Massachusetts Public Library Trustees Handbook
| Establishing a Public Trust or Foundation | ||
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Chapter 8. Fundraising |  |
A number of methods exist to manage funds for the exclusive benefit of the library. The way your library handles funds may be as simple as a passbook savings account or as complicated as a large endowment. Whatever the method used, good management of funds is an essential requirement.
When library trustee boards choose to move toward establishing a new financial vehicle, they first must choose the legal entity that would serve their library most simply and efficiently. The board should carefully outline their purpose and goals, and then apply the financial vehicle which best fulfills these goals. Boards should work with their municipal counsel and municipal treasurer for assistance with legal and financial issues. Consider contacting the local district attorney's office for specific advice about forming a tax exempt nonprofit corporation, if the decision is made to form a new corporation.
A charitable trust or an endowment may be governed by the library's board of trustees. By virtue of their office, trustees or their agents in some communities are responsible for the management of funds in the trust. They become stewards of these private funds for the support of the library. Every trustee should understand his/her fiduciary powers and responsibilities with respect to such funds, and whether or not such powers are shared with other local officials such as the municipal treasurer. It is important for the library to have access to original gift documents and follow restrictions and directions as set forth in these instruments.
The board should enlist the aid of a qualified financial counselor (for example, a local community foundation, an attorney specializing in financial management, or a local banker) to explain the most profitable investment plans for the money available, within the restrictions placed on investment of public funds. Contact your municipal treasurer to become fully informed about any such restrictions. Careful management of the funds is important not only for the best return on investments, but also for maintaining the public's confidence in the trust.
A foundation may be organized as a nonprofit corporation which exists as a separate legal entity from the library. Its primary functions are to raise and manage major funds for the library. A foundation has a separate board of directors, some of whose members should come from the library board. Control of funds rests with the foundation's board of directors.
Why establish a public library foundation?
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A foundation can provide the library with an independent financial resource, one whose entire reason for being is to support the public library. No matter how generous a municipality might be with its appropriation to the library, such appropriation is almost never enough to fund more than basic services. Foundation monies can be used to fund enhancements to library services.
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We are currently in an era of relative prosperity for public libraries. A foundation can provide an important source of funds to help protect against possible reductions in service when times are tough.
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Foundations provide the residents of a municipality with a clear cut way of channeling tax exempt donations to the library for library use, with no fear that these funds might somehow be reallocated for another purpose.
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Foundation boards control their own investment of donated funds. This control offers the possibility of more aggressive investment practices, and thus greater potential returns for the library, than a municipality is allowed under Massachusetts law.
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Foundations can serve as a highly visible public relations tool for the library. Working in conjunction with a Friends of the Library group, a foundation may focus on bringing in large donations while the Friends present programs of interest to the community.
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The permanent tenure of a foundation may engender trust in the organization and encourage planned giving.. Alternative vehicles for giving, including bequests, real estate, and gifts of stock may be more fully realized when the financial expertise of a foundation's board is made known to the community.
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| Public Library Trust Funds: MBLC Policy Statement |  |
Selected Fundraising Terms |