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- How does the payout work for CSA funds?
Every year, we allocate a portion of the total fund for distribution and notify each CSA of the amount available for grants that year. This portion is 4.5 percent of the fund’s average fair market value (FMV) over the last 16 fiscal quarters (4 years). The funds are valued at the end of the year, and the new distributable funds are made available to the CSA in January.
Please note that this 4.5 percent rate does not reflect a guaranteed return or growth of the fund. This is simply the portion of the current fund’s value for distribution which we’ve found to be statistically stable over time. When this amount is distributed, the fund’s value will also reflect that expense. Investment returns are not predictable, but the SDCF's distribution policy is aimed evening out the peaks and valleys in investment returns and providing a steady stream of income to be paid out as well as your fund to grow over time.
CSA boards have the flexibility to determine how much of the funds that are available for distribution should be paid out on an annual basis. This allows the boards to protect their principal investment during poor economic conditions.
If you have any questions about your CSAs earnings or fair market value, please contact us. We are always happy to advise you on the financial health of your CSA fund.
- When can we begin to distribute earnings to our community?
Before you can distribute earnings from your fund, it must meet the following criteria:
- The fund must exist for one year before it can be valued, and a fund must be valued to receive annual distributions. However, funds are only valued at the end of the calendar year, once they have reached this one-year minimum. As a result, some funds will take more than one calendar year to reach maturation.
- For example, let’s take a look at the longest possible waiting period. If a fund were established in January 2015, it would not receive distributions until January 2017. Since it wouldn’t be a year old until January 2016, it would miss 2015’s year-end valuation by a month. As a result, it would have to wait for year-end 2016 to be valued—a 23-month period.
- If you would like to make distributions earlier, you can direct a portion of the initial contributions as “spendable.” These spendable contributions will be available immediately.
- Before a fund is distributable, the fund must hold a balance of at least $10,000 in principal. No matter the size, we place all CSA funds in the investment pool to generate earnings and growth for your fund. However, these earnings do not count towards the $10,000-minimum principal for distribution. In other words, funds are only distributable after $10,000 has been raised in donations and applied to the CSA.
- How should we write our CSA mission statement?
Local CSAs typically work to benefit the community and the region. We encourage you to broaden your mission statement so that interested stakeholders know why you are all doing what you are doing. We call this a “belief statement.”
For example: We believe in the long-term sustainability and growth of city/county. We work toward that goal by providing opportunities to financially support the nonprofit and charitable organizations and causes in city/county for perpetuity.
- What services are provided to CSAs by the South Dakota Community Foundation?
The SDCF provides all “back-office” support for South Dakota CSAs. This includes a number of financial services. We provide an annual audit of all funds under management and oversee all accounting work. We help distribute quarterly fund statements and IRS receipt letters to each donor. We maintain online access to fund information and provide free websites and website management. We process fund contributions and grant disbursements.
In addition, we provide an annual report and spring and fall newsletters each year. We can also provide CSA fund reports, answer questions regarding fund statements or spendable funds, or support CSAs in their fundraising, grant-making, and marketing efforts. We’re always happy to visit your community to present to the public or small group.
- How do we acquire a website for our CSA?
The SDCF assists you in setting up a website for your CSA. The website includes basic contact information for your CSA, grantmaking guidelines and forms, photos and your logo. The SDCF also encourages you to share board member names and bios to share why they feel the CSA is important to your community.
- Is there a generic set of grant guidelines that are used by CSAs? Is the local CSA required to use the SDCF grant guidelines?
Each CSA has the ability to make recommendations for distributions from their funds with the SDCF through their own guidelines and distribution process. The SDCF only requires that grants be distributed to verified non-profit organizations/groups in the service area defined by the CSA. Distributions to unverified organizations must complete the expenditure responsibility process (see below). We do have examples of different grantmaking guidelines that are used by other CSAs available upon request.
- What is expenditure responsibility?
Expenditure responsibility is a process that not only allows CSAs to better meet the grantmaking needs in their communities, but also ensures that the SDCF is in compliance with the new IRS requirements of the Pension Protection Act. In instances where grant recipients are not verified by the IRS, or they do not possess a tax ID number, the CSA will provide the applying organization or group with a copy of the grant application and the grant acceptance policy available on the CSA Documents page. Once the signed agreement and grant application reach the SDCF, a grant check will be processed and sent to the identified recipient. Once the grant is complete, a very short evaluation and expenditure form will be required in order for the grant recipient to be considered for future funding opportunities.
- How do we make a grant distribution request as a CSA?
Download a grant distribution request form. (This is also available via FundWeb.) Complete the form and email or mail it into the South Dakota Community Foundation office. If the organizations/groups referenced in the form are verified nonprofit organizations, we will be able to issue the check. If not, you will need to partner with a verified nonprofit organization to act as a fiscal sponsor or move forward with the expenditure responsibility process.
- How do we complete the expenditure responsibility process?
Step 1: Complete a grant distribution request form and send it to SDCF.
Step 2: If the organization/group requesting funds is not a verified nonprofit per IRS Publication 78, we’ll ask the organization/group to complete a Grant Application Form and the Grant Acceptance Policy Form, sign them and return them to the SDCF office.
Step 3: Once this information is received by the SDCF, the check will be processed and sent to the recipient listed on the grant distribution request form along with a grant evaluation and expenditure form. This must be submitted at the completion of the grant/project to prove to SDCF auditors that the funds were used for the purpose specified in the grant application. This form is completed by the Grantee (not the CSA) and we request its completion within two months after the project end date. We appreciate if the CSA will work with its grantees to complete this process, but we are happy to work with anyone that may have questions or concerns.
- How soon are grant checks sent out once the distribution request is mailed?
This will depend on the status of the organization or group to which the distribution is being sent. If their Tax ID number is determined to be verified and in good standing with the IRS, a check may be sent within seven (7) business days. In the instance where the grant recipient’s Tax ID number is not verified under Publication 78, the organization requesting the grant funds must sign the Grant Acceptance Policy before the CSA sends it into the SDCF office along with a copy of the organization’s Grant Application. Once those documents are received, a check can be distributed. The submission of a follow-up Final Evaluation & Statement of Expenditures report is required within two (2) months of the conclusion of the grant program/project.
- Do you have examples of “best practices” available for us to reference?
We have a number of examples from other CSAs that we are happy to share with interested communities. Please contact us to let us know what you are looking for, and we’ll find you a few examples.