Incubator program helps non-profits grow endowments
Fifty thousand dollars is a lot of money for some non-profits. But in the world of high finance, $50,000 is a drop in the bucket.
So how can non-profit organizations such as the Robert J. Shapiro Fund (established when the Warwick educator of 50 years and former superintendent retired) expect to get the kind of investment given to non-profits hundreds of times its size?
Ocean State Charities Trust (OSCT) has come up with an answer that Mayor Scott Avedisian and other members of the Board of Trustees highlighted at a recent meeting at the City Council Chambers. Representatives from non-profit agencies were invited to hear about OSCTâ€™s Endowment Incubator Program. The program enables non-profits to take funds that might be sitting in low interest accounts and gain the type of financial advice and oversight available to the big players.
The incubator program currently has six participating agencies, including the Shapiro Fund, with total assets of almost $1.2 million. The Shapiro fund itself has assets of about $45,000 and is used to help support the drama and musical comedy productions in Warwick high schools. In its five years, the fund has made $7,000 in contributions to Warwick productions. Contributions from the fund help pay expenses not covered by school budgets and would have had to be raised by students and faculty.
The Incubator fund enables participants to pool assets. Citizens Bank acts as the trustee and manages the assets, for which they are paid 1 percent of the assets. Unlike other non-profit funds designed to establish endowments for certain causes, participants in the incubator have the right to withdraw assets.
â€śInvestments are retained for reinvestment to build endowment or for distribution in accordance with the policies of Ocean State Charities Trust,â€ť Avedisian told the gathering.
He said participants will have access to educational events, such as the seminar series sponsored by Citizens Bank that focus on planned giving, fiduciary responsibilities associated with endowment management and legacy fund-raising strategies. Ocean State Charities Trust is responsible for the overall program, marketing and enrollment of participants; and investment oversight.
Board Chairwoman Helen Marandola gave a brief history of OSCT. The trust was established in 1981 by the state with proceeds from the refunding and refinancing of housing bonds by the Rhode Island Housing and Mortgage Finance Corporation.
Marandola said that federal regulations required that proceeds be placed in charitable foundations where the interest income could be used to support agencies that minister to organizing and dealing with the health, education and welfare of families and children. Since the fund awarded its first grant in 1982 it has distributed $8.7 million. Grantees must be a public charity, incorporated in the state and be in operation for at least two consecutive years before applying. In addition to Marandola and Avedisian, other board members are Mark Russell, Jonathan Farnum and John Partridge.
While only several representatives from non profits attended the session, there was interest in the prospect of gaining greater rates of return than from certificates of deposit and building an endowment. As one non-profit representative observed, however, that can be difficult today with cuts in operating funds and declines in contributions.