Reading Your Account Statement
Your Fund Account Statement presents information in three parts:
The first section is a balance statement that involves only the CAPITAL. You will see the Opening Capital in the fund, additions to the capital that you have made over the year through tribute cards and contributions of cash or shares, less distributions that are made from those funds which are set up to make grants from capital.
The Ending Fund Capital states the total accumulated capital in your fund at the year-end, but before the allocation of income and expenses.
The second section is an INCOME statement. The funds managed by the Foundation are pooled for investment purposes. Each fund receives a proportional share of the income (losses) generated by the pooled funds. As a not-for-profit charity, the Foundation operates on a cost recovery basis. We do not build any profit into our administrative expenses and we strive to keep our costs low. All fund-holders pay a share of the administrative costs; in this past year these averaged 1.7 to 2 % of asset value. Each fund’s proportionate share of the investment income and the administrative costs are calculated on a quarterly basis. The fund balances for the year are presented on your annual fund statement and are used to determine the income available for distribution.
The third section presents each fund’s POTENTIAL DISTRIBUTABLE FUNDS. This year’s net income is added to the accumulated balance of previous years to determine the income available for distribution. The Foundation consists of several different types of funds: endowment funds generally distribute when there is positive revenue; flow-through funds must distribute their capital within three years; managed funds are held for other organizations. There are specific granting rules for each fund, depending upon the fund contract and Canada Revenue regulations.
If you have a Donor Directed Endowment Fund, your ability to make grants depends on the ending distributable income balance each year. You will be able to make distributions when fund balances are positive and in most cases you will not be able to encroach on the capital in your fund. If you choose not to distribute all of the available income in a given year, the amount of potential distributable income will be carried forward. In a year where our funds have been managed at a loss, endowment funds usually do not make distributions unless they have income that was not distributed in previous years.
Donor directed flow-through funds must distribute all the capital within three years after the funds are contributed. If you contribute additional funds during the three year period, we keep track of the ins and outs. Distributions are made from the capital rather than the revenue of the fund until the final year.
Managed funds are presented in the same format as endowment funds: the capital section reflects the balance of all contributions net of withdrawals, and the Ending Fund Balance changes annually to reflect the annual net investment income and the management fee as agreed.
Thank you for your commitment to Tzedekah and your trust in the Foundation.