Oct 10th

Trust Services: Foundation Administration

What an executive director needs for success behind-the-scenes

Oftentimes families appoint a family member to be the executive director of their foundation. This is perfectly legal and makes sense, as that person can be the voice of the family, promote the mission of the foundation within the community and surface appropriate grantmaking opportunities as part of their job. However, there are several administrative duties that must be performed, some complex, which the family might not know about or in which the executive director might not be well-versed. Additionally, as a foundation grows, there are other considerations.

One example is the story of the English family who came to Whittier Trust after its matriarch had passed away. She had been running the family’s foundation and decided to appoint her granddaughter to the executive director position before her passing. The granddaughter, along with the other family board members, were managing a relatively small foundation of around $3 million. However, upon the grandmother’s death, the majority of her estate was left to the foundation. The foundation now had a much larger annual payout requirement to meet and the family was feeling a bit overwhelmed. They wanted to make sure they were in compliance with all applicable regulatory requirements and wanted to take a more sophisticated approach to the foundation’s investments.

Whittier Trust helped the English family to establish an investment policy statement, diversify their portfolio and align their investments with their values. They also took over several key back-office tasks to set the executive director up for success so that she could continue doing what she does best: representing the foundation in the community and focusing on its philanthropic strategy.

Bookkeeping and Accounting

Keeping the books in order can be a large undertaking. “Whittier Trust takes this off the executive director’s shoulders by preparing quarterly and annual financial statements for the foundation, issuing checks and maintaining the files needed for tax preparation and audit purposes,” says Haley Kirk, CAP, vice president and client advisor for Whittier Trust’s Philanthropic Services.

Preparing Grant Agreements

When an executive director or one of their family members comes across a nonprofit they’d like to support, Whittier Trust can handle the administrative work to review the organization. It was vital for the English family’s executive director to be involved in the community and to support her family’s mission. Instead of being bogged down by back-office work, such as preparing grant agreements, her time is primarily spent meeting with nonprofits learning about what they want to do and their goals. “For example, she’ll send me an email that says she wants to grant $30,000 over 3 years, and ‘Haley, please compile the needed details and grant file to complete the donation,’” says Kirk. “And we get it done.”

From there, Kirk’s team interfaces with the nonprofit to collect the EIN, run a charity check to make sure it can qualify for the grant, get their contact information and create the grant agreement, which may include a grant report requirement. As the date of the report nears, they make a phone call to remind the charity about the report’s deadline. When the next grant is due to the nonprofit, they reach out to the executive director to keep her up to date, as well as send the check. What’s more, Whittier can facilitate multi-year grants and schedule and monitor any subsequent grant reports that the family would like to see.

Tax Preparation

In addition to handling bookkeeping and accounting, Whittier interfaces with the foundation’s CPA to provide any documents needed for tax preparation. 

If a California-based private foundation or charitable trust earns or receives over $2 million annually, it is required to have an audit the following year. “It can be hard to track that number so we keep an eye on the $2 million threshold for our clients,” says Kirk. “If the foundation requires an audit, Whittier then works with the auditors.”

In the case of the English family’s grandmother’s estate, part of the money came in shortly after her passing, then a larger sum arrived. “They might not have realized that they were going over the audit threshold but we could see that on our end. Because the books were clean and up to date, everything was on track for the audit and the executive director and family Board members did not have to worry,” Kirk explains.

Board Meeting Facilitation

Corporate foundations are required by law to have one board meeting every year. “The team at Whittier Trust can stay on top of this so that it doesn’t become a cumbersome process,” Kirk says. This includes all of the logistical planning, such as scheduling the event with multiple parties; preparing the materials, such as proposals, financials and reports for review at the meeting; and taking meeting minutes so the executive director can focus on leading the meeting.

Central Office Funnel

All mail can run through Whittier Trust, which can serve as the central office for a foundation. Using Whittier’s address rather than the family’s reduces the burden on the executive director to triage all that mail. “We can screen out requests that aren’t a fit with the foundation’s mission or guidelines and politely decline them on behalf of the family,” Kirk says.

Initially, the English family was concerned that by giving Whittier the reins to take over the foundation’s administration they would lose some control and not be able to do what they wanted. It ended up being the opposite. Without the burden of administrative tasks, the executive director can now spend more time as the public face of the foundation, which means attending more events and meeting with nonprofits.  Partnering with Whittier Trust has allowed her to thrive and alleviates the worry of liability due to a misstep along the way.

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