Affiliate Manual and Resources
LOCAL WITH A SHARED VISION FOR MONTANA
Montana Community Foundation (MCF) is honored to partner with more than 50 communities to build permanent funds to foster community leadership and philanthropy across Montana. MCF’s mission is to “cultivate a culture of giving so Montana communities can flourish.” We are privileged to invest in and support the work of each Local Community Foundation Affiliate and the unique community they serve. Because you are an Affiliate of MCF, your community can play a key role in ensuring wealth continues to benefit Montana communities forever through permanently endowed assets. MCF is committed to providing clear, transparent information about our financial position, investment management, organizational performance, and fees.
The following policies and procedures manual is intended to help Affiliates comply with legal regulations, standards, and best practices of our sector.
Affiliate Policy and Procedure Manual
Montana Community Foundation, Inc. (MCF) is honored to partner with you in building permanent funds to foster your community’s growth and development.
As partners, we are cultivating a culture of giving so Montana communities, such as yours, can flourish. Together we can collaborate, convene, and facilitate the important role you play in this mission – and in your community.
As an Affiliate of MCF, your organization operates under MCF’s nonprofit status. We are proud of our commitment to excellence. Federal and State laws, regulations, and National Accreditation standards require us to meet specific requirements. Affiliates of MCF are required to conduct themselves in a manner that ensures compliance with these laws, rules, and national accreditation standards. The following policies and procedures are intended to help Affiliates comply with legal regulations, standards, and best practices of our sector.
MCF was the first community foundation in Montana to earn national accreditation from the National Standards for U.S. Community Foundations. As an Affiliate, you share this distinction.
The Affiliate Policies and Procedures Manual provides guidance both on legal operational matters and best practice standards put forth by the National Standards for U.S. Community Foundations. Thank you for helping us create a foundation that fosters excellence in community philanthropy.
Each year, the Affiliate Fund Representative (often the Affiliate Advisory Committee Chair) will sign a statement affirming the Affiliate’s advisory committee has read the Affiliate Policies and Procedures Manual and agrees to conduct the business of the Affiliate in accordance with the policies and procedures found herein.
We look forward to building success with you. Should you have any questions regarding the policies and procedures or have suggestions about how we can better serve you, please contact us.
BECAUSE YOU ARE AN AFFILIATE
- YOU OPERATE UNDER MCF’S 501(C)(3) STATUS
All legal and operational functions of an Affiliate fall under the Montana Community Foundation’s 501(c)(3) status. MCF assumes all legal responsibilities and risks associated with your work. As an Affiliate, you do not have to file bylaws, articles of corporation, annual tax filings, perform annual financial audits, or obtain applicable business and governance insurance. Therefore, all legal agreements, committee decisions, and financial transactions must comply with MCF’s governing policies and procedures as set forth in the following manual.
Affiliate Legal Status Limitations
An Affiliate’s legal identity is not separate from that of MCF’s; therefore, Affiliates cannot enter business transactions without the authorization of MCF. This includes:
o Hiring employees*
o Serving as a fiscal sponsor
o Applying for/accepting government and/or private foundation grants without review and approval from the MCF Finance department
o Purchasing assets
o Entering contracts, rental or lease agreements**
o Maintain bank accounts, either savings or checking
o Directly accepting major donations of non-cash assets (land or other tangible assets) ***
*In limited circumstances, MCF will sign contracts to hire independent contractors to assist the Affiliate with administrative tasks or perform consulting services, such as strategic planning.
**These are services and contracts MCF may enter on the Affiliate’s behalf. Please contact MCF should these services become necessary.
***Major donations of non-cash assets can be accepted by MCF when in compliance with MCF’s gift acceptance policy.
- YOU HAVE NATIONAL ACCREDITATION AND MEMBERSHIPS THROUGH MCF
MCF was the first community foundation in Montana to earn accreditation by the National Standards for U.S. Community Foundations. As an Affiliate, you can tout accreditation too! MCF complies with regulations and is registered to fundraise in all 50 states. Affiliates can fundraise under these legal registrations with MCF-approved materials.
Affiliates are members of the Council on Foundations, Philanthropy Northwest, and Montana Nonprofit Association through MCF’s membership of these organizations.
- YOU HAVE ACCESS TO LEARNING RESOURCES, TRAINING AND CONSULTING, AND NETWORKING OPPORTUNITIES
MCF has a library of resources based on national best practices and recommendations.
Training and Consulting Opportunities
MCF provides ongoing training and consultation for Affiliates that include, but are not limited to:
o Federal and state regulatory standards
o Nonprofit and committee governance
o Asset development (fundraising)
o Marketing and community engagement resources
o Donor services
o Strategic and action planning
o Community leadership
MCF is committed to providing statewide and national networking opportunities for Affiliates in-person and online with community leadership and philanthropy experts. Affiliates will be invited throughout the year to participate and connect with their peers in the field.
- YOU HAVE ASSISTANCE FROM MCF’S PROFESSIONAL STAFF
MCF has recently bolstered how we support Affiliates in the areas below, including administrative and professional assistance through our LCF Program Officer. The LCF Program Associate serves as the main point of contact for MCF Affiliates, services include:
o Submission of donations and expenses
o Grant processing support and assistance
o fundraising tools and support
o Event planning resources
o Program-related support and assistance
The Grants Department offers:
o Research and due diligence for grants in accordance with state and federal regulations
o Grantmaking in accordance with The Council on Foundations’ best practices
o Guidance and support for conducting site visits and examining grant impacts within your community
o Grantee tracking, data collection, and grant reporting
o Strategic grantmaking consultation and training, when requested
o Maintenance of granting history
Most of the following services are provided through MCF’s Philanthropy Department. MCF offers highly sophisticated, full circle fundraising support through:
o Donor relationship management and stewardship training
o Professional advisory visits, as appropriate
o Technical expertise in accepting complex gifts
o Donor-centered philanthropy
o Donor cultivation and stewardship
o Donor solicitation resources:
o Montana Charitable Endowment Tax Credit
o Gift Planning
o Leaving a Legacy
Marketing and Communications
Affiliates have access to marketing and communications resources developed by MCF’s Communications Department. The Communications Department consults and advises on anything from social media and media releases to annual appeals and newsletters. Services include:
o Regular review of marketing and communications materials
o Examples and templates provided for commonly used marketing and fundraising materials
o Affiliate-specific branding and marketing materials.
Finance and Administration
Affiliates receive financial and administrative support. These services include:
o Investment and performance management of funds
o Quarterly fund reports created and distributed
o Access to online statements
o Annual auditing of funds, including Affiliate funds
o Annual preparation of tax filings
o Annual endowment distributions
o Storage of Affiliate documentation, both legal and governing
o Maintenance of donor lists and donor data
- YOU HAVE ONLINE ACCESS THROUGH THE FUNDHOLDER PORTAL
MCF provides Affiliate Fund Representatives with access to an online portal to see fund balance, receive statements, and request and recommend grants. To learn more about the portal, see the Quick Start Portal Guide which will be sent alongside this manual.
AFFILIATE ADVISORY COMMITTEE RESPONSIBILITIES
Advisory Committee members, like board members, are expected to provide governance over their Affiliates and to comply with the various governing responsibilities.
Duty of Care and Duty of Loyalty
As volunteers, representing MCF and taking actions under MCF’s nonprofit status, Affiliate Advisory Committee members will exercise care in the administration of their duties to their Affiliate and MCF. This is known as the Duty of Care. In addition, Affiliate Advisory Committee members must act in the best interest of the Affiliate and MCF, putting personal benefit aside. This is known as the Duty of Loyalty. Affiliate Advisory Committee members will disclose any possible conflict of interest in the administration of the Affiliate’s affairs to ensure members do not breach their duties of care and loyalty. The conflict of interest disclosure form can be found both online on the MCF website and in the Document Appendix of this manual.
Defined Rules of Governance
Rules of Governance are like bylaws, but less formal. They provide guidance about the following:
Name, location, and purpose of the Affiliate
- Responsibilities of Affiliate Advisory Committee members, including attendance, and giving and residency requirements, if any. This is typically referred to as a committee member's job description.
- Meetings, including frequency and quorum requirements
- Conflict of interest disclosure requirements
- It is recommended that each Affiliate develops the following documents:
Affiliate Advisory Committee Guidelines (Template)
Affiliate Committee Responsibilities (Template)
Maintain Affiliate Records
Affiliates’ records will be maintained in accordance with MCF’s record retention policy, which is available on the MCF website. Permanent documents include meeting minutes and governing documents.
Open and Maintain a Post Office Box for Affiliate Business
Opening and maintaining a PO Box specifically for the Affiliate is necessary to maintain a professional reputation, continuity for donors, and accuracy of marketing materials. It also provides a secure address to receive Affiliate business materials (i.e. expense reimbursements, donations, etc.) that should not be sent to an Affiliate Fund Representative’s personal address.
AFFILIATE FUND REPRESENTATIVE RESPONSIBILITIES
The Affiliate Fund Representative is typically the Affiliate’s elected Chair/President or Treasurer. The Affiliate Fund Representative serves as the liaison between MCF and the Affiliate. The Affiliate Fund Representative is also given access to the Affiliate’s confidential financial information and is responsible to communicate that information to the Affiliate they serve.
Responsible for All Correspondence to/from MCF
The Affiliate Fund Representative receives all communication, both electronic and paper, from MCF and is responsible for promptly sharing the correspondence with the full Affiliate Advisory Committee.
The primary documents and responsibilities of the Affiliate Fund Representative are listed on the Annual Task List that is required to be filed annually. The Annual Task List primarily includes, but is not limited to, the following:
- Sign and submit the Affiliate Policy and Procedure Manual agreement form to MCF for record-keeping.
- All Affiliate Advisory Committee members are required to read and submit signed copies of MCF’s conflict of interest policy once a year.
- Annually provide MCF with an up-to-date roster of Affiliate Advisory Committee members. The roster must include each member's email, phone number, and physical address.
- Provide MCF with any changes or updates to committee governing documents, including job descriptions and committee guidelines.
- Provide minutes of each Affiliate Advisory Committee meeting or major decision process within one month of the meeting.
Serve as a Point of Contact for the Fundholder Portal
The Affiliate Fund Representative ensures quarterly endowment statements have been viewed on the portal and is responsible for sharing the statements with the full Affiliate Advisory Committee. The Affiliate Fund Representative is the point of contact with MCF regarding any questions or possible discrepancies.
Submit Grant Recommendations
The Affiliate Fund Representative is the liaison for grant requests from the Affiliate Advisory Committee. Please refer to the Grants section of this manual for more information.
The Affiliate Fund Representative will monitor its Affiliate’s web presence on www.mtcf.org/About/Local-Community-Foundations and ensure MCF has correct and updated information. Additionally, the Affiliate Fund Representative will send at least one story annually that highlights the work of their Affiliate for MCF to publish in its publications and/or media releases. The Affiliate Fund Representative must ensure they have permission to use the story. Both updated information for the website and stories can be emailed to MCF’s LCF Program Officer.
Report Affiliate Fund Representative Transitions
The Affiliate Fund Representative is required to alert MCF when the position is going to be transitioned to another committee member so MCF can keep the information accurate and current. When an Affiliate Fund Representative transition occurs, please alert MCF within 15 days of the transition and register the new Affiliate Fund Representative for MCF’s portal.
An Affiliate is deemed to be dormant when that community foundation has not submitted any documentation, including grant recommendations and/or solicited contributions, in one calendar year. If an Affiliate is dormant, MCF may assume grantmaking responsibilities. MCF will first send a notice to the Affiliate Fund Representative to determine if the Affiliate can be re-organized. If the Affiliate Advisory Committee is not reactivated and making grant recommendations within 12 months, MCF will assume responsibility for grantmaking. An Affiliate’s failure to make grants in a continuous 24-month (this seems to contradict 12 months stated above) period is the primary indicator MCF uses to determine dormant status.
An Affiliate's main financial information and transactions are focused on three main categories:
- Fund Types - Endowment and administrative funds
- Payment of invoices and reimbursement of expenses
- Processing of donations
An Affiliate maintains the following fund types at MCF:
A qualified, permanent endowment is held at MCF for the benefit of the Affiliate’s community. Endowments at MCF are permanent, inviolate, irrevocable, and cannot be withdrawn. The endowment’s distribution is placed in the Affiliate’s distributable (grantable) portion of the endowment fund.
An Affiliate can establish agency, scholarship, Donor Advised, and designated endowments. To determine the best options for your Affiliate, please contact the LCF Program Officer to get more information.
Affiliate Administrative Fund
The Administrative Fund is a non-permanent fund Affiliates use to pay for operational expenses. This account is restricted only to the scope of operations of the Affiliate.
Funds can be raised for and designated to, administrative funds. Grants cannot be made from the administrative funds.
Both endowment and administrative fund balances can be viewed 24-hours a day on the fundholder portal at www.mtcf.org/myfund. Distributable amounts available for grantmaking can be found under the Affiliate’s endowment fund as “grantable balance.”
PROCEDURES FOR PAYMENTS AND REIMBURSEMENTS OF EXPENSES
Payment of Vendor Invoices
The Affiliate Fund Representative must properly complete and submit the Expense Reimbursement Form. Please scan and email unpaid invoices at least two weeks before the due date and no later than 15 days after the month-end.
Requests for Reimbursements
The Affiliate Fund Representative must properly complete and submit the Expense Reimbursement Form with scanned receipts no later than 15 days after the month-end. Reimbursements are typically approved within five (5) business days of receipt and paid within ten (10) business days after approval.
Operational Payment and Approval
All Affiliate expense forms, with supporting documentation, must be submitted electronically.
Please scan supporting documentation (invoices, receipts, etc.) and send them as one document. If the Affiliate is unable to electronically submit forms, contact the LCF Program Officer. The Expense Reimbursement Form is a fillable PDF and can be submitted with an electronic signature.
MCF must approve the payment and reimbursement of expenses and ensure the expense conforms to the charitable purpose of MCF and the Affiliate.
PROCEDURES FOR DONATION REMITTANCE
Donations Directly to MCF
Donors should make checks payable to the Montana Community Foundation with the Affiliate’s name written in the memo line.
All checks should be mailed checks to:
Montana Community Foundation
PO Box 1145
Helena, MT 59624
Donations Forwarded to MCF by the Affiliate
Affiliates must use the Donation Remittance Form to submit donations to MCF. MCF will follow the instructions on the Donation Remittance Form to determine which fund will receive the donation. MCF will verify that the instructions on the form agree with any instructions placed on the donors’ checks and correspondence.
While cash donations should be avoided, any cash donations received should have a receipt noting the date of receipt. Mail a copy of the receipt to MCF with the check and the Donation Remittance Form as soon as possible.
Processing Donation Checks
Remit donation checks with the Donation Remittance Form to MCF within one week of receipt. This allows MCF to acknowledge donors promptly as required by the IRS. Any check that arrives at MCF and is 60 days past the date written will be held until the Affiliate is able to contact the donor and confirm the donor still intends to honor the check.
Special Procedures for Donations at December Year-End
Affiliates need to follow special guidelines to help donors claim a charitable deduction for donations made at the end of the calendar year. Whenever possible, please send all postmarked envelopes with the Affiliate Donation Remittance Form. However, it is ultimately the donor’s responsibility to substantiate the date of charitable donations for their tax purposes.
MCF understands the goal of Local Community Foundations is to be a resource for their communities. To be successful, community members need to understand what the community foundation does and how it fulfills this role in their community. Effective marketing helps tell this story by promoting the work of the Affiliate and increasing its visibility in the community. Ultimately, good communication and storytelling support fund development for the betterment of the community.
COMMUNICATIONS AND MARKETING PLAN
In order to optimize communications and fundraising activities, each Affiliate is encouraged to create a Community Engagement and Marketing Plan that is integrated with its fund Development Plan. The Communications and Outreach Manager can help with this effort. Affiliate Advisory Committee members should actively engage in carrying out this plan. It should include:
- Methods for the Affiliate to uniquely identify and promote itself
- A process for ensuring materials are consistent and updated
- A calendar of marketing initiatives that align with strategic initiatives of the community foundation
- An established grantmaking calendar/schedule
- A web presence that includes a website and/or social media
- An identified budget for carrying out the Marketing Plan
Once drafted, the Community Engagement and Marketing Plan should be submitted to MCF with the other materials required to remain in good standing as an Affiliate of MCF.
PRINTED MATERIALS AND MATERIALS INTENDED FOR PUBLIC CONSUMPTION
Each Affiliate is responsible for ensuring drafts of marketing materials (brochures, annual reports, media releases, newsletters, etc.) are provided to the Director of Communications for review at least fifteen (15) business days before the desired publication date to avoid any delay in approval.
Additionally, each Affiliate must alert the Communications and Outreach Manager when they plan to engage in fundraising via social media i.e. using the MCF donate button on a post or hosting an online fundraising event. See more information in the Fundraising section.
Because each Affiliate operates under MCF’s legal nonprofit status, it is important MCF ensures consistency in messaging, including proper disclosures. This also allows MCF to provide help and guidance as needed.
MCF has technical and professional expertise available for any Affiliate wanting to expand their existing communications and marketing initiatives. Please contact the Director of Communications for assistance.
According to IRS regulations, the assets of a community foundation must be used exclusively for charitable purposes. For community foundations, this is most commonly demonstrated through grants awarded by the foundation to other charitable organizations and particularly organizations that qualify as public charities.
MCF will approve grant recommendations for organizations that meet the public charities criteria in I.R.C. §501(c)(3) and §509(a)(1),(2), or (3), or are churches, schools, hospitals, medical research organizations, or government units. MCF is prohibited from making grants to private charitable foundations. If you are unsure about the status of an organization, please contact MCF. Grantmaking to charitable organizations remains the most common way to make grants, however, it is also possible to give charitable grants to individuals. Charitable grants to individuals are generally awarded in the form of a scholarship, however, other types of grants to individuals are possible, so long as they meet the IRS requirements. If your Affiliate wishes to make grants to individuals, you must consult with MCF staff for training and approval.
TYPES OF GRANTS
Grants to Individuals
Grants to individuals do not include payments to individuals for services performed for the benefit of the community foundation in furtherance of its charitable mission.
According to IRS regulations, grants to individuals should be given for the following purposes:
1) to assist persons who are in need because of poverty or temporary distress (including natural disasters)
2) to assist individuals who are pursuing education including scholarships, fellowships, and, under certain circumstances, travel grants.
3) to fund the conduct of, or reward past achievement in, activities that further a “charitable purpose,” including the creation of works of art and the conduct of certain kinds of research.
Other Types of Grants
- “Brick and Mortar” Grant – An informal term indicating grants for buildings or construction projects.
- Matching Grant – A grant or gift made with the specification that the amount donated must be matched on a one-for-one basis or according to some other prescribed formula.
- Reactive Grant – A foundation tends to fund projects and recipients based solely on submitted requests to cover emergencies.
- Proactive Grant – A foundation most likely decides what it wants to do and then selects the projects and/or recipients to best meet that need.
- Competitive Grant – A foundation knows what it wants to accomplish but sets up an open and competitive process for eligible grant seekers to submit proposals that fit specific criteria.
In cases where an Affiliate does not receive grant applications (a non-competitive grant cycle), there is no need to submit grant applications. However, there should be a proposal from the grantee, and all other materials mentioned above should be scanned and sent to MCF’s Grants Department.
To ensure grant recommendations can be processed in a timely fashion, MCF highly recommends avoiding the giving season (November – December).
MCF shares your goal in building lasting relationships with nonprofits. Most nonprofits appreciate grantmaking that does not occur during their busy fundraising times. By providing a 1-2-month period for grant seekers to apply, the Affiliate encourages equitable, diverse, and inclusive partnerships with nonprofits in the community.
Grantmaking schedules/cycles should be publicly promoted and included in the Affiliate Community Engagement and Marketing plan. MCF would be delighted to share your granting opportunities in our newsletter, Infinity.
Affiliates have access to MCF’s online grantmaking platform through Foundant’s Grant Lifecycle Manager. To access the service, contact the LCF Program Officer at least three months before the grant cycle is to open.
The Affiliate Fund Representative is responsible for the timeliness and accuracy of submitting grants. For timely and accurate processing of recommended grants, please ensure the following:
- Each grant recommendation must be submitted through the online fundholder portal at www.mtcf.org/myfund.
- Grant recommendations must be for grants that are $500 or more. If an Affiliate would like to make a grant for less than $500, please contact MCF staff.
- The following documents should be scanned and emailed to the LCF Program Officer:
- Copies of all grant applications received for that grant cycle (including those not recommended for funding).
- 501(c)(3) determination letters for new grantees or support for the grantee meeting charitable guidelines. If grantees are awarded grants in multiple years, MCF will have this documentation on file.
- Grant Recommendation Minutes Template is filled out completely and notes which Affiliate Advisory Committee members were present, their affirmative or negative votes, which members abstained due to conflicts of interest, and conflict of interest conversations that took place. MCF staff will only approve grants that have the conflict of interest documentation addressed in the Grant Recommendation Minutes Template.
- Special instructions must be noted, as needed, regarding the delivery of grant checks. Unless specified, checks will be mailed directly to grantees. If requested by the Affiliate Fund Representative, checks can be mailed to the Affiliate for a presentation event. MCF requires that checks reach grantees within 15 days.
- MCF is required to independently verify each recommended grant recipient is a qualified organization according to IRS rules. Once MCF receives all required information, recommended grants will be processed within ten (10) business days (two weeks).
- Affiliate Fund Representatives can view the progress of the grant recommendations on the online portal.
As part of the funding agreement, MCF requires grantee organizations to submit a written report that summarizes the project and identifies progress in achieving the purpose of the grant. Reports may require a detailed accounting of the use and expenditure of grant funds. Additional requirements of granted dollars can be found in the Grant Agreement Letter.
It is the responsibility of the Affiliate to work with the grantee and MCF to obtain the report. In some circumstances, the Affiliate may wish to change reporting requirements for specific grants. If changes are needed, the Affiliate must contact the LCF Program Officer prior to making the grant recommendation.
Fundraising activities are an important function for all Affiliates to raise funds for their communities. However, when conducting fundraising activities, the Affiliate needs to remember that the IRS and the State of Montana consider Affiliate fundraising to be fundraising on behalf of MCF. Therefore, Affiliates must work closely with MCF to ensure fundraising complies with state and federal laws. This section of the manual will assist you in determining the types of fundraising activities that may work best for your Affiliate, as well as provide the compliance required for the fundraising activities being performed.
Affiliate Development Plan
If fundraising events are something the Affiliate wants to do on a routine basis, MCF strongly encourages you to develop a written development plan. Having a strong development plan in place will likely result in more funds raised during fundraising activities. A development plan outlines the Affiliate’s fundraising goals and strategies for raising contributions. It explains how the Affiliate and other volunteers should focus their fundraising efforts within a certain period of time (usually one or two years). A development plan also helps measure progress during a process that might take years or even decades to bring about tangible results. If your Affiliate is interested in building a development plan, MCF is here to help. See the Affiliate Development Plan- Tools and Template.
Pre-Approval Requirement for All Fundraising Activities
MCF appreciates your cooperation in fulfilling the requirements for all fundraising activities as outlined in this portion of the manual. Our goal is to protect donors, Affiliates, and MCF. To ensure legal obligations and best practices are followed, all fundraising activities must be pre-approved by MCF. Communication is strongly encouraged as MCF is not obligated to recognize the proceeds from any fundraising effort that is undertaken without prior approval as charitable gifts. Furthermore, failure to comply with the MCF’s fundraising procedures may result in additional fees and the Affiliate’s loss of fundraising privileges.
TYPES OF FUNDRAISING ACTIVITIES
For purposes of this manual, MCF has determined there are two main types of fundraising activities that will have established processes, procedures, and various levels of compliance: non-event fundraising activities and event fundraising activities. MCF staff is here to help assist Affiliates in determining how to optimize your fundraising objectives.
Non-event fundraising activities are those that primarily involve no gathering of the public and mainly consist of (in)direct contact with donors through mailing solicitations or social media forums.
Event fundraising activities may take many forms, but, generally, they provide a venue and host activities that encourage donations by providing a benefit to participants and donors. Event fundraising activities, especially those involving ticket sales and auctions, are time-consuming for both Affiliate volunteers and MCF staff.
The following table provides the most common examples of non-event and event fundraising activities that Affiliates perform.
Determining the Type of Fundraising Activity
Properly identifying the type of fundraising activity is important when communicating the Affiliate’s intended fundraising activity to MCF to obtain approval. It is not always easy to determine the correct type of fundraising activity that is being performed. The following flowchart is provided to assist in determining if the Affiliate is going to have a non-event or event fundraising activity. MCF always encourages the Affiliate to contact the LCF Program Officer with questions determining what type of fundraising activity is being performed.
FUNDRAISING ACTIVITIES PROCESSES AND PROCEDURES
After the Affiliate identifies what type of fundraising activity they are performing, the following sections provide the necessary processes, procedures, and other compliance that is required by each type. It is extremely important to note there are significantly different processes and procedures that are performed for nonevent fundraising activities, then for event fundraising activities. The processes and procedures vary significantly primarily due to the tax and legal compliance that is required for the event fundraising activities.
Non-event Fundraising Activities Processes and Procedures
In general, the processes and procedures for non-event fundraising activities are very streamlined and primarily consist of review and pre-approval of the fundraising materials.
Affiliates are encouraged to reach out to donors and potential donors through newsletters, solicitations, annual reports, and email campaigns. MCF has complied with each state’s charity registration requirements, giving Affiliates the ability to solicit donors in all 50 states.
MCF’s Director of Communications must approve the final version of marketing materials before mailing/disbursement/publication. Expenses for mailing a solicitation without approval may not be reimbursed. See the Marketing section for more information.
All appeal letters must include the following language:
<Insert LCF name> is an Affiliate of the Montana Community Foundation. Your donation to the <Insert LCF name> becomes an asset of the Montana Community Foundation, for the benefit of the <Insert LCF name>, which has exclusive legal control over all contributed assets. All endowment funds are subject to MCF’s variance power. MCF is committed to ensuring the donor’s intent for their charitable gift.
When properly conducted, face-to-face solicitations are the most cost-effective way to secure contributions for your community's benefit. Face-to-face solicitations involve directly asking someone to contribute to your Affiliate. These conversations typically involve a request for a specific amount. MCF staff can help coach your Affiliate committee members on how to have successful conversations with prospective donors.
As an Affiliate of MCF, all donations accepted on Facebook are processed via MCF’s Facebook page and paid out to MCF. Often payment is received before we receive the payout report from Facebook letting us know how to attribute the donations. For this reason, it is important that the Affiliate alert MCF staff when they will be fundraising on Facebook.
- For Facebook fundraisers, the Affiliate must let the Communications and Outreach Manager know they will be holding a fundraiser 15 days before the actual event.
- When including the donate button on a Facebook post, the Affiliate must tag the Montana Community Foundation as a way of alerting MCF of the post.
Facebook donations are generally not encouraged due to the lag time between when the gift was made and when the funds are received by MCF (generally two weeks) and the incomplete donor information provided by Facebook, an obstacle to good donor stewardship.
As an alternative, the Affiliate can direct donations solicited through Facebook and other online channels to the Affiliate’s designated page on the MCF website. Contact the Communications and Outreach Manager for more information.
Giving Days and Give Local Campaigns
Participation in a giving day has become a popular way for community foundations to engage residents, donors, and non-profits in their community. A giving day is a powerful 24-hour online fundraising event that unites a community around local causes. The giving day raises money through online donations.
Before jumping into a giving day program, Affiliate must complete and submit an Affiliate Giving Day Application at least 6 weeks before the planned giving day.
Affiliates should develop a strategy for how to maximize their giving day efforts. Please reach out if you need more information and resources to help plan your giving day. When possible, MCF recommends that the Affiliate direct donations to their designated page on the MCF website as opposed to Facebook.
Remember, MCF staff is here to help. We have tools and resources available to assist Affiliates in developing a strong fundraising campaign and inspiring materials. Do not hesitate to reach out for help.
Event Fundraising Activities Processes and Procedures
At times, you may wish to organize an event fundraising activity to raise dollars and awareness for your Affiliate. The following processes and procedures are intended for you to use as a guide for planning and executing event fundraising activities. As noted above, the processes and procedures vary significantly and are more complex than non-event fundraising activities primarily due to the tax and legal compliance that is required for the event fundraising activities.
To start this process, Affiliate Advisory Committees will need to schedule a meeting, whether virtual or in-person with the LCF Program Officer and other applicable MCF Staff to discuss the Affiliate’s goals, objectives, and implementation plan for the special event in order to anticipate any unforeseen challenges.
Submission of Application and Budget for Event Fundraising Activity Approval
At least 10 weeks before the event fundraising activity and before any planning and publication, the Affiliate Fund Representative must submit the completed Event Fundraising Activity Application and Event Fundraising Budget forms to MCF’s LCF Program Officer. Affiliates must use the templates provided; no other versions will be accepted.
General Rules and Guidelines for Approval:
- The event fundraising activity should reflect a minimum of $2,000 in revenue or more than 50% of the proceeds benefiting the Affiliates endowment. It is important to note, the Affiliate is responsible for any additional costs or any losses incurred as a result of the event. Losses will be paid from available monies in the Affiliate’s administrative operation fund.
- The Event Fundraising Activity Budget must include how all expenses are to be paid (either by the Affiliate Fund Representative to be reimbursed or from the Affiliate’s administrative fund). This must be discussed before the event.
- Special approval is required for raffles and/or any other gambling event activities because these require state approval.
- Please note, it may take up to 10 business days for MCF staff to complete the approval process for the desired event fundraising activity. For this reason, the Affiliate needs to allow plenty of time for planning.
Affiliate and MCF Pre-Event Responsibilities
Once the event fundraising activity is approved by MCF, the Affiliate may proceed with their event plan. To offer as much clarity as possible, we have provided the responsibilities of both the Affiliate and MCF.
- Provide instruction for how all expenses presented in the budget are to be paid (either by the Affiliate representative to be reimbursed or from the Affiliate’s administrative fund). For each of the expenses presented.
- MCF must issue W-9’s for all event vendors. The Affiliate must provide MCF with vendor information before the event occurs so MCF can plan for W-9 issuance and vendor payment.
- All invoices should be submitted to MCF as the vendor requires (i.e. pre-event deposits or for payment after the event).
- Submit all marketing materials for review and approval by the Director of Communications.
- When required, submit the Affiliate Event Fundraising Activity Insurance Application.
- If any raffle and/or gambling activities were approved, the necessary applications have been reported to MCF.
- If the event includes an auction, the Affiliate should provide a list of all auction items along with the Fair Market Value of each item.
- Provide MCF with any contractual service agreements that need authorization (i.e. caterers, space rental agreements, entertainment expenses, etc.).
- Provide MCF with needed licenses for vendors/caterers for serving alcohol.
- Work with MCF to ensure appropriate acknowledgment of donors is made.
- Comply with applicable local, state, and federal laws.
- Comply with MCF’s fundraising policies and procedures.
- Review and approve vendor W-9 forms for payment.
- Establish a payment plan for all budgeted expenses.
- Review and edit all marketing materials.
- Obtain appropriate insurance coverage for the event, subject to the community Affiliate filling out the Affiliate Special Event Insurance application.
- If applicable, obtain the necessary permits for raffles and/or gambling activities as approved.
- Maintain and authorize necessary contractual service agreements provided from Affiliate.
- Maintain and authorize necessary licenses for vendors/caterers for serving alcohol.
- Manage money and property from donors, contributors, and sources.
- Pay event expenses, subject to appropriate substantiation and approval by authorized Affiliate Fund Representative.
- Provide appropriate acknowledgments to donors, consistent with MCF guidelines and IRS requirements.
Affiliate and MCF Post-Event Responsibilities
After the event fundraising activity has occurred, all materials should be submitted to MCF within 7 days. A meeting with the LCF Program Officer and a member of the MCF Finance and Administrative department should take place as soon as possible to ensure that information is complete, accurate, and reconciled. To offer as much clarity as possible, we have provided the responsibilities of both the Affiliate and MCF.
- Provide complete and reconciled forms for all donations, in-kind contributions, and special events revenue forms, as applicable (instructions are on all forms).
- Provide all checks, cash, credit card, etc. information that reconciles to the forms listed (as applicable) as soon as possible for proper deposit and acknowledgment.
- The proper fund (endowment, distributable, or administrative) should be identified for all revenue.
- All Expense Reimbursement Forms and the related complete supporting documentation should be submitted within 7 days.
- Pay event expenses, subject to appropriate substantiation and approval by authorized Affiliate Fund Representative
- After the event has taken place, donors will receive charitable contribution substantiation according to IRS requirements and MCF’s receipting guidelines. The IRS requires that all event fundraising activity materials state clearly, where applicable, that funds are being raised on behalf of the Affiliate at MCF rather than by MCF.
FUNDRAISING ACTIVITIES - IRS COMPLIANCE AND CHARITABLE DEDUCTIONS
IRS Compliance for Fundraising Activities
The IRS has strict acknowledgment requirements that impact any type of fundraising. Because Affiliates are included in MCF’s 501c3 status, Affiliates and MCF staff need to work closely together to ensure IRS reporting requirements are met. A review of all marketing materials ensures there are no unintentional Unrelated Business Income Tax (UBIT) consequences.
Furthermore, MCF’s provided donation, special event, in-kind, etc. forms must be used to ensure that all information needed during the generation of funds during a fundraising activity has been properly captured. If the forms provided are not used and filled out completely and accurately, donors may be denied a tax deduction and/or the Affiliate may be subjected to penalties.
Donors who contribute to the event will receive a written acknowledgment from MCF. MCF requires detailed information to provide accurate acknowledgments. Affiliates must complete the Donation Remittance Form, following the procedure outlined on page 13.
Non-Monetary (In-Kind) Contributions – Goods and Services
Non-monetary (in-kind) contributions of goods - may be deductible to the extent allowed by the IRS. Examples may include items donated for auction and/or raffles, or free food donated for the event. To comply:
- The donor must provide the Affiliate with a description of the item and a good faith estimate of the value of the item contributed to be forwarded on to MCF.
Non-monetary (in-kind) contributions of services - may be both deductible and non-deductible. In general, only services in which a professional skill is required are considered deductible. Services in which a professional skill is not required are often not deductible. For example, if a gourmet chef is hired to provide a meal for an event, and the chef donates their services, this would be considered a professional skill. However, if there was a barbeque meal served and a person donated their time to grill the food, this would not be considered deductible. Volunteer hours are generally not deemed deductible. To comply as a non-monetary service donation:
- The donor must provide the Affiliate with a description of the service and a good faith estimate of the value of the service contributed to be forwarded on to MCF. Typically, an hourly rate of the professional and the number of hours donated should be provided.
For purchasers of auction items, the charitable value of an item purchased is limited to the amount over its fair market value. MCF will provide purchasers with an acknowledgment letter that provides both the fair market value and the purchase price of the item. The excess of the purchase price over the fair market value will be the charitable value.
If ticket costs include dinner, drinks, or entertainment in exchange for buying a ticket to an event, the ticket price includes a charitable donation amount only if the price of the ticket exceeds the fair market value of the benefits (food, drink, and entertainment) offered to the donor. If the donor buys tickets to an event and does not attend, they were still offered the benefit, the value of which must be deducted from their ticket price. If donors want to support your efforts and optimize the charitable benefit, a direct contribution to your fund rather than purchasing an event ticket meets that objective.
MCF will send an acknowledgment letter that provides both the fair market value of the benefits enjoyed by the ticket holder and the purchase price of the ticket. The excess of the purchase price over the fair market value of the benefits received is the charitable value of the ticket.
Raffles, Door Prizes, and Split-The-Pots
Purchasing a raffle ticket or paying for the chance to win a door prize or “split-the pot” is not the equivalent of making a charitable donation. Special event participants who purchase raffle tickets, tickets for door prizes, or split-the-pot prizes will not be acknowledged for making a charitable donation.
The IRS requires MCF to report gambling winnings of $600 or more and withhold taxes from winnings. Therefore, MCF recommends that the fair market value of individual raffle or door prize items does not exceed $600 and individual cash winnings are less than $600.
Affiliates may hold raffles of items worth over $600, so long as they collect the following information from the raffle winner to be submitted to the IRS before the raffle winner receives their raffle prize:
- Raffle winners name
- Raffle winners contact information
- Raffle winners Social Security Number (this is most important)
FUNDRAISING ACTIVITIES – LEGAL COMPLIANCE
Marketing and Advertising
MCF reviews all marketing and advertising information to ensure the Affiliate is complying with copyright, branding, and other potential laws. Furthermore, language used for the intent of the funds (i.e. endowment versus administrative) is verified to ensure that the monies raised are properly reported. As noted above, there is also legal compliance in reviewing for Unrelated Business Income Tax (UBIT).
Affiliates cannot sell alcohol at any event. Doing so violates MCF’s general business liability insurance policy. MCF’s liability policy only covers an event that is small, private, and where the Affiliate host carefully monitors alcohol consumption, such as a house party.
Affiliates can purchase a separate liability policy for the event.
If an Affiliate hires a caterer, such as an independent caterer, restaurant, or bar with liquor liability insurance, MCF will waive the requirement to purchase event insurance so long as the caterer adds MCF as an “additional insured” and a copy of the liability policy is provided to MCF before the event.
Raffle and Gambling
Affiliates must abide by State and Federal raffle and gambling laws and obtain any applicable permits and/or licenses. The State of Montana requires permits for raffles. As a nonprofit entity, there may be certain items donated for the raffle (i.e. guns, vehicles, etc.) that may require additional IRS filings.
Planning a House Party Event Fundraising Activity
House parties are small, intimate gatherings of supporters or potential supporters to raise money for your Affiliate. It can be held in someone's home, usually with no more than 30-50 attendees, and is only a couple of hours long. House parties are considered event fundraising activities and require the Affiliate to complete the Event Fundraising Activity Application and ensure all event procedures are followed.
GLOSSARY OF TERMS
A Local Community Foundation or fund that has 100% of its endowed assets invested at MCF. The community foundation or fund is under MCF’s 501(c)(3) status. The Affiliate serves a specific area, generally a geographic area, and operates under the guidance, or in accordance, with a formal agreement with MCF.
Affiliate Advisory Committee
Members from the local community who assume responsibility for creating and implementing the Affiliate’s mission and vision. Members are volunteers of MCF and covered by MCF’s liability insurance. An Affiliate may choose to call its Affiliate Advisory Committee a “board,” but legally MCF’s Board of Directors governs the Affiliate. An Affiliate Advisory Committee supports MCF’s board in managing the activities of the Affiliate.
Is a nonpermanent component of the Affiliate’s funds at MCF. This fund is used for the operations of the Affiliate. Administrative funds can also be called operating funds and can be separately fundraised for, creating operating funds for non-granting programming of the Affiliate.
A charitable donation is “something voluntarily transferred by one person to another without compensation.” (Merriam-Webster’s Collegiate Dictionary, Tenth Edition). It is a gift of money or other property to a qualified organization for charitable purposes for which the donor does not reasonably anticipate benefit from in return. In IRS Code Section 170, the income tax charitable contribution provision, and numerous court cases define “charitable donation.”
The relief of poverty, the advancement of education or religion, the promotion of health, governmental or municipal purposes, and other purposes the achievement of which is beneficial to the community (IRS definition). Organizations set up and operated exclusively for charitable purposes, and which serve a public rather than a private interest, are exempt from federal income tax under section 501(c)(3) of the Internal Revenue Code and are eligible recipients of tax-deductible charitable contributions.
A community foundation is a tax-exempt, nonprofit, autonomous, publicly supported, philanthropic institution composed primarily of permanent funds established by many separate donors of the long-term diverse, charitable benefit of the residents of a defined geographic area. Typically, a community foundation serves an area no larger than a state. Community foundations provide an array of services to donors who wish to establish endowed funds without incurring the administrative and legal costs of starting independent foundations. According to the Foundation Center, there are more than 800 community foundations across the United States today. The Cleveland Foundation is the oldest; the Silicon Valley Community Foundation is the largest.
Conflict of Interest
A situation where personal interests prevent an individual from making an impartial decision that is in the best interest of the charity. Putting one’s own interests before those of the charity can have negative consequences on the individual and charity. Even the most minor action or appearance that a person has acted for personal benefit can diminish the public’s trust in the charity.
Funds available from an endowment for grantmaking. The amount of distributable funds is calculated annually using MCF’s payout policy. Affiliates are notified of the new amount of distributable funds each February. On the Fundholder Portal, this balance is reflected as part of the "grantable balance."
The MCF Fundholder Portal is an online way to manage the Affiliate’s account(s) online. The dashboard can be used to access the fund’s information and recommend grants. User accounts are simple to request and set up. The fundholder portal is a secure, 24-hour site.
In grantmaking, this speaks to the practices one applies when reviewing grant requests prior to giving them approval. It generally includes establishing the charitable status of the grantee, the charitable purpose of the grant, and the financial and organizational capacity of the organization to undertake the proposed activities. Due diligence may also include reporting from grantees, site visits to grantees, and other methods to ensure funds are used appropriately and for the intended charitable purpose.
A fund in which the principal is kept intact and only a certain amount of earnings are available for other purposes, such as granting. Endowments at MCF are permanent and the principal is intended to remain intact in perpetuity.
In Montana, endowments are defined under Montana law. According to Montana law in the Uniform Prudent Management of Institutional Funds Act (MCA 72-30-101 and in the Qualified Endowment Tax Credit (MCA 15-30- 165), the definitions are not strictly identical. MCF uses donors’ intention as the determining factor in defining “endowment.”
• Unrestricted Endowment – donors have not restricted the charitable benefit of the endowment to a specific organization or purpose.
• Restricted Endowment – donors have restricted the charitable benefit to a specific organization or purpose (e.g. arts, youth programs, community health).
Fair Market Value (FMV)
The amount at which a good or service would change hands between a willing buyer and seller. This is an important concept in determining the charitable value of non-cash donations.
Community Impact Fees
MCF offers a carefully designed fee structure that is both cost-effective and competitive and supports and sustains MCF’s ability to meet our mission of “creating a culture of giving so Montana communities can flourish.” Key MCF service factors are expertise in financial and investment management, local community foundations, and gift planning, and brand recognition.
Community Impact Fees are set by the Board of Directors and reviewed annually. Please refer to https://www.mtcf.org/About/Financials-Investment-Performance for MCF’s current Community Impact Fee schedule.
Not a term found in the Internal Revenue Code but used to describe a tool offered by community foundations and other public charities to provide a functional framework for charitable projects that cannot, or choose not, to function as a stand-alone charitable organization. Fiscal sponsors provide fiduciary oversight, financial management, and other administrative services to help build the capacity of charitable projects. MCF is the fiscal sponsor for Affiliates. Affiliates cannot assume the responsibilities of fiscal sponsorships and only in very rare circumstances will MCF act as a fiscal sponsor.
An account at MCF that has a specific charitable purpose.
A person designated by the Affiliate Advisory Committee as the primary contact and liaison with MCF. The Affiliate Fund Representative receives and sends official correspondence from and to MCF and signs grant recommendation forms. The Affiliate Fund Representative is also designated as the fund's portal user.
National Standards for Community Foundations
Approved in September 2000, the National Standards are the baseline requirements for the governance, structure, and activities of community foundations. The standards are peer-driven, voluntary, and self-regulatory. The adoption of these standards throughout the field provides a level of consistency that helps the field build capacity, distinguish itself, and market nationally and regionally. National Standards can be found at cfstandards.org. MCF is accredited through National Standards and therefore, Affiliates of MCF are also accredited.
Philanthropy is defined in different ways. The origin of the word philanthropy is Greek and means love for mankind. Today, philanthropy includes the concept of voluntary giving by an individual or group to promote the common good. Philanthropy also commonly refers to grants of money given by foundations to nonprofit organizations. Philanthropy addresses the contribution of an individual or group to other organizations that in turn work for the causes of poverty or social problems-improving the quality of life for all citizens. Philanthropic giving supports a variety of activities, including research, health, education, arts, and culture, as well as alleviating poverty.
The policy of MCF that determines the amount from each endowment fund available for distribution. In compliance with the Uniform Prudent Management of Institutional Funds Act (UPMIFA), MCF’s Board of Directors determines the percentage rate to calculate distributable earnings on an annual basis.
Managed according to the Uniform Prudent Management of Institutional Funds Act (UPMIFA) – 47 states have adopted this as the standard for qualified endowments: UPMIFA Section 4. Appropriation for
Expenditure or Accumulation of Endowment Fund, Rules of Construction.
The seven factors that dictate how an institute operates within UPMIFA – subject to the intent of the donor are: (1) the duration and preservation of the endowment fund; (2) the purposes of the institution and the endowment fund; (3) general economic conditions; (4) the possible effect of inflation or deflation; (5) the expected total return from income and the appreciation of investments; (6) other resources of the institution; and (7) the investment policy of the institution.
- Affiliate Conflict of Interest Disclosure Form [PDF]
- Affiliate Giving Day Application & Checklist
- Affiliate Policy and Procedure Manual
- Affiliate Meeting Minutes Form [PDF]
- Agency Endowment Guide [PDF]
- Annual Affiliate Agreement Form [PDF]
- Donation Remittance Form [PDF]
- Event Finance Tracking Form [PDF]
- Expense Remittance Form [PDF]
- How an Endowment Works [PDF]
- In-Kind Contribution or Silent Auction Form[PDF]
- Local Community Foundations at Work[PDF]
- Quick Start Portal Guide [PDF]
- Records Retention Policy [PDF]
- Special Event Application Form [PDF]
- Special Event Budget Form [PDF]
- Special Event Checklist [PDF]
- W-9 Form [PDF]
- Your Partner in Planned Giving
- Board Member-Advisory Committee Orientation Checklist
- Development Plan- Tips and Template
- Community Engagement and Marketing Plan Template
MCF staff is available to answer any questions or concerns you may have. Please contact our team for assistance.