K-12 Education Foundations: Critical Components of Sustainability For Schools and Districts Benefits of an Education Foundation Raises additional resources to enhance educational initiatives Improves communication with your community Raises awareness of school needs Improves academic, fine arts, athletic and social opportunities for students Prepares future school board members Adults representing the school s needs to the community Offers the community the opportunity to be part of the solution by supporting education What is an Education Foundation? 501 (c) (3) IRS Recognized Non-Profit Organization Tax Exempt Charitable Organization Serves as a Private Partner to Assist the School or District Governed by a Volunteer Board of Directors Organized group of adults whose mission is to assist the school or district School Foundation History Education foundations started in the late 70 s and early 80 s in CA, MI, TX and FL. Declining funds and Prop 13 (CA) pushed districts to consider foundations as supplemental resources Today ~45% of all US school districts have at least one foundation in operation Many started because the public/alumni wanted an opportunity to be involved in the education of the community s children. Foundation Facts Average board size: 10 14 members Active committees: 3-5+ either permanent or ad hoc Utilize 4-6 fundraising resources yearly Resources average $20-$40/student annually 40% have attempted a capital project 45% have an endowment of $500K+ Have an established operational MOU between the school board and foundation board TFG Critical Components School Foundations Page 1
How are School or District Foundations Governed? School education foundations are 501 (c) (3) charitable organizations governed by a volunteer board of directors comprised largely of community leaders, interested parents and alumni. School board and or administration normally serve as ex officio members. These foundations strive to engage the entire community in the school improvement process. Business leaders, parents, alumni and other volunteers work to create a successful business of sorts, one which actively seeks resources from a diverse group of constituencies to work collectively to enhance their respective school or district. Most Popular Programs Funded by a Foundation Teacher Classroom Innovation Grants: $250 +/ teacher initiated competitive grants to improve classroom education Classroom grants: $1,000 +/used to improve a classroom s ed environment Professional development for staff: clinics, training etc. Capital projects: buildings normally/alumni entrances to the school(s), endowments Technology: One on one technology is popular, enhance special educational situations Arts: Performing Arts Center/Auditoriums/Endowed staff/equipment or instrument purchases Athletics: field turf, weight rooms, clinics, equipment etc. Social needs: Backpacks for underprivileged, winter coats, dropout prevention, dental or eyeglass needs. Endowments: teacher positions for a much needed area Scholarships: professional development, graduate work, student scholarships Common methods for K-12 Foundations to Fundraise Sales: Quick and easy, annual same time and place, supports operations Internal Campaign: Seek funding from staff, administration and board members Vendors: Obtain a list from financial secretary Corporate Partners: Negotiate a partnership agreement for financial support Alumni: Develop a relationship/alumni association Major Donors: Come out of your data base Planned Giving: most often involved major donors, endowments or capital projects Events: make them manageable, focus on fundraising and friend raising Signature event: Dinners, silent auctions, super breakfast, 100 s clubs, TASTE events Satellite event: Any of the above, golf tourney, dinner dance, race, etc. Grants: Written work Entrepreneurial activities: Advertising/signage/ shopping carts/wind energy/on-line sales/before and after school child care etc. On-line giving: from your website TFG Critical Components School Foundations Page 2
Efficiencies: where can costs be cut or Investments: average earning was 7-11% this past year...nov. 2012 Chronicle of Philanthropy Calendar of Events for the Development of a K-12 Education Foundation Phase I: Months 1-5: Design and Planning with a Feasibility Study Committee (FSC) A. K-12 Foundation Formation Feasibility Study: Answer 20+ key questions/concerns: develop the purpose, mission and vision for the new foundation. (See attached Checklist for the Feasibility Study Phase) B. Feasibility Study Committee presents a written report of its work to the school board (BOE) at the conclusion of its work. C. BOE and or Administration respond with questions, concerns and hopefully encourages the committee to proceed with the formation of a standalone foundation or a partnership with another 501 (c) (3) organization to benefit the school or district. D. Continue by recruiting founding board for the foundation and continue to phase II E. Continue to test key corporate donors and major donors for interest Phase II: Months 6-9: Launching the Foundation {Founding Board of Directors (BOD)} A. Conduct the first meeting of the foundation B. Elect officers: recommended officers: chair, vice chair and secy-treas C. Approve a BOD member job descriptions and conflict of interest policy. D. Approve by-laws for the organization E. Develop a working budget for the launch period F. Continue to test key corporate donors and major donors for interest and support G. File Articles of Incorporation with the Secretary of State H. File for an EIN with the Treasury Department I. Identify a registered agent for the foundation J. Establish a procedure for developing policies and procedures for the organization K. Partner with a community foundation and/or file for 501 (c) (3) status by completing form 1023 tax exempt status with the IRS L. Finalize an operational MOU between the foundation and the BOE /district. M. Finish identifying, describing and defining programs to fund by the foundation N. Develop a marketing/imaging strategy for the foundation s future O. Identify both short term and long term funding sources: Seven basic funding sources P. Establish working committees of the board Phase III. Months 10-12: Enterprise Development (Founding Board) A. File for exemption from local sales, property or use tax if needed Begin to develop a community marketing development model to promote the foundation s activities TFG Critical Components School Foundations Page 3
B. Select programs to be funded by the foundation C. Implement the fundraising plan and on-going fundraising plans to support the foundation. D. File for permits to fundraise (if needed) E. Approve the first fundraising projects F. Conduct the initial fundraising campaigns G. Plan for 990 completion & annual report development ASA Services Phase I Foundation Feasibility Study: includes all support materials. Travel billed separately for on-site meetings with the feasibility study committee. Virtual meetings are held at no cost to the school or district. Includes overseeing preparation of the foundation feasibility study presentation document and as well as assisting with or leading the final presentation of these documents to the BOE. Phase II Launching the Foundation: includes all support materials. Travel billed separately for on-site meetings and virtual meetings are held at no cost to the school or district. Key components of this phase include preparation of legal and governance documents including but not limited to: By-laws, Articles of Incorporation, EIN, IRS 1023 completion, insurance RFP s, and setting up the office and policies as required by the IRS. This phase will require the support of a local attorney/school attorney (usually pro-bono) for assistance with state specific documents as well as proofing the IRS application (form 1023). Filing the articles of incorporation with the state, securing DnO insurance and filing the IRS form 1023 will have expected costs of ~ $1,500.00+ Phase III Enterprise Development: includes all support materials. Travel billed separately for on-site meetings and virtual meetings are held at no cost to the school or district. Key activities during this phase include continuing to launch the board and foundation with vigorous and sustainable fundraising as well as establishing leadership job descriptions, gift processing procedures and launching needed committees of the board. K-12 Education Foundation Formation Feasibility Study Check Sheet Develop a vision statement offering future direction for the not for profit entity Document a purpose statement Identify and define unmet outcomes for students in the school or district Agree upon a mission of the organization (must be in sync with the school s mission) TFG Critical Components School Foundations Page 4
Complete an organizational/community S.W.O.T. measuring awareness/acceptance of an NPO Research concerns which often arise from PTO, PTA, Booster club personnel and other NPO s from the community. Identify a name for the foundation and potential web URL availability Discuss potential foundation board members and how they might contribute to the success of the organization. Complete the school/community leadership matrix Begin to outline potential JD s for the BOD Determine office location, staffing and outfitting Discuss executive director leadership for the foundation: who will do the work of the foundation? Outline rudiments of an initial case statement for the foundation Discuss initial fundraising strategies for the foundation and where potential funding may reside Review marketing and communication needed to promote the foundation with the community. Discuss year one two operational budgets Discuss the viability of obtaining 501(c)(3) status, either by filing directly with the IRS or through a group exemption with a community, county, or regional foundation. Begin to articulate relationship/communication between foundation (BOD) & school (BOE). Outline an MOU document for the two partnering boards and associated articles of agreement Determine by-law components in agreement with state laws and codes Review articles of incorporation filing procedure with the secretary of state Introduce IRS forms 990 and 1023 documents to officials BOE: Board of Education BOD: Board of Directors of a foundation Terms 501 (c) (3): Section of the IRS code that designates an organization as charitable and taxexempt. Organizations qualifying under this section include religious, educational, charitable, and scientific research. Annual Report: A voluntary report published by a foundation or corporation describing its grant activities. It may be a simple financial report or a more elaborate detailed publication. TFG Critical Components School Foundations Page 5
Bylaws: Guidelines for the operation of a nonprofit corporation, developed according to the state law requirements. Bylaws often provide the methods for selection of directors, the creation of committees and the conduct of meetings. Form 990: The IRS forms filed annually by public charities. The IRS uses this form to assess compliance with IRS code. The form lists organization assets, receipts, expenditures and compensation of offices. Public Charity: A nonprofit org (NPO) that is exempt from federal income tax under section 501 (c) (3) of the IRS code and that receives its financial support from a broad segment of the general public. After nearly 10 years of founding and developing the National School Foundation Association (www.schoolfoundations.org) Jim has begun applying all the knowledge and experiences of working with foundations across the US to his own consulting services. Jim and ASA associates currently work in an eight state area assisting school superintendents, school boards and school foundations start, develop and in general improve school foundations and funding for the benefit of students in partnering schools and districts. Jim Collogan President ASA Strategic Funding Topeka, KS (515) 971-2324 (563) 387-8333 (fax) jcollogan@asamarketing.com TFG Critical Components School Foundations Page 6