LVCBA/WDIY Building-to-Endowment Policy - Issue1.0; Jan. 16, 2007

I. Definitions, Background, and Purpose
A. This statement provides general guidelines, policies, and principles for the acceptance, establishment, administration and management of a Building-To-Endowment (BTE) fund.
B. A BTE fund is defined as a single pool of assets gifted to LVCBA eventually to provide resources for various activities consistent with the mission of WDIY, and is a precursor fund in which to collect and invest gifts until the total has grown within a specified period to the minimum required to establish an endowment fund. LVCBA will establish two types of BTE funds: unrestricted and restricted.
1. A single BTE fund will be used to pool together multiple contributions from one or more donors, where the contributions are specified as for unrestricted, general purposes. On reaching the $15,000 threshold level for endowment, this fund will transition to become the general unrestricted permanent endowment fund.
2. Other restricted BTEs may be established to pool together multiple contributions from one or more donors, where the contributions have a common set of use restrictions (e.g.the Capital Equipment BTE, the Youth Media BTE, etc.). On reaching the $15,000 threshold level for endowment, each fund will transition to become the corresponding restricted endowment fund.
3. If a BTE does not grow to the threshold for endowment within a five year period, and the organization has acted in good faith attempting to reach the threshold, a fund will be reclassified to a regular unrestricted or restricted fund, and the balance in the fund made available to be spent in accordance with the stated purpose.
C. The Treasurer of the LVCBA BOD will serve as a trustee for these endowment funds and, therefore, has a fiduciary duty to the donor and the LVCBA to administer the assets consistent with the donor's wishes and generally accepted financial standards.
II. Administration, Accounting, Investment, and Distributions
Acceptance of Building-To-Endowment funds, including but not limited to (a) the type of restricted use, (b) the minimum amount required to initiate a BTE fund, and (c) the minimum donation to an existing BTE fund, is subject to the discretion of the Executive Director or Treasurer of the LVCBA, subject to the following.
A. Administration
1. A BTE must grow to $15,000 within a five year period from its initiation in order to transition into a regular endowment fund from which income may be withdrawn. If the BTE does not reach this threshold within this time frame, the existing funds in the BTE may be merged with another BTE or into an existing endowment account that best meets the intent of the donor. If no account is available, the funds in the account may be deposited in a general endowment fund account. Both of these options may be considered unless otherwise stipulated by the donor. Any exceptions to the threshold amount should be submitted to the Board of Directors for consideration. The threshold amount should be reviewed annually.
2. Contributions to an unrestricted BTE will be in a minimum amount of $300.
3. Contributions to a restricted BTE will be in a minimum amount of $1,000.
4. Contributions will be accompanied by a letter of understanding from the donor, acknowledging the terms of this BTE Policy, and indicating the existence or lack thereof of restrictions on the use of the donation. A form version of this letter will be made available to potential donors. It is necessary for the donor to keep the LVCBA informed of any changes in contact information.
5. Appropriate records related to the BTE accounts shall be maintained by the LVCBA.
6. A fee not exceeding 2% of the principal may be assessed to all contributions made to a BTE to defray administration expenses.
B. Accounting
1. The BTE account(s) will be audited at least annually as part of the audit of the LVCBA performed by an external CPA firm.
2. The Treasurer of the LVCBA BOD will report the audited status and activity of each BTE fund annually on WDIY's website.
3. Recording and reporting of all related transactions shall be consistent with currently established accounting procedures and methodology.
4. In the situation of multiple BTE funds, for investing purposes, the funds may be co-mingled consistent with legal and / or regulatory provisions.
C. Investment
1. BTE funds will be invested in low to medium risk, less volatile assets, aimed to achieve consistent growth to reach the threshold level within the five year interval. The aim will be to achieve average real growth of 5% per year (i.e. in excess of the current inflation rate). Choice of specific assets will be the responsibility of the asset manager of the fund. Under a Donor's specific instructions, a particular donor-specific BTE fund may, at the discretion of the LVCBA BOD, be invested in the manner prescribed by the donor.
D. Distributions
1. No distributions shall be made from a BTE. All investment earnings are reinvested and become a part of the eventual endowment corpus. The intent is to give the BTE the maximum probability of reaching the threshold level to become an endowment fund, after which the annual earnings have reached a reasonable size to merit the administrative cost of managing a withdrawal.