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Policies and Fees

Rochester Area Community Foundation is entrusted with carrying out the wishes of our donors in the best interest of the community and with the investment management of donors’ funds. The Community Foundation seeks through our Investment Policy to maintain or increase the real value of the endowment principal and its distributions over the long-term while funding current needs at an appropriate level.

Total Return Concept

The Community Foundation believes that the Total Return Concept (TRC) is the most effective way to invest permanent funds; that there is more to successful investing than merely maximizing current interest and dividend income; and that capital appreciation over time can be significant. Under the TRC, the interest and dividend income plus the appreciation (total market value) of the community foundation’s assets are taken into consideration in determining available grant dollars for each year’s distribution.

The TRC allows the Community Foundation to set a spending policy that is independent of the interest and dividend income earned by the community foundation’s funds and which may be more or less than the actual income earned by interest and dividends in any one year. The spending policy does not produce inordinately high levels of distributions because of high market valuations nor does it produce detrimentally low levels because of market declines, thus smoothing out market volatility.

The primary benefits of the Total Return Concept are as follows:

  • Donors can be assured that their funds are being managed in an effective manner that balances current demands and future needs.
  • The Investment Committee will be able to design long-term strategies aimed at providing a proper balance between income and long-term growth and not subject to sudden shifts in interest rates or market value. The Investment Committee will not be forced to focus their investment strategy on required distributions from income alone.
  • The Community and Grant Recipients will have a predictable flow of funds to respond to the area’s charitable needs and interests. Because distributions are based on a percent of the market value of the Community Foundation’s funds, the amount available for distribution should slowly increase over time due to long-term investment growth and a responsible spending rate.

Spending Policy

The level of spendable income is set at 5% of the 20-quarter rolling average market value of the endowment funds. Spendable income includes interest, dividends, and appreciation. Our Spending Policy adjusts for unusual market fluctuations, thereby giving predictability to future distributions. In periods of poor market performance, newer funds may not have enough appreciation to make the full spending policy. In these circumstances, interest and dividends are available for spending.

Ensuring Donor Intent

Community foundations are founded on the concept of “donor intent.” We are obligated to adhere to the written language provided by the donor in a will, fund agreement or accompanying documents that establish a fund. This obligation precludes the addition of binding restrictions on the fund that did not previously exist. This could include but would not be limited to adding a donor advisor, restricted clauses, or specific charitable beneficiaries; matters regarding permanence of the fund or timing of grant distributions; and requests for changes in standard policies of the Community Foundation.

In order to ensure that its assets remain relevant over time, however, the Community Foundation’s governing body – by law – retains variance power by which it may modify any restriction or condition on the distribution of funds for any specified charitable purpose or to specified organizations if, by the sole judgment of the board, such restriction or condition becomes, in effect, unnecessary, incapable of fulfillment, or inconsistent with the charitable needs of the community served. Every effort is made to keep the varied use as consistent as possible with the original intent. To date, the Community Foundation has used the variance power twice – once to redirect a fund established for the now-defunct Center for Educational Development to the purpose of “educational development and reform of Rochester public schools” and in another instance to redirect funds intended for the now-defunct Genesee Hospital for “medical/dental equipment in order to serve the medical needs of the underserved, giving preference to those areas formerly served by Genesee Hospital.”

Processing and Guidelines

While the Community Foundation encourages grantmaking within the eight-county region around Rochester and has special expertise in local charities, we provide careful due diligence to ensure that all grants reach bona fide and operational charitable organizations. We check to make sure that the required charitable status of each organization is documented, that the charity is adhering to its mission, and that it is financially sustainable. The minimum grant amount for most funds is $250.

Each type of fund has its own grantmaking process and timeline. Discretionary and Field of Interest Funds accept applications from local non-profits on a predetermined schedule; staff and volunteer committees review them and recommend them to the board of directors for approval or decline. Recommendations for grants from Advised Fund are accepted from donor advisors on an on-going basis; they are processed weekly with recommendations received by Friday and paid the following Friday. Grants from most Designated Funds to their predetermined charities are processed annually although schedules can be established. Online access to view fund activity and recommend grants is available free of charge.

We share information about regional grant opportunities with philanthropists quarterly, and provide personal assistance in giving upon request. International giving is possible through U.S.-based “friends” type organizations or churches.

Making a Difference in the Community

The Community Foundation participates in local initiatives and works with other local nonprofit organizations to monitor the changing needs of our community. We can help you determine where funds are most needed at any time to make the greatest impact on our community’s largest or most pressing problems.

Measuring Grant Impact

Donors have a right to know that grants from their funds are doing what they intend. A formal process of grant reporting and evaluation is in place for grants made from Discretionary and Field of Interest Funds. This information will be shared with community philanthropists through our quarterly mailings. Grants from Advised Funds and Charitable Checking AccountsSM are accompanied by letters stating the purpose of the grant, the fund from which it is paid, and how to direct thanks; philanthropists may receive copies of these letters. Philanthropists who want to see their grants at work may also participate in site visits to organizations.

Charitable Endowment Fund

Minimum fund $25,000; minimum grant $250

The annual fees listed below are computed and charged quarterly. Fees are based on the market value of the endowment.

  • 1.00% on first $500,000
  • 0.80% on next $2,000,000
  • 0.70% on next $2,500,000 
  • 0.60% on next $5,000,000      
  • 0.40% on balances over $10 million
  • Minimum annual fee of $250

Charitable Investor Fund

Minimum fund $50,000; minimum grant $250

Fee schedule is the same as Charitable Endowment Funds. Fees are computed and charged monthly.

Scholarship Fund

Minimum fund $50,000; suggested minimum scholarship grant $500

The annual fee is 1.25%, or a minimum of $1,250, and is computed and charged quarterly. Fee is based on the market value of the endowment.

  • 1.25% on first $500,000 
  • 1.00% on next $2,000,000
  • 0.80% on next $2,500,000
  • 0.60% on next $5,000,000      
  • 0.40% on balances over $10 million
  • Minimum annual fee of $250

Charitable Checking AccountSM

Minimum account $10,000; minimum distribution $100

There is a $100 fee charged per year. The fee is waived for any donor who also has an endowment fund (charitable or scholarship).

Pooled Life Income Fund

Minimum $10,000

The Community Foundation pays all administrative and investment management expenses so that the entire yield is paid to the beneficiaries until the fund matures. 

Charitable Gift Annuity

Minimum $10,000

The Community Foundation pays all administrative and investment management expenses so that the entire yield is paid to the beneficiaries until the fund matures.

Planned Gift

Planned gifts used to create funds in the Community Foundation pay the fees associated with those funds. When a payout of principal has been pre-arranged with the donor, a fee of 1.00% is assessed against the funds removed.

Program Sponsor Fund

Occasionally, the Community Foundation accepts selected time-limited projects as sponsored programs. As compensation for its services, the Community Foundation charges a fee of 8% of contributions received. For gifts between $25,000 and $249,999, the fee is reduced to 4%; for gifts $250,000 and over there is no fee. Any income earned by the fund accrues to the Community Foundation for administrative purposes.