Seminar on Legal and Financial Aspects of Endowment Building
Warsaw, June 6-7th, 2002
On June 6-7th 2002 the Stefan Batory Foundation in cooperation with Ford Foundation and with a financial support of Polish-American Freedom Foundation, Trust for Civil Society in Central and Eastern Europe and the US Embassy in Warsaw organized a seminar on Legal and Financial Aspects of Establishing and Managing Endowments. Despite its narrow focus the seminar was greatly welcome by Polish NGOs, which demonstrates how popular the issue of financial sustainability is in Polish NGO sector. Many of them ponder seriously the ways to make their operations sustainable. The panelists from the US, Western Europe and the Visegrad countries: Barry Gaberman, Senior Vice-President of the Ford Foundation, Carl Carstensen, CFO of the Volkswagen Foundation, Germany, Nilda Bullain, consultant from the International Center for Non-Profit Law in Budapest, Pavlina Kalousowa, Director of the Czech Donor Forum and Milan Andrejkovic of the First Slovak Non-profit Service Center, as well as the lawyers professor Hubert Izdebski and Tomasz Kacymirow from Poland presented the regulatory and fiscal framework for endowment building and asset management in their countries. Their presentations clearly demonstrated that in the respect of legal environment for endowment building and management Poland is left behind not only by the US and Western Europe but also by the Visegrad group countries.
The practical aspects of endowment management were presented by Carl Carstensen of the Volkswagen Foundation, Livia Harringova from the Slovak Ekopolis, Sandor Koles from the Carpathian Foundation, Tomasz Perkowski from the Foundation for Polish Science and Marcin Murawski from the Leopold Kronenberg Foundation of Bank Handlowy, Jacek Wojnarowski, Director of the Trust for Civil Society in Central and Eastern Europe, Robert Thomas, consultant to the East- West Institute who had conducted research on legal and fiscal issues connected with endowment building and management in Central Europe as well as representatives of Poland’s financial sector: banks, asset management firms and investment funds discussed what should be done to enhance the environment for endowments and NGO financial sustainability in Poland.
The seminar looked into the prerequisite conditions a foundation has to meet to be successful in endowment building and the appropriate timing of the process. Barry Gaberman of the Ford Foundation in his opening remarks pointed towards what he referred to as “the tyranny of numbers” and demonstrated a simple formula which implied that if a foundation wants to have USD 1 million of its capital gains in general support and still preserve the purchasing power of the endowment over time it must accumulate USD 25 million. Gaberman also suggested that while there were no “industry standards” on the minimum level of endowment it is believed in the foundations community that it is worth the effort to raise the endowment if proceeds can cover some 15- 20 per cent of the organization’s operational budget. According to Gaberman key organizational and financial factors that an organization should consider before embarking on endowment building include: strong leadership and experienced management, a history of at least one successful leadership and board succession, an active and diverse board that truly governs the foundation, financial stability and transparency over the past several years, fiscal accountability with annual outside audits, diversified funding base. Further, it is critical that a clear endowment fund-raising plan be established and a financial committee be formed to oversee the investment and spending policy approved by the board.
Presentations:
- Barry Gaberman, Endowment Grantmaking: Why and When?
- Carl Carstensen, The Understanding of the Foundation in Economic Terms
- Carl Carstensen, How to Maintain the Real Value of the Foundation's Capital [DOC 112 KB]
- Pavlina Kalousova, Legal and Fiscal Conditions for Foundations in Czech Republic [PPT 91 KB]
- Pavlina Kalousova, Professional Management of Foundation Assets in ®B - Trust, Investment Company [PPT 176 KB]
- Nilda Bullain, Legal Environment for Endowments in Hungary [PPT 71 KB]
- Jacek Wojnarowski Endowments. Any Chance? [PPT 29 KB]
- Tomasz Kacymirow, Podatkowe aspekty działalności organizacji pozarządowych w Polsce na przykładzie fundacji. [PPT 176 KB]
- Stanisław Markowski, Cezary Burzyński, Creduit Suisse Zarządzanie środkami organizacji pozarządowych. [PPT 534 KB]
- Grzegorz Krawczyk, Adam Dakowicz, BRE Asset Management Legal and Financial Aspects of Establishing and Managing Endowments. [PPT 697 KB]
Seminar materials:
See also:
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