GROW HEALTHY KANSAS:
The Second Chapter
Frequently Asked Questions with Answers
July 2011
Overview of Compiled Qu
Overview of Compiled Questions and Answers
In June 2009, the Kansas Health Foundation announced the second chapter of its
successful GROW Healthy Kansas program. As part of this announcement, Foundation
staff traveled to four regional meetings in late July 2009 to describe the program and
respond to questions. The Kansas Association of Community Foundations (KACF)
organized and hosted the meetings, which were held in Fredonia, Manhattan, Garden
City and Hutchinson.
This document contains the questions that were raised at these regional meetings, as
well as others that have been asked since the meetings. These questions have been
edited as needed and the answers have been reviewed and approved by the Kansas
Health Foundation. This document supplements the official GROW II documents that
are available on the Foundation’s website at the following link:
http://www.kansashealth.org/focus_areas/community_philanthropy/GROW/ .
Interested applicants are urged to go to this website and download the GROW II grant
guidelines booklet and the GROW II application form.
Please note: Although most of these questions were raised at the regional meetings,
the official answers are contained in this document. Potential applicants are strongly
urged to read this entire document as the answers given orally at the meetings may
have been further clarified in this document. The answers contained herein constitute
the official policies for GROW II. Although the Kansas Health Foundation has
endeavored to provide clear and consistent answers to all questions at all times, the
answers contained herein supersede any given orally at the regional meetings.
The Kansas Health Foundation wishes to thank KACF, including its board chair Becky
Goss and its coordinator Aubrey Abbott Patterson, for its help in organizing the four
regional meetings. In addition, the Foundation would like to thank Tom Fryer, Sarah
Saueressig, Janie DeVore-Gillis, Aubrey Abbott Patterson and Becky Goss for their
presentations at these meetings.
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Application Questions
What documentation do we need to submit to verify gifts or pledges as a part of our
application?
A list of the names of donors, the types of pledges (that is, a pledge to what type of
endowment fund) and a calculation that shows the pledges total at least 10% of the
amount of the application.
We have not been certified as meeting national standards, but all of our back office
work is done by another foundation that has received certification. Do we need to seek
certification on our own?
Yes. If you are a separate legal entity, the standards certification from another
foundation does not cover you. A GROW II planning grant might be available to help
you achieve standards.
If we wait until 2011 to apply, does the six-year period begin in 2011?
Yes.
If we are an affiliate of another foundation, do the eligibility requirements apply to us
(the affiliate) or only the host?
The eligibility requirements apply only to the host foundation.
Are there limits on the number of pages on the grant application?
No, but conciseness is appreciated.
We currently have an operational endowment, but it does not remotely fund our entire
operating budget. Is there an upper limit to the acceptable size of an operating
endowment? At what point does our operating endowment become too large for
GROW II to want to help us?
GROW II is designed to help community foundations build their permanent endowment,
with special interest in operating endowments and public health endowments. Each
applicant must make the case that it can benefit from participating in the program. If a
foundation already has a large operating endowment, that could make its application
less competitive. However, there is no rule about what is too large or large enough. You
might want to discuss this with the Foundation’s GROW II Program Officer, Jeff Usher
(jusher@khf.org or 316-491-8422).
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Can you expand on the grant review criteria “Board Capacity” and “Commitment of
Board?”
“Board capacity” is a general measure of the strength of a foundation’s board. For
example, is it composed of senior leaders? Do the board members have experience
raising funds for the foundation? Do they have experience with civic issues?
“Commitment of the board” is a measure of the board’s knowledge, involvement and
dedication to the GROW II program. For example, has the foundation’s participation
been discussed and approved at a board meeting? Has a resolution to this effect been
approved? Have board members made pledges to GROW II? Has a board member or
two agreed to lead the foundation’s GROW II campaign?
What do you mean by “pledges that will earn 10% of the requested matching grant
must be in place” when we apply?
An applicant must have pledges in hand at the time of application to earn 10% of the
matching grant requested. If the applicant is requesting a $300,000 grant, it must have
pledges to earn $30,000. These pledges must be written pledges (e.g. signed pledge
cards) and they must state that the pledges will be paid by the end of the next year if
the applicant is accepted into the program. Each pledge must also indicate what type
of endowment fund it would be paid into, so that the correct matching rate can be
calculated.
Remember: “Pledges to earn $30,000” is different from $30,000 of pledges. Gifts are
matched at 1-to-2 or 1-to-4. Therefore, it could take gifts of $60,000 to $120,000 to earn
$30,000 of match, depending on the type of gift and how the gift is matched.
If only 10 foundations apply in 2009 and 30 apply in 2010, are all 30 competing against
each other in 2010?
GROW II has budgeted an equal amount of grant funds for the three rounds of grant
making: 2009, 2010, and 2011. The competition may be tougher in one year than in
another. However, if only a few strong applications are received in one year, some of
that grant money may be held over for use in the next year. There is no guarantee that
all of the grant funds budgeted for a year will be committed that year. If there are more
good applicants than can be funded in one year, the Kansas Health Foundation may
ask the applicant to re-apply in the next year.
Does acceptance into the program preclude you from reapplication later?
Yes. A foundation can only apply and be accepted into the endowment-building
program once. If a foundation is declined, it may reapply after consultation with GROW
II staff.
Do you have staff that can evaluate fundraising plans prior to application submission?
No. However, KACF will provide training and technical assistance in this area for all
Kansas community foundations.
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Can the foundations participating in an alliance apply separately to receive an
endowment-building grant?
This depends on the legal status of the alliance. Two separate legal entities can each
apply for an endowment-building grant.
What is an affiliate?
For the purposes of GROW II, an affiliate is a component fund (or collection of
component funds) established by a local community or geographic area within a host
community foundation. The local community affiliate serves a defined geographic area
with an advisory group representing the community/area that advises the host
community foundation on fund raising, donor relations, grant making and may take on
any other appropriate role of a community foundation delegated by the host.
We are an affiliate; will the host foundation apply on our behalf?
Yes, an affiliate foundation can apply to participate in GROW II, but the application
must be approved and submitted by the affiliate’s host foundation.
Our community foundation is a “support organization” of another community
foundation. Can we apply for a GROW II endowment grant?
Support organizations, as defined by the IRS, present a number of complicated issues.
The biggest issue from the perspective of GROW II is that a community foundation
cannot receive national standards accreditation from the Council on Foundations if it is
a support organization. Yet in some cases, a community foundation that is a support
organization functions essentially like an affiliate of the “supported” foundation.
Therefore, GROW II will consider applications from community foundations that are
support organizations on a case-by-case basis. We request potential applicants who
are support organizations to contact the Kansas Health Foundation to discuss their
application before submission. GROW II will request an additional set of documents
from these applicants.
For the purposes of a GROW II endowment application, the support organization must
meet the requirements for an affiliate foundation as described elsewhere in this FAQ
and the GROW II program booklet. In addition, the support organization must make a
case that it functions essentially as an affiliate of the organization that it supports and
this “supported” organization must be certified as having met the national standards for
community foundations.
How do you classify “organizational budget”?
A foundation’s organizational budget is its annual operating budget, excluding grant
making. This information should be on each organization’s income statement.
Are the GROW I organizations allowed to apply, too?
Yes.
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When calculating the size of our operating budget, can we include in-kind
contributions?
Generally accepted accounting practice (GAAP) allows some types of in-kind
contributions to be included as income with an offsetting expense. In these cases, yes,
the in-kind contribution can be included as part of your operating budget. However,
many in-kind contributions, such as volunteer hours, should not be included in your
operating budget. Any applicant that includes in-kind contributions in their operating
budget must include a letter from their attorney and/or accountant stating that the
budget complies with GAAP.
How do we know the dollar amount of grant to ask for?
An applicant should calculate the amount of new gifts for endowment that it feels it
can raise, and then calculate how much matching money these gifts would earn using
the program’s two different matching rates. See page 22 of the grant guidelines
booklet for more on this issue.
What counts as tracking software?
Any type of database that tracks grants, gifts, investments and donors would qualify.
This may be one or more software programs.
GROW II encourages community foundations to collaborate to reduce costs. Are these
collaborations limited to community foundations, or can they include a private
foundation?
The Kansas Health Foundation is interested in supporting any type of collaboration that
would lead to reduced costs and higher quality of services for the field.
When can I start counting gifts?
June 1, 2009.
What does a good fund-raising plan look like?
KACF will offer training and technical assistance in this area.
What year must we have at least a $75,000 operating budget?
The year you apply.
If we take on an affiliate, does it have to be in our region?
That is up to you and the prospective affiliate.
We are an affiliate. Does the $75,000 operating budget apply to us?
No. Your host foundation must meet this requirement.
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If two foundations share a staff person, do they both have to meet the $75,000 budget
requirement? Can the budgets be combined?
If the two foundations are distinct legal entities, then they must both meet the
requirements.
If someone wants to give a completed gift instead of a pledge, does it count toward the
10% pledges we need when we apply for an endowment-building grant?
Yes. A gift is better than a pledge.
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Endowment-Building Program Questions
Matching Grant Questions
Will GROW II match gifts from a community foundation’s donor advisor fund if the gifts
otherwise qualify?
Yes. GROW II will match any new endowment gift from a foundation’s non-endowed
donor advisor fund.
Do all dollars that qualify for the match have to be new money into the foundation or
can monies moved from pass-through funds to endowment qualify for the match?
GROW II matches new gifts to permanent endowments. If a foundation has funds that
are not permanent endowment, and the funds have a third party advisor, this advisor
can recommend that the funds be placed into a permanent endowment and these
newly endowed funds would qualify for a match. This would only include funds that
have a third party advisor with the ability to recommend that the funds be spent out by
the foundation for other charitable purposes.
For example, a non-endowed donor advised fund can make a gift to a permanently
endowed fund, and this gift would qualify for a match.
What kind of fund will the Kansas Health Foundation Fund be?
A field of interest fund.
Regarding the date of gifts, which date counts: The date the gift is received by the
community foundation or the date written on the check?
IRS guidelines state that the date of a gift is the date the gift was postmarked. If the gift
is hand-delivered, the gift date is the date it was delivered. See IRS publication 526 for
other scenarios.
Under the “Matching Grants” section on page 10, the text states: "Matching grants will
be between $300,000 and $800,000.” Can a foundation apply for less than $300,000?
$300,000 may be too much for an affiliate to request.
No. The minimum grant is $300,000. However, a “host foundation” could apply for a
grant that would benefit both the host and an affiliate. Thus, the host might apply for a
grant of $400,000, half of which could benefit the host, and half of which could benefit
an affiliate.
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Do endowment funds defined for a specific period of time qualify for the match?
No. The purpose of GROW II is to build permanent endowment.
What is the Kansas Health Foundation definition of “public health?”
The Foundation considers public health to be the protection and promotion of the
health and well-being of individuals and their communities through encouragement of
healthy lifestyles, behaviors and environments.
What is the purpose of the Kansas Health Foundation Fund?
The Kansas Health Foundation Fund at each participating community foundation will
be defined as a fund that supports the protection and promotion of the health and
well-being of individuals and their communities through encouragement of healthy
lifestyles, behaviors and environments.
Does the Kansas Health Foundation want copies of the actual gifts that we are using to
earn our match?
No. A list of the donors, the gift amounts and the type of endowment fund that
received the gift will be sufficient.
Do all dollars that qualify for the match have to be into new funds or can they be added
to existing endowment funds?
GROW II will only match new endowment gifts. These gifts do NOT have to go into new
endowment funds (i.e. accounts).
All the matching dollars go into operating and public health endowments; do all the
gifts have to go to the operational or public health funds as well?
No. GROW II will match any new endowment gifts to any type of endowment fund
other than scholarship funds.
Can gifts to donor advised endowment funds be matched?
Yes, as long as the endowed donor advised fund has a sunset date after which the
fund becomes an unrestricted endowment fund or a broad field of interest fund of the
foundation.
Do endowed, unrestricted community funds in our service region that are component
funds, not affiliates, meet the 1-to-2 or 1-to-4 match?
1-to-2.
If an existing foundation gifts some or all of its assets to our community foundation, can
we count such a gift for match purposes?
Yes. Any gift to a community foundation that creates new endowment at the
community foundation counts for match purposes. However, permanently endowed
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funds at a community foundation cannot be re-named or re-packaged in some way
and earn matching funds.
Can only one donor fulfill the matching requirements for the application pledge
requirement? How many different donors do we have to have to fulfill our total grant
match?
Yes, an applicant can fulfill the 10% pledges in-hand requirement with a single pledge.
You must have at least two donors to earn the entire matching grant. That is, one gift
(or a series of gifts) from one donor (and his/her household) can only earn up to onehalf of the matching grant.
What does “new endowed funds” mean?
GROW II will match new endowment gifts, subject to a few restrictions. Each of these
gifts will go into a fund, that is, an account. These accounts do not have to be new.
If we are successful and raise all of the required gifts in the first year or two, will the
matching funds come to us in full at that time?
If a foundation is admitted into the endowment-building program, the foundation will
submit a written report at the end of each year indicating the new endowment gifts
that qualify for a match. The Kansas Health Foundation will then pay the earned
matching funds by the end of March of the next year, subject to one limitation.
For planning and budgeting purposes, the Kansas Health Foundation will limit the
amount of matching payments in any given year to 20% of the grantee’s total award.
(See discussion on page 23 of the grant guidelines booklet.)
Tell us about the field of interest fund the Kansas Health Foundation money will go into.
Will it be a true field of interest fund or since it will be named the Kansas Health
Foundation Fund will it actually be a donor advised fund? Who will make the granting
decisions? Why would donors want to give to the Kansas Health Foundation Fund?
The Kansas Health Foundation Fund will be a true field of interest fund, as the Kansas
Health Foundation will not advise on the grant making from this fund in any way. If
donors want to make gifts to a public health field of interest fund, a foundation could
establish another fund with a different name and the same purpose.
Do gifts to a donor advised fund count?
GROW II will match new gifts into an endowed donor advised fund, as long as the fund
has a sunset date and will eventually become an unrestricted grant-making fund or a
broad field of interest fund. Gifts into a non-endowed donor advised fund will not be
matched.
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Do gifts from a donor advised fund count?
Gifts from a non-endowed donor advised fund into an endowed fund will be matched
at the appropriate rate. Gifts from an endowed donor advised fund will not be
matched.
If a previously established endowed donor advised fund is converted to an unrestricted
endowment fund, will it qualify for the match?
No. GROW II is only matching new endowment gifts. Although this type of fund
conversion would be beneficial to a community foundation, it does not create a new
endowment.
What kind of gifts can be counted and what documentation is needed to show gifts and
pledges received?
GROW II will match any new gift to permanent endowment funds, except gifts to
scholarship funds. A list of the gifts with the name of the donor, the amount and the
type of fund is all that is necessary to document the gifts.
Would unrestricted endowments where a donor has specified a first preference (when
possible) count for a 1 to 2 match?
No, it would count as a 1 to 4 match. An unrestricted endowment qualifies for the 1-to-2
match only if the board and/or staff of the community foundation have complete
discretion over the distribution from the fund. The donor may not have the privilege of
advising the distribution of the fund once the gift is made to an unrestricted fund.
In terms of gifts, would deferred (planned) gifts qualify?
GROW II will match irrevocable planned gifts, subject to certain restrictions. See page
23 of the grant guidelines booklet. Please note that bequest intentions are not
matched.
Will GROW II match actual payments from a will or trust?
Yes, if the gifts are new gifts that are explicitly designated by the donor for endowment.
Would governmental or municipal donations count?
Yes, as long as they are new gifts designated for permanent endowment.
How much money is available for GROW II, and how much will be allocated each year
for the program?
The Kansas Health Foundation has designated $6.5 million for each of the three rounds
of grant making by the endowment-building program of GROW II. Additional funds will
support the operating grants and planning grants programs.
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If a donor advised fund is endowed and unrestricted, the match for new gifts into this
fund is 1-to-4?
Yes, as long as the endowed donor advised fund has a sunset date.
Can our local school district establish an endowment at our foundation? Will gifts into
this fund count for the match?
The policies of the school district and the community foundation will answer the first
question. Regarding the second question: If the fund is a permanent endowment and
the gifts are new gifts, then, yes, GROW II would match those gifts.
If an affiliate foundation applies, does the host have to raise the required matching
money?
That is up to the host and its affiliate. Presumably, the affiliate would be expected to
raise the gifts that would benefit its endowment.
Some community foundations have separate unrestricted endowed grant-making funds
that benefit individual communities within their regions. At what rate does GROW II
match gifts of this type?
1-to-2.
When a donor makes a new endowment gift, can the community foundation earmark
the matching funds earned by his/her gift for a public health fund that serves his/her
community?
Yes, if it wishes, a community foundation can designate the public health portion of the
matching funds paid by GROW II for a public health fund that serves a community
within the foundation’s region.
If a donor makes an endowment gift, can the foundation create named sub-funds with
the matching funds earned by this gift within the public health endowment fund and the
administrative endowment fund to recognize the donor?
Yes.
Would the charitable portion of the irrevocable planned gift count towards the 10%
pledge?
Yes. The charitable portion of irrevocable planned gift towards the 10% pledge as long
as it was secured after June 1, 2009.
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Operating Grant Questions
If we complete our match before the six-year period, do we still get the operating
grants in the remaining years?
Yes.
In other words, do we penalize ourselves or leave money on the table if we complete
early?
No.
For what purposes can we use the operating grant payments?
The operating grants paid to those community foundations accepted into the
endowment-building program can only be used to support the general operations of
the participating foundation.
What if I raise enough gifts to earn all of the matching funds in the first year or two, do I
still need to raise 10% each year to receive the operating grants?
No. If you raise more than 10% in one year, the balance carries over to meet your 10%
requirement for the next year.
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Additional GROW II Questions
Planning Grant Questions
Additional GROW II Questions
Does a planning grant preclude an organization from applying for the endowment
building program?
No. In fact, GROW II anticipates that some planning grants will be awarded to help a
foundation position itself to be able to apply for the endowment-building program.
How do we apply for a planning grant?
Call or e-mail Jeff Usher, Kansas Health Foundation Program Officer:
Phone: 316-491-8422 or E-mail: jusher@khf.org
Miscellaneous Questions
On charitable gift annuities, who provides the annuity – the donor or the charity?
The charity receives the gift and is obligated to pay the annuity to the donor.
If we successfully raise our public health endowment and the market goes south can
we make distributions when the fund is “underwater?”
Community foundations should consult with their legal counsel on this issue and the
foundation’s board should consider an appropriate policy. The recently passed UPMIFA
(formerly UMIFA) has changed the state laws regulating the management and payout
of endowed funds. See http://www.upmifa.org.
Are Pamela Davidson’s services provided in the program?
GROW II, working with KACF, will provide training and technical assistance to all Kansas
community foundations. Part of this assistance will include access to consultants, such
as Ms. Davidson.
How does the dynamic of geography play into affiliation?
This is up to the two parties. There is no presumption that to engage in collaboration, the
two parties must be geographically proximate.
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Are there standard costs/fees for back-office services?
No. There are only a few dozen examples of this type of service in the country, and
each of these arrangements is unique. In the near future, average or typical costs for
back-office services will likely emerge as more foundations consider this option.
What are the guidelines regarding life insurance gifts, and how do these apply to the
matching criteria?
Please see the attached “GROW II Guidelines for Life Insurance Gifts” document.
NOTE:
GROW Healthy Kansas is an ongoing program of the Kansas Health Foundation, which is
solely responsible for the initiative. This document is to further clarify the intentions and
policies of the GROW II program. It is intended to build on the earlier grant guidelines
booklet, which summarized the manner by which the second chapter of GROW
Healthy Kansas (GROW II) is anticipated to operate. The Kansas Health Foundation
reserves the right to make a final determination regarding any organization’s eligibility
and/or qualifications for program benefits, and to make allocations of program benefits
as it may, in its sole discretion, deem appropriate. All grants are subject to the actual
award documents as well as the written terms and conditions of the Kansas Health
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Foundation.
GROW II Guidelines for Life Insurance Gifts
Overview
A donor may contribute a life insurance policy to a GROW II community foundation in a
number of different ways. A donor may:
1. Irrevocably assign ownership of a paid-up life insurance policy to the
community foundation.
2. Irrevocably assign ownership of a life insurance policy on which premiums
remain to be paid to the community foundation.
3. Name the community foundation as a primary or secondary beneficiary of
the proceeds and retrain ownership of the policy.
Criteria for GROW II match
For the purposes of GROW II, only a single-premium or other existing paid-up insurance
policy irrevocably assigned (as owner and beneficiary) to a community foundation and
designated for the community foundation’s endowment fund will qualify for a match.
That is, GROW II will only match option number 1 above.
Further, the contributed policy must meet the high-quality rating standards of the
various insurance-rating agencies.
The community foundation must receive the insurance contract and all related
documents showing the foundation as the irrevocable owner and beneficiary of the
policy, as well as documentation from the insurance company stating the policy’s
value for tax purposes.
Sample Match Calculation
GROW II will match the charitable deduction allowed for federal income tax purposes
at the rate of $1 for each $2, or $1 for each $4, of deductible value depending upon
which type of endowment fund the donor designates the life insurance policy. The
value of the policy at the time of the gift as documented by the life insurance
company determines the charitable deduction.
For example, if a donor has an existing policy—or purchases a single premium policy—
with a value of $250,000 and a deductible cash value of $12,000, the match amount
will be $6,000 or $3,000 depending on the type of endowment fund that benefits from
the policy.
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