2018 Foundation Source Annual Report_LI


Assets/Endowment All investments, cash, and other property held by the foundation for investment purposes at a given moment in time, generally the last day of the year, unless otherwise noted. Our definition does not include property used directly in carrying out the foundation’s charitable mission, such as land used to operate a camp for disadvantaged youth or a building used as a community center. Average Investment Assets The assets against which the 5% mandatory distribution requirement is measured. It is calculated by valuing all investments periodically throughout the year (monthly for most liquid assets) and taking the average of those values. This number does not include assets used in carrying out the foundation’s charitable mission, such as buildings, art, property, or equipment used directly for charitable activities. Charitable Expenditures All funds expended by the foundation in furtherance of its charitable purposes, including all grants and all reasonable and necessary administrative expenses. These expenditures do not include investment expenses or other expenses attributable to producing income. Contributions New gifts to the foundation. These gifts are typically from the founder or parent company (in the case of a company foundation), but they may also come from family members, related businesses, and others close to the organization. While some foundations also conduct occasional fundraising events, the amounts collected at such events typically do not represent a significant source of new revenue. Because of somewhat complicated IRS rules that can discourage foundation-to-foundation transfers, contributions generally do not include funds from other private foundations. Expenses All amounts spent by the foundation including administrative expenses, investment management fees, compensation paid to employees, rent, fees for services, and all other program and operational expenses; but not including grants. Grants/Giving Funds distributed to individuals, charitable organizations, or other organizations that are used exclusively to support charitable activities. Money spent on rent, to purchase supplies, or in any other quid pro quo transaction— even if entered into to further the charitable programs and mission of the foundation—is considered an expense, not a grant. Mandatory Distribution Requirement The federal tax laws require that private foundations distribute a certain amount each year for charitable and administrative purposes. That amount is equal to 5% of the foundation’s average investment assets, less a few minor modifications and credits set forth in the tax regulations.

2018 Foundation Source Annual Report



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