June, 2004: "Annual Giving, the Million Initiative and You"

by Mike Bourland
American Football Coaches Foundation

Courtesy: AFCA
Release: 06/01/2004

The American Football Coaches Association provides American football coaches with opportunities to enhance their technical skills and coaching capabilities. Additionally, the AFCA emphasizes to American football coaches their responsibility as role models for the character development of young men and women. As stated many times in this column, the AFCA provides substantial benefits to it member-coaches at an extremely low cost. These benefits include the annual convention and numerous other professional education opportunities. In order to provide these benefits, the AFCA must have significant financial resources.

The American Football Coaches Foundation was created to raise funds for the promotion and support the AFCA's various activities. The Foundation was established to provide financial resources for the AFCA through many fund development initiatives. In recent installments of this column, we discussed the Foundation's $20 Million Endowment Initiative, explained how it functions for the Foundation and AFCA, and demonstrated the strategic importance of your participation in the Foundation's Endowment Initiative.

What is an endowment fund of the Foundation? It is a collection of charitable gifts made to the Foundation from which only income and value growth are allowed to be used for the Foundation's purpose of supporting AFCA programs. That means that an endowment fund has the economic potential to last in perpetuity. That also means that only a limited amount can be annually distributed to the AFCA for its activities. That further means that a very large endowment fund must be created to provide a significant amount of annual support to the AFCA. The goal of creating a $20 Million Endowment Fund over the next 10 years translates into $750,000 to $1,000,000 distributed annually to the AFCA for its programs.

It is possible that a few wealthy donors or their family foundations will provide the majority of the funding of the Endowment Fund. However, it is more likely that a large number of smaller donors will be necessary. It is believed that this Initiative can be accomplished in 20 increments of $1 million each; however, it is acceptable to reduce the size of individual increments to $250 thousand, $500 thousand, etc. Each increment is further broken into 100 parts. Each part is divided into 10 annual contribution pieces. Each annual contribution piece is in the amount of $250, $500, $1,000, etc. depending on the amount of the individual increment. The thrust of the Initiative is that 100 individuals will each agree to give $250, $500, $1,000, etc. per year for 10 years, (i.e. total of $250 thousand, $500 thousand, $1 million, etc.) to honor their college football coach in appreciation for all that person has meant to their lives. Honoring college football coaches by their former players committing to donate agreed upon amounts to the Foundation for 10 years can raise a significant portion of the $20 million Endowment Fund goal.

The Foundation is a publicly supported, tax-exempt charity. Donations to the Foundation qualify for an income tax charitable deduction to the donor. In order to maintain the Foundation's favorable tax status, the Foundation must meet certain guidelines in raising funds. A big portion of these guidelines relate to the source of the financial support. A publicly supported charity like the Foundation maintains its favorable tax status by receiving a significant portion of its financial support from a lot of different donors. Each coach who is a member of the AFCA and those to whom the effect of the coach's work is important, should be contributors to the Foundation. Donations from these sources are subject to specific rules and restrictions, which have been discussed in past articles. Your participation, and the participation of those you influence, is very important in order for the Foundation and AFCA to reach their goals.

Because the Foundation is a publicly supported charity and must receive a large portion of its support from a broad segment of the general public, the Foundation cannot rely solely on contributions from a few wealthy individuals, family foundations or corporations to maintain its favorable tax status. This rule was intended by the IRS to make sure that a publicly supported charity is responsive to a broad range of the public, benefits the public at large and is not controlled by a small group of wealthy individuals, foundations or corporations.

In addition to the Initiative, the Foundation needs a personal pledge and contribution annually of at least $50 from each AFCA member-coach. Small donations are as important as large donations because for every dollar given by a small donor (including AFCA member-coaches), the Foundation can receive two more dollars from a wealthy donor or the donor's foundation, without endangering the Foundation's favorable publicly supported tax-exempt charity status. The Foundation needs your personal pledge and contribution and needs you to encourage those within your sphere of influence to give also. The ability of the Foundation to tax efficiently accept donations from large individual donors is dependent upon whether the Foundation receives support from a broad number of small individual donors (including member-coaches). The Foundation must receive one-third of its support from a broad cross-section of the general public in order to maintain its favorable tax status. A single donor's gift, including the gift of a donor's family foundation, in excess of two percent of the total contributions received by the Foundation, will not qualify in satisfying the one-third public support test. That is why small donations from a large number of contributors is vital to the Foundation's success in maintaining its favorable publicly supported tax-exempt charity status.

Please continue to plan and conduct fundraising events in your community, such as banquets and golf tournaments. Previous articles have explained the rules relating to banquets and tournaments, and the sale of sports memorabilia and merchandise through auctions and other methods. Proceeds from admissions, sales of merchandise, performance of services, or furnishing of facilities at an event are classified as "gross receipts" funds of the Foundation. Gross receipts funds should target a broad base of the community, as no single person can provide more than 1% of the Foundation's total support through gross receipts and have it count toward maintaining the Foundation's favorable tax status. Also, care should be taken so that no fundraising activity becomes an ongoing business, to avoid the Foundation having unrelated business taxable income (UBTI) from the activity, resulting in income taxation and possible loss of the Foundation's tax exempt status.

As is obvious, the Foundation's Endowment Initiative is an ambitious undertaking. It is strategic to the future success of AFCA. The accomplishment of the Foundation's Endowment Initiative will require contributions from many different sources. Other tax and financial planning techniques to support the Foundation, including the Foundation's Endowment Initiative, will be discussed in future installments of this column.

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“Coach George Smith is not only an influence on young people, but the influence is multiplied many times in the beliefs of the young people he helped mold into amazing human beings. George is an outstanding coach, but more importantly, he is an outstanding gentleman.” —Tina Jones, Principal of St. Thomas Aquinas High School