6B - FUNDING OUR FOUNDATION (6B)
Our Rotary Foundation is funded in two principle ways: Annual Giving and Endowed Giving. These two ways of giving are kept in separate accounts known as the Annual Fund and the Permanent Fund.
ANNUAL FUND: The vast majority of the funding for our foundation (about $65 million per year) comes from annual voluntary donations by Rotarians. Rotary asks that we set a target of $100 per member per year for donations. This is only $2 per week – not an impossible amount. Even more important than the $100 target, however, is to have each and every member donate SOMETHING every year. We want and need 100% participation! See “A Guide to Annual Giving” in your materials package.
When TRF was founded in 1917, it was a very minor thing. It did not accumulate very much money and it was not until 1930 that it made its first grant ($500 to the International Society for Crippled Children). It was not until the death of Paul Harris in 1947 that donations were made in a significant degree and the Trustees saw a need to distribute funds in a regular manner. They decided that they would turn over all the funds of TRF in a three-year cyclic program. Donations coming in for the Annual Fund would be banked or invested for two year and then expended in the third year. The interest earned in this THREE-YEAR CYCLE pays for all the overhead and expenses of TRF.
PERMANENT FUND: A number of years ago, the Trustees of TRF saw the need to address expected peaks and valleys in annual donations by having a true endowment fund in which only the annually earned interest would be expended. Additionally, having an endowment fund would be appealing to those wanting to formulate estate plans and other major donations with an ongoing impact. Both the US and Canada have tax laws which encourage estate planning with donations to charitable organizations such as TRF. The Permanent Fund is also a wonderful vehicle to use to memorialize a deceased Rotarian. See the “Memorial Envelopes” in your materials package.
DESIGNATED vs, UNDESIGNATED: A person making a donation can put restrictions or set certain rules for how they want their money to be used. When this is done, the donation is known as a “restricted” or “designated” donation. As an example, if you were to donate $100 to TRF today and you wanted all of that money to go to the Polio Plus program, you could do that. Your donation would be restricted or designated. It could only be used for that specific purpose. When a donation is made for the general purposes of TRF, it is known as an “unrestricted” or “undesignated” donation. When goals are set for donations to TRF, the goals are ALWAYS stated in the form of UNDESIGNATED DONATIONS TO THE ANNUAL FUND.
Prior to beginning a term as District Governor, the DGE is required to submit a form to RI in which the District Foundation Goal is set. In the recent past, our district has asked the clubs to determine their own goals and the cumulative total becomes the District Goal. Remember – this goal is ONLY undesignated donations to the Annual Fund.
SHARE: We often refer to The Rotary Foundation as OUR Rotary Foundation. This is not only because it is the charity our organization uses to further its goals of International Peace and Understanding, but also because WE have a good deal of control over the way our money is expended. This control happens through the SHARE program. When we make undesignated donations to the Annual Fund, 50% of that comes back to our district for us to determine how it will be expended. We can choose to use that money for additional District Matching funds for Foundation Matching Grants, to fund an additional Group Study Exchange, to fund an Ambassadorial Scholar or any other program of TRF. But it is only the undesignated funds that qualify for SHARE. Why? Simply because a designated donation must be used 100% for the designated purpose. 50% cannot be used for something else. This is another reason why undesignated donations are so important.
Every year, usually around the end of September, our District is notified of the amount of SHARE funds we will have two years in the future. We then have to fill out forms to indicate the general categories of how we want to spend those funds. The forms must be signed by the current District Governor, the immediate past DG, the DGE , DGN and the District Foundation Committee Chair. Clubs are always asked for their input into this decision. Please read the section on SHARE in your Foundation Handbook.
Some may ask: “What about the other 50% of undesignated contributions that does not come back to our District?” That money stays with the Trustees for their determination. But, just think about it for a minute. When TRF “matches” our money in a matching grant, where does that “match money” come from? It comes from that 50%. So does the money for large 3-H grants and for GSE teams. Over the years, there has been some confusion about where the money for Ambassadorial Scholars comes from. None of that money comes from the International Office. Every bit of it comes from District SHARE funds. Only Districts, though the use of their own SHARE money, fund Ambassadorial Scholars. Some District choose to use all of their SHARE money for this purpose and some chose to use none of it. That is a District decision of how they want to use THEIR money.
If one looks back over the last ten years, our Foundation has experienced a pendulum swing in the favorite way to spend SHARE funds. Ten years ago, our district was like most districts in the world, we used our SHARE money to fund Ambassadorial Scholars. In our case, this was ALL we did with our SHARE money. In the summer of 1995, our DG consulted with his District Foundation Chair and worked out a strategy to change the way we would use our SHARE funds. We began to use a portion of our funds for Matching Grants. Change is difficult. Even though this change was initially resisted, today, the majority of our SHARE funds are used for Matching Grants and now some want all of our SHARE funds to be used in this way.
It’s important to have a perspective with this. One of the great things about TRF is the way it uses a multitude of programs to impact the problems of the world. Using all these programs in a planned manner can result in the end product being greater than the sum of its individual parts.