Procedures for the Rotary Club of Columbia-Patuxent Charitable Trust
Relationship to the Club:
The Rotary Club of Columbia-Patuxent Charitable Trust (the Trust) is a separate and distinct legal entity from the Rotary Club of Columbia-Patuxent (the Club). The Trust operates under its own set of by-laws and meets the rules and regulations of the Internal Revenue Service for 501(c) (3) organizations. Nevertheless, the Trust maintains a close relationship with the Club in two important ways. First, the Trustees of the Charitable Trust are nominated and elected by the Board of Directors of the Club, and second, the members of the Club carry out the fundraising activities on behalf of the Trust.
The trustees of the Trust are nominated and elected by the Club’s Board of Directors. The typical procedure is that the trustees will suggest successor Trustees to the Club Board for their consideration. The Board then nominates their own candidates and then votes for approval. The Club Board also has the right to remove a trustee from office.
The Trustees consist of the current Club President, President-Elect, and Treasurer. In addition, the Trustees also include four members who do not need to be current club officers. Of the four non-officer trustees, two should be former club presidents and two may be members held in good standing by the Club Board. The intent of having two trustees that are not former presidents is to make certain that the Trust and its operations are transparent to the members of the Club and that new members have an opportunity to participate in Trust decisions. The intent of having two trustees who are former club presidents is to ensure that the trustees retain some institutional knowledge of the traditions and values of the Rotary Club.
Trustees who are club officers serve one-year terms. The non-officer Trustees serve three-year terms although they may be asked to continue as Trustees for a second three-year term at the pleasure of the current Trustees and the Club’s Board.
The Trustees nominate and elect a Trust Chairman by a majority vote whose role is to call Trust meetings, resolve trust disputes, and make certain that the trust follows all of the By-Laws and procedures of the Trust. The Trust Chairman serves a three-year term and then nominates a successor chair to the other Trustees.
Joan Athen, Chairman
Alice Ford, Club President
Linda Ostovitz, President-Elect
Dave Lerer, Treasurer
Sandy Harriman, Past President
Robert Estes, at large member
Philip Dodge, at large member
The Trust has adopted a conflict of interest policy that requires trustees to disclose any relationships that could be viewed as a conflict of interest on an annual basis. In the event that a trustee has a conflict of interest, they will generally be recused from discussion and voting on a specific topic. Similar conflict of interest disclosures are suggested for the Club’s Community Service Chair and International Service Chair.
The Trustees meet at least four times each year formally and typically meets several times throughout the year on an informal basis. The Trustees keep formal minutes of each meeting that are available to Club members upon request.
The Trustees generally rely on the Club for the fundraising activities of the Trust. The Trustees reserve the right to veto any fundraising ideas that do not meet the standards of the Trust or violate the terms of our 501(c)(3) charter.
The Club has typically raised funds for the Trust in the form of several fundraisers, including a major fundraiser that occurs once each year. Traditionally the President-Elect of the Club has been charged with the organization and management of the annual fundraiser. In addition, the club has raised funds through a Super Bowl raffle, and other miscellaneous events throughout the year. The specifics of how these events are organized and managed are a function of the Club, and not the Trust. The Trustees gratefully accept the Club’s contributions to the Trust each year.
The Trustees will approve any solicitation or marketing materials in advance of club fundraising activities to make certain that the content meets the rules and regulations of IRS guidelines.
The Trust maintains several different accounts for the purpose of fulfilling our charitable goals.
The Community Fund:
The Trust maintains a separate account called the Community Fund that is funded by Club fines and happy dollars throughout the year. These funds are specifically held for the purpose of meeting “emergency situations” that may occur throughout the year. The Club’s community service chair (or similar title) has traditionally been given the responsibility of nominating charitable awards from these funds.
The Trustees have given the Club’s Community Service Chair the discretion to make grants up to $500 for each beneficiary from the Community Service Fund provided the Community Service Chair has the approval of the Treasurer of the Trust. This provision may be reviewed from time to time by the Trustees of the Trust and can be changed at their discretion.
The Community Service Fund may make grants to individuals as long as the grants serve a charitable purpose that is clearly within the charter of non-profit organizations. The Trust does not otherwise make grants to individuals but instead makes grants to non-profit organizations.
The Trustees prefer that Community Service Funds not be distributed through other non-profit organizations to a specific individual. The intent of the Trustees is that grants made by the Trust are seen by the community and by the Club as specifically benefiting an individual or organization. While the Trustees prefer to make grants directly for the benefit of donees from the Community Service Fund, there are exceptions that may be made throughout the year as circumstances require.
The Community Service Fund is not required to distribute all of its funds each year, and typically carries a balance forward each year in order to always have a reserve needed to meet an unexpected emergency in the community.
Funds Earmarked for Future Endowment:
The Trust does not currently have a formal endowment fund. However, over the years and from time to time, individual Rotarians and friends of Rotary have given funds to the Trust with the clear intention that the funds be treated as an endowment. In some cases funds have been given to the Trust where the distribution of the funds has been left to the discretion of the trustees.
The Treasurer of the Trust keeps a separate accounting of these funds. While the trustees have attempted to preserve the principal of these funds in the past, they are not compelled to do so. The trustees honor the spirit and intention of these gifts while retaining the discretion to use them in the best interest of the community.
Certain funds for this purpose are invested in a brokerage account in a diversified portfolio of investments that are intended to outperform cash over complete market cycles.
Annual Distribution Funds (“ADF”):
Throughout the year the largest amount of Trust assets are distributed to the community through grants to various non-profit organizations. These funds are not attributed to the Community Fund nor are they considered endowment funds. The funds are raised in the Club’s fundraising efforts throughout the year and are distributed at or near the end of the Club’s fiscal year, which is June 30th. The Annual Distribution Funds (“ADF”) are typically divided as follows:
The Trustees may, from time to time, and at their discretion, make legacy gifts to certain organizations that must be funded over a period of years. The Trustees typically reserve adequate funds to make these legacy gifts, if there are any in a particular year, as the first step in determining how ADF will be distributed.
Next, the Trustees, at their discretion, take 10% of the remaining Trust ADF assets and set them aside to be distributed to international charities at the discretion of the club’s International Committee Chair. The International Committee Chair typically works closely with the Trust Treasurer in getting trustee approval for international grants.
The remaining Trust ADF assets are then available to be distributed according to the recommendations of the club’s Community Service Chair.
Procedures for ADF Distributions:
The Trust has traditionally funded numerous non-profit organizations on an annual basis with the proceeds of the Club’s fundraising efforts. While this is the tradition of the Trust, it is not a legal requirement. In fact, the Trustees, in cooperation with the Club’s Board, may suggest a different methodology for distributing funds in the future, including giving to only one charitable beneficiary in a given year, or skipping a year in order to raise large amounts for any one or more then one charitable organization. Nevertheless, to date the Trust has followed the following procedures for distributing ADF funds:
The Trustees recommend that the Community Service chair solicit recommendations from club members for charitable grants to be made by the Trust in a given year. The Trustees give great weight to these recommendations, but retain the right to change the charitable recommendations in any manner that they deem to best serve the community. In evaluating the recommendations from the Club, the trustees consider the following factors:
- Does the non-profit have an identifiable financial need?
- Does the non-profit serve the local Howard County community?
- Is the amount of the grant consistent with the total funds available to be distributed in a given year? The Trustees endeavor to make the total amount of available funds for distribution known to the Club in advance so that club members can be given reasonable guidelines for annual grant recommendations.
- Has the Rotarian who is making the request made several other requests for consideration in a given year?
- Does the non-profit meet the specifications of our non-profit 501(c)(3) charter?
- The Trustees generally will not consider a grant to a specific school in Howard County unless it is for a specific and unique circumstance. The Trustees would like to avoid becoming a favored funding vehicle for PTA’s throughout the community.
The Trustees meet formally with the Community Service Chair to discuss and review the grant requests each year. Trustees may ask for further clarification regarding grant recommendations.
The Trust’s charitable awards are usually given out to the various non-profit organizations that we support at a formal meeting that occurs at or near the end of the Rotary fiscal year.
The Trustees typically do not distribute all of the available ADF in a given year and reserve a certain amount of funds to meet various trust expenses throughout the year. The Trustees consult with the trust Treasurer in determining the amount of funds to be kept in reserve in any given year.
From time to time, non-profit organizations in Howard County ask the Trust to participate in their fundraising activities. It has been the general policy of the Trust to grant funds directly to non-profits and not utilize other non-profits as “pass-through” entities. To the extent the Trust has participated in such grants, the Trustees typically require that 1) the Trust is specifically named as the donor or co-donor of the grant, and 2) the recipient of the grant is clearly identified.
The Rotary Club of Columbia Patuxent Charitable Trust follows the guidelines of Rotary International’s Terms and Conditions for Rotary Foundation District Grants and Global Grants, Section III, Restrictions (updated August 2014), which states:
Grants cannot be used to unfairly discriminate against any group; promote a particular political or religious viewpoint; support purely religious functions; support activities that involve abortion or that are undertaken solely for sex determination; fund the purchase of arms or ammunition; or serve as a new contribution to the Foundation or another Rotary Foundation grant.
Communications to Club:
The Rotary Club of Columbia-Patuxent Charitable Trust is a separate non-profit institution serving the needs of the Club. The Trustees are not required to report the operating or financial condition of the Trust to the Club members. However, the Trustees recognize the close relationship between the Trust and the Club. Therefore, the Trustees, at their discretion, will make the minutes of Trust meetings available to Club members upon request. In addition, once each year the Trustees present an overview of the Trust and its operations to the Club members as a club program. The intention is for the club members to have a clear understanding of how the Trust works on behalf of the community.
Trust Accounting and Auditing:
The Treasurer of the Trust routinely creates detailed financial reports that are reviewed by the Trustees four times times each year. From time to time, at the discretion of the Trustees, the Trust will ask for an outside audit of financial records of the Trust.
The Trustees present to the Club’s Board quarterly financial reports as a matter of courtesy and full disclosure to club members.
The Trust also benefits from informal accounting reviews by qualified tax accountants who are Club members who volunteer to assist in making certain that the proper tax forms are filed by the trustees.
Our conflict of interest policy is also available. Conflict of Interest for Rotary Trust.pdf