Questions and Answers About the Foundation
Q. What is the Foundation For Southeast Texas?
A. It is a community foundation serving Hardin, Jefferson and Orange Counties that was created to accept and administer charitable gifts given by local citizens to enhance the quality of life in our area.
Q. When and why was the Foundation For Southeast Texas established?
A. It was established in late 1996 by a group of community minded individuals who saw a need to provide a flexible method for donors to band with other donors to serve both the immediate and long-range charitable needs of the community. Many of the founders had been involved with the Beaumont Community Foundation (which merged into the Foundation For Southeast Texas in August of 1998), and saw a need to serve a broader community and a greater variety of nonprofits.
Q. How is the Foundation organized?
A. The Foundation for Southeast Texas is a 501( c )(3) non-profit corporation governed by a Board of Directors of community civic, business and professional leaders representing each area of the three counties. A professional staff works for the Board.
Q. What is unique about this Foundation and other community foundations?
A. Numerous funds from a variety of individual and group donors are pooled for the foundation to manage, invest and distribute for needs of the area. Because the funds are pooled for investment, there is a greater opportunity for growth and the cost of management and distribution is kept to a minimum. Most of the funds are endowed funds, although some donors may choose to give some of the principal of their fund to charitable organizations.
Q. What is an endowed fund?
A. It is a permanent investment asset designed to create income for charitable organizations.
Q. Are there non-endowed funds within the Foundation?
A. Yes, the Foundation has non-endowed funds. Most of the non-endowed funds are Donor Advised funds. The donor of a donor advised funds takes an active part and may request the Board to distribute gifts to numerous nonprofits at various times in a year.
Q. How are funds established with the Foundation?
A. The donor, with the assistance of foundation staff and sometimes with an attorney, accountant, or financial advisor, establishes a fund in his own name or a name of choice. The donor may designate a single recipient, a field of charitable interests, or the donor may set up an unrestricted fund giving the Foundation the distribution decision.
Q. Can a named fund be established in a will?
A. Yes, many of the Foundation’s donors established their fund in a will. Others have added to their fund in their will.
Q. What is the minimum amount needed to establish a fund?
A. An individual may establish a fund with a minimum of $10,000. A scholarship fund may be established with $25,000.
Q. Can the fund be established over a period of time?
A. Yes, a fund can be established and built over a period of 5 years.
Q. Who determines how the funds are invested?
A. The Board of Directors of the Foundation has appointed the Trust Department of Capital One Bank of Beaumont to invest approximately 50% of the assets in securities and 50% of the assets in fixed income.
Q. Can gifts be added to the fund?
A. Yes, once the fund is established, any amount may be added at any time. Some donors add yearly, some for special occasions and some will increase the fund through a bequest.
Q. How much of the fund is distributed to the charity designated by the donor?
A. Most agreements between the donor and the Foundation state that the Foundation will distribute income only, preserving the historical gift(s) made by the donor. The Board reviews the market value of the fund each December 31st and makes the final decision. During periods of substantial financial growth, the Board may elect to gift as much as 5% of market value.
Q. Are the donors informed of distributions of the funds and other activities of the Foundation?
A. Yes. Each January, when the funds are distributed, each donor is informed of the amount distributed to his designated charity, and the value of his fund as of that date. Additionally, the donors receive an annual report and the Foundation’s publications.
Q. Why should an individual or an organization establish a fund in the Foundation For Southeast Texas rather than starting their own foundation, give the money directly to the charity, keep their charitable funds in c.d.’s, money market or put it in one of the large money management institutions?
A. There are at least four simple, but pertinent answers to this question.
If the gift is given to the Foundation as an endowed fund, it is a perpetual gift to the charity with perpetual management by the Foundation.
The long–term rate of return will be greater than that of any c.d. or money market. The pool of endowed accounts, managed by the Capital One Trust Department has consistently averaged a higher return than the Lehman Bond Index and the S&P 500 Index.
The investment, like the gift, stays in our area of Southeast Texas and enriches our economy.
Management and administration fees are much less with the Foundation. (For funds the fee is 1%)