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GRCC Foundation Fund Establishment Guidelines

Grand Rapids Community College Foundation (“GRCCF”) exists to support and advance the educational mission of Grand Rapids Community College (the “College”). One of the ways in which GRCCF does this is by establishing and administering various scholarship funds. These guidelines provide information to consider when establishing such funds with GRCCF.

In considering the establishment of a fund, potential donors should be aware that tax laws require that charitable gifts be irrevocable and unconditional in order for a donor to receive the associated tax benefits. A donor cannot continue to have control over donated funds or property of the contributed; once a donor has made the contribution, the assets become the property of the charitable organization and cannot be returned under any circumstances.

Fund Definitions

Existing Fund –GRCCF currently has over 400 existing established funds that were created by a person, family, or group to help students in a particular program, or to help students in general. These funds help the College attract gifted students, expand accessibility to a quality college education, and increase educational opportunity for all students. For a full list of existing scholarship funds and the specific requirements of each, please visit grcc.academicworks.com/donors.

Non-Endowed Fund - A non-endowed fund at GRCCF is a fund that is designed to have an immediate impact. Funds are established by the donor and provide an annual scholarship to students who meet the criteria mutually determined by the donor and GRCCF. In most cases, a non-endowed fund is intended to be expended in accordance with its terms until depleted, at which point the fund will be closed.

Endowed Fund – An endowed fund at GRCCF is a fund that will be a gift of lasting significance and is designed to continue in perpetuity. Once funded at the minimum endowment level (currently $25,000), only a specified percentage of the total fund balance (currently 5%) is expended for designated scholarships on an annual basis.

Funding Guidelines

Establishing a Non-Endowed Fund 

  • The minimum initial gift required to establish a non-endowed fund is $5,000. Donors are asked to sign a gift agreement documenting this commitment. Additional funds may be contributed to the fund at any time, in any amount.
  • Criteria for the use of the non-endowed fund will be mutually agreed upon between the donor(s) and GRCCF in a mutually executed gift agreement.

Establishing an Endowed Fund 

  • The minimum initial gift required to establish an endowed fund is $25,000. An endowed fund may be established by making a one-time gift, by making a pledge to be fulfilled within five years, by some combination of the two, or through a planned gift.
    • One-Time Gift 
      • The first scholarship can be awarded after the fund has been fully endowed and interest earnings have been allocated to the fund (currently after June 30th).
      • If the donor would like to make an award from the fund prior to when interest earnings have been allocated, the donor must agree to fund the scholarship award for the year at the full annual award amount. This is in addition to the initial one-time gift amount.
    • Pledge 
      • The pledge must be completed within five years. The fund will be classified as building to endowment. No scholarships will be awarded until total donations equals or exceeds the endowment level of $25,000.
      • If the donor would like to make an award from the fund prior to reaching the endowment level, the donor must agree to fund the scholarship award at the full annual award amount on an annual basis. This is in addition to the pledge payment amounts.
      • If the pledge is not completed and the fund never reaches $25,000, GRCCF will follow its Pledge Receivable Policy and follow up with the donor semi-annually for three years. If there is no response from the donor or any reasonable prospect that the pledge will be fulfilled, as determined by GRCCF in its sole discretion, the current fund balance will be transferred into the GRCCF Discretionary Fund and the endowed fund closed.
    • Planned Gift
      • Planned gifts may be used to establish an endowed fund. The management and operation of a fund established by a planned gift will be dependent on the value of the planned gift when realized.
      • If the realized value of the planned gift is less than the minimum endowment level, the donor will be afforded the opportunity to supplement the planned gift with a one-time gift and/or pledge, as described above. If the donor elects not to supplement the planned gift as necessary to initial funding of at least $25,000, the planned gift will, after discussion with the donor, be designated by GRCCF to an existing related endowed fund or be managed as a non-endowed fund, spent out, and closed.
      • If the donor wishes to provide scholarships with current funding in conjunction with a planned gift, it is preferred that the annual funding be comparable in amount to the scholarship provided by the income from the expected endowment.

If you have questions about establishing a scholarship fund or want to start the creation process please contact the GRCC Foundation at (616) 234-3939.

Fund Management

Non-Endowed Fund 

  • The standard scholarship award amount for each academic year, as determined by the GRCCF, is $800 for resident students and $900 for non-resident students. That amount is split equally into two semesters. The actual award amount can vary and is determined by the donor with the help of GRCCF. It is suggested that the amount not be below the standard award amount. The standard award amount is subject to change by the GRCCF.
  • If the fund balance is below the annual award amount, the scholarship will not be awarded until the fund balance exceeds the award amount.
  • Awards will be made each academic year in the annual award amount plus any accrued earnings on the fund as of the date of award, less the annual administrative fee (see below). At the end of the year, if there is a fund balance that interest earnings can be applied to, those earnings will be added to the amount available for award in the following academic year.
  • If the fund has not been funded for three years in a row, and the GRCCF is unable to contact the donor, or if there is no reasonable prospect of imminent funding by the donor; as determined in good faith by the GRCCF, any remaining funds will be awarded and the fund will be closed.
  • At the end of each fiscal year, interest is allocated to the fund based on the total return on GRCCF investments during that same fiscal year. If the fund balance is zero at the end of the fiscal year, there will be no interest allocated.
  • At the end of each fiscal year, an administrative fee of 2.5% will be charged to the fund to cover operational costs for GRCCF to manage the fund. If the fund balance is zero at the end of the fiscal year, the administrative fee will not be charged.
  • If the non-endowed fund reaches the endowment level (currently $25,000), and the donor elects to convert the fund to an endowed fund, the GRCCF will facilitate the change. At that point, the fund will follow the same guidelines established for endowed funds.

Endowed Fund

  • The standard scholarship award amount for the academic year, as determined by the GRCCF, is $800 for resident students and $900 for non-resident students. That amount is split equally into two semesters. The award amount can vary and is determined by the donor with the help of GRCCF. It is suggested that the amount not be below the standard award amount. The standard award amount is subject to change by the GRCCF
  • Endowed funds are awarded based on a 5% spending rule established by GRCCF. The 5% spending rule annually calculates an amount equal to five percent of the three-year fund balance average (June 30th fund balance). If the fund does not have three years of fund balance activity, the year-end fund balances available will be used to determine the award amount. The amount calculated is the amount available to award each academic year.
  • Each endowed fund shall have a principal portion and a spendable portion. Except as otherwise provided in these guidelines, the principal portion of the fund shall consist of donor contributions, and shall not be available for expenditure. The spendable portion of the fund shall consist of interest earning allocated to the fund, less the administrative fee assessed to the fund, and less distributions from the fund.
  • If the 5% spending rule is calculated and the spendable portion of the fund does not have enough available to make a full award, no awards will be made that year. If the fund is set-up to allow multiple awards, full awards will be made to the extent of available funds in the spendable portion of the fund, provided that the aggregate amount of the awards do not exceed the 5% spending rule. The 5% spending rule may be modified from time to time by the GRCCF Board if the Board deems it prudent to do so, in its sole discretion, to reflect long term changes in interest rates andearning yields on endowed funds.
  • All donations, unless otherwise noted by the donor, will be applied to the principal portion of the fund.
  • At the end of each fiscal year, interest is allocated to the fund based on the fund balance as of June 30, and the total return on GRCCF investments during that same fiscal year. The interest allocation is applied to the spendable account.
  • At the end of each fiscal year, an administrative fee of 2.5% will be charged to the fund to cover operational costs for GRCCF to manage the fund. The administration fee is charged to the spendable account. The administration fee will be calculated based on the fund balance as of June 30.

Fund Investment

  • Non-endowed and endowed funds will be invested by GRCCF in prudent, conservative, low-risk tolerance manner consistent with an investment horizon and objectives appropriate for scholarship funds of this nature.
  • Monies from all funds, whether non-endowed or endowed, and whether restricted or spendable, may be commingled for investment purposes.
  • GRCCF may employ or retain the services of outside investment advisors to assist in the management and investment of fund assets.
  • Investment returns may vary over time and no representation, promise or guarantee is made with respect to investment yields. Administration
  • Both non-endowed and endowed funds will be administered by the Financial Aid Office of the College.
  • In administering both non-endowed and endowed funds, the Financial Aid Office will endeavor in good faith to apply the award standards agreed-upon between the GRCCF and the donor, but reserves the right in its sole discretion to interpret those standards and to select the recipients of the scholarship awards.
  • The Financial Aid Office also reserves the right, in its sole discretion, to determine the timing and amount of all scholarship awards.
  • The Financial Aid Office may from time to time adopt and enforce reasonable rules and procedures to aid it in its administration of scholarship awards.
  • In the event the terms of a scholarship fund become impossible or impracticable to apply, GRCCF shall endeavor to contact the donor and, in good faith, to negotiate alternative terms and conditions for the scholarship. However, if alternative terms and conditions cannot be negotiated to GRCCF’s reasonable satisfaction, or if the donor cannot be reached or refuses to cooperate, then GRCCF shall have the right and authority to unilaterally modify the terms and conditions of the scholarship as it deems appropriate.
  • All scholarship awards are final and are not subject to appeal.

Establishing Criteria for Funds

Non-Endowed and Endowed Funds

  • Donors are encouraged to avoid specifying overly-narrow criteria for scholarship funds. When considering criteria, donors may request a preference for:
    • Academic merit – minimum overall GPA1 .
    • Program of Study 1 .
    • Enrollment Levels (Full-time or Part-time) 1 .
    • Financial need – as determined by the Financial Aid Office 2 .
    • Last year or last semester of program 2 .
    • Underrepresented or underserved population – a student who would contribute to the diversity of the student body and who is a member of a group that historically has been under-represented at the College 3 . (1 = criteria easy for the Financial Aid Office to confirm; 2 = criteria generally provided in application, but needs additional work by Financial Aid to confirm; 3 = difficult for Financial Aid Office to determine without additional research or documentation provided by student)
  • Donors may not recommend or suggest specific scholarship recipients. The Internal Revenue Service will not recognize a contribution for charitable tax deduction if the donor retains control over the funds and how they are used. Therefore, a donor may not participate in the selection of a scholarship or award recipients, name an individual to the scholarship committee or structure the criteria so narrowly as to limit selection to a small population comprised solely or primarily of individuals related to or pre-selected by the donor.

Stewardship

Non-Endowed and Endowed Funds

  • Donors of named non-endowed and endowed funds will receive the following:
    • The right to name the fund.
    • A thank you letter from a scholarship recipient.
    • A fund report on an annual basis. o An invitation to GRCCF’s annual scholarship breakfast for an opportunity to meet scholarship recipients.
  • Scholarship recipients of named non-endowed and endowed funds will receive the following:
    • Timely notice of the scholarship award and information regarding the nonendowed or endowed fund from which it originated.
    • Encouragement to send a thank-you letter to the scholarship fund representatives.
    • An invitation to GRCCF’s annual scholarship breakfast for an opportunity to meet donors or representatives of the scholarship fund.
  • Recipients who fail to remain enrolled or maintain such standards as set forth in the scholarship award will forfeit the balance of the award, which amounts shall be returned to the applicable scholarship fund as spendable funds and be available for distribution the following year.
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