Frequently Asked Questions

1. What is the Montana Community Foundation?

2. What is an endowment?

3. What is the minimum balance to begin an endowment fund?

4. How will our endowment be managed?

5. How is the Montana Community Foundation compensated for its services?

6. How are distributions made?

7. When are distributions made?

8. How does a planned gift work?

9. How do we know how our endowment is performing?

10. Are your endowments “qualified” so we can use the Montana Charitable Giving Tax Credit?

11. Who owns the endowment?

12. What other services can we expect from you?

1. What is the Montana Community Foundation?

The Montana Community Foundation is a nonprofit community foundation that manages and invests charitable funds for individuals, families, businesses and other nonprofit organizations. Our mission is to cultivate a culture of giving so Montana communities can flourish. Founded in 1988, the community foundation has more than $58 million in assets under management and administers more than 500 philanthropic funds that make grants to charitable organizations and causes across the state. We are a center for philanthropy in Montana, working with donors, charitable organizations and communities to provide simple and effective ways to give back to Montana
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2. What is an endowment?

Montana law defines an endowment (MCA 15-30-165(2)) as “a permanent, irrevocable fund that is held by a Montana incorporated or established organization that:
(i) is a tax-exempt organization under 26 U.S.C. 501(c)(3); or
(ii) is a bank or trust company, as defined in Title 32, chapter 1, part 1, that is holding the fund on behalf of a tax-exempt organization.  Most simply, an endowment is a fund whose contributions are not expendable; only the earnings on those contributions are available to support tax exempt organizations or charitable purposes.
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3. What is the minimum balance to begin an endowment fund?

Donor advised and donor designated funds require a minimum of $25,000 to open.   Scholarship and agency funds require a minimum of $100,000 to open.  (Once the endowment is open, gifts of any size are accepted.  Planned gifts must be a minimum of $5,000.)  Depending on the scope of work desired by the donor, higher or lowers minimums may apply.
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4. How will our endowment be managed?

The endowments are actively managed in compliance with our investment policy, which reflects compliance with Montana law, our view of the financial market place, and our responsibility to protect and grow principal and to provide for annual distributions.  In the simplest terms, our investment goals are:

• Inflation plus 5.5%
• Exceed the policy index on a risk adjusted basis
• Perform well against our peer group

The balance of all endowment funds is invested in a pool, which is managed by institutional funds managers selected by the Foundation in a competitive proposal process.  Our oversight of managers is rigorous.  We monitor performance against the requirements and goals of our investment policy. Read more about our most recent investment performance.

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5. How is the Montana Community Foundation compensated for its services?

The Montana Community Foundation pays fees for professional investment management and portfolio oversight.   We also charge a fee for the services we provide.  The combined fees are charged to the endowment funds each month as a percentage of the average daily monthly balance.  Fees vary from 1% to 2.5% according to the fund type, size of the endowment, and services provided.  Please ask us for a current fee schedule. 
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6. How are distributions from endowments made?

Distributions are calculated as a percentage of the fund’s balance.  Currently, our policy to distribute 4% of the fund’s average daily balance over the prior three years as calculated each December 31. 
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7. When are distributions made?

For designated funds, an automatic distributions to the benefitting nonprofit orgnaizations are made once a year in February. Grants from donor advised and scholarship funds can be requested throughout the year.
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8. How does a planned gift work?

We pride ourselves on our planned giving services, but we are not attorneys or accountants.  The Montana Community Foundation was one of the key players in the passage of the Montana Tax Credit for Planned Gifts and we continue to actively encourage and defend public policies that reward donors for investing in Montana’s future.  We can discuss all nine planned gifts allowed under Montana law and point out benefits and deficiencies in each based on the donor’s financial goals and charitable intentions.  Since the passage of the Montana Tax Credit, planned giving has become very popular.  We find that over 90% of planned gifts are made in the form of charitable or deferred gift annuities.  These are very easy to establish and can be handled completely by the Foundation.  Other forms of planned giving should be done in consultation with legal and/or financial professionals. Read more about planned giving at the Montana Community Foundation.

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9. How do we know how our endowment is performing?

We send quarterly financial statements to fund representatives.  We also post a quarterly investment summary that shows how your endowment’s performance compares to the policy index. You can read about our current performance here.
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10. Are your endowments “qualified” so we can use the Montana Charitable Tax Credit?

Yes.  We qualify under Montana law (MCA 15-30-165 (2)(a)) and as well meet the qualifications of the Montana State Auditor’s office accept charitable gift annuities.  (MCA 33-20-701). Read more about planned giving at the Montana Community Foundation.
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11. Who owns the endowment?

The funds managed for all beneficiaries of the Montana Community Foundation (except those held as trusts) are assets of the Montana Community Foundation.  The contract signed by the donor and the Montana Community Foundation when the endowment is created stipulates that the earnings must be paid to the beneficiaries specified by the donor.   
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12. What other services can we expect from you?

A donor creating an endowment at the Montana Community Foundation can expect us to carry out their charitable wishes in perpetuity.  The Gift Agreement establishing the endowment clearly states the purpose of the fund.  But, beyond that, we try to learn as much as possible about the donor’s charitable goals, motivations for creating the endowment, favorite organizations or types of services.  This information is recorded in our permanent records, so that we can be sure of honoring the donor’s wishes long after s/he may be around to execute them in the event of changing circumstances. 

We process all requests for distributions in accordance with the donors’ instructions.  In some cases, we solicit proposals for the donors’ consideration and make awards on their behalf.  We have permanent records of distributions made.

We maintain the anonymity of donors if they wish. 

Nonprofit organizations can expect us to acknowledge third-party donations, notify the organizations of the gifts, and maintain permanent records of contributions. 

We look forward to assisting board members and staff of nonprofit organizations in accepting planned gifts.

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