequest Document

    Posted 01-05-2024 07:34 PM
    sorrry... more to add - I use the example of a donor wanting to solve a safe water issue for a remote community - they leave $500k in their will to solve this problem... the charity can't decide to endow the funds and only use the investment proceeds over time to address the issue if $500k would be required to solve it now?  Maybe I a mis-understanding the situation?

    On Friday, January 5, 2024 at 08:30:00 p.m. EST, Suzanne Gall <suzannegall@rogers.com> wrote:


    I've been having this same struggle.... I believe trust law indicates that there must be expressed intent to endow in order to endow a bequest or any other restricted donation (it is a further restriction - a time restriction.)  My understanding is that creating an endowment is a restriction that must be imposed by the donor???  Would love to hear other's thoughts.

    Thanks,
    Suzanne

    It is in everyone's best interest to establish an agreement, however. If for no other reason than to put UPMIFA language in the agreement.... -posted to the "FundSvcs Community" community

    FundSvcs Community

    Re: Establishing Endowed Fund from Bequest Document
    Jan 5, 2024 3:39 PM
    Jeff Baynham

    It is in everyone's best interest to establish an agreement, however. If for no other reason than to put UPMIFA language in the agreement. Otherwise, you may have an issue down the road if the funds are no longer usable. 



    ------------------------------
    Jeff Baynham
    NC State University
    jtbaynha@ncsu.edu
    ------------------------------
    -------------------------------------------
    Original Message:
    Sent: 01-05-2024 12:49 PM
    From: John Taylor
    Subject: Establishing Endowed Fund from Bequest Document

    I am unaware of any law requiring a gift agreement to establish an endowment. I've used wills and their instructions in the past to establish endowments.

    However, provided the endowment criteria conform to state and federal law, it seems that the Executor or Trustee is empowered to execute any form or agreement deemed necessary by your Counsel.

    John

    John H. Taylor
    Principal
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987




    Original Message:
    Sent: 1/5/2024 1:43:00 PM
    From: Leah Richards
    Subject: Establishing Endowed Fund from Bequest Document

    Greetings!

    We received dollars from an unanticipated bequest with accompanying documentation from the will outlining the donor's intent. There is no documented gift agreement.

    Our Finance partners doubt that we can create an endowed fund from an estate document, citing that an endowment requires a gift agreement that is prepared and submitted prior to establishing an endowment fund.

    Provided we can honor the donor's intent, I judged the documentation to be enough to establish the fund as it is not in conflict with any of our existing institutional policies (it meets our threshold, etc.). Can others weigh in so I can share additional support for this approach with Finance? Or, do we need to get additional documentation or work with the executor of the estate before establishing this fund?
    Thank you!
    Leah


    ------------------------------
    Leah Richards
    St. John Fisher University
    lrichards@sjf.edu
    ------------------------------
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    Original Message


  • 8.  RE: Establishing Endowed Fund from Bequest Document

    Posted 01-08-2024 07:53 AM

    Hi Suzanne,

    In our case, the donor expressly indicated their wish that the funds be endowed. As you indicated, we wouldn't attempt to endow the funds otherwise.

    Leah



    ------------------------------
    Leah Richards
    St. John Fisher University
    lrichards@sjf.edu
    ------------------------------

    Original Message


  • 9.  RE: Establishing Endowed Fund from Bequest Document

    Posted 01-08-2024 10:17 AM
    Overall, this is a dependent situation, and it really depends on how it is worded in the will and state laws. I would refer you to your legal counsel. 




    Original Message


  • 10.  RE: Establishing Endowed Fund from Bequest Document

    Posted 01-05-2024 08:16 PM
    Good evening,

    Navigating the scenario of requiring an agreement or accepting a gift through a will is inherently nuanced. The necessity for such documentation hinges on the specifics outlined in the will, introducing potential complexities.

    1. In instances where an endowment is already in place to establish a fund for the same purpose, and the donor is not requesting a named fund, there may be no immediate need for a separate agreement. 
    2. I have seen endowments created just by using a will as the gift documentation. However, challenges may arise, especially when dealing with older funds subject to jurisdictional wills. In such cases, the absence of a Uniform Prudent Management of Institutional Funds Act (UPMIFA) clause in the will and the potentially questionable legality, reasonableness, or feasibility of the fund's purpose can pose challenges, as highlighted by Jeff.
    3. We have established a named endowment through an internal gift agreement in the past. It's important to note that the effectiveness of such an approach may depend on the specificity of the fund's purpose and the will. 
    4. Presently, we are in the process of collaborating with the executor of an estate to establish an endowment in honor of the individual he represents.
    Things to take into consideration:
    1. State Probate Laws
    2. Estate Administration 
    3. Uniform Prudent Management of Institutional Funds Act (UPMIFA) (depends on the state): UPMIFA may be relevant. This law provides guidelines for the prudent management and investment of charitable assets, including endowment funds.
     
    In light of the complexities involved, I recommend engaging our legal team and planned giving to navigate this situation judiciously. Furthermore, the inclusion of Finance in these discussions would be advantageous.

    Ultimately, the most prudent approach is contingent upon the specifics delineated within the will. I urge a comprehensive review to ensure that all legal and practical considerations are duly addressed.

    It's crucial to involve legal professionals and, if applicable, financial advisors to navigate the legal intricacies associated with the bequest. Every situation is unique, and seeking professional guidance will help ensure that your organization handles the bequest appropriately and in accordance with the law.





  • 11.  RE: Establishing Endowed Fund from Bequest Document

    Posted 01-08-2024 08:02 AM

    Jeff and Sarah,

    Thank you for this additional input. My takeaway is that we can move forward to establish this endowment with the documentation we have. We are fortunate that the purpose the donor indicated is one we should be able to easily honor down the road. However, the most prudent course of action to eliminate any risk for the institution would be to work with the executor of the estate to establish a gift agreement with UPMIFA language to give us flexibility should we have any issues spending the endowed funds down the road.

    Is that a fair high-level recap?

    Thank you so much for lending your expertise,
    Leah



    ------------------------------
    Leah Richards
    St. John Fisher University
    lrichards@sjf.edu
    ------------------------------

    Original Message


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