6B - FUNDING OUR FOUNDATION (6B)

Our Rotary Foundation is funded in two principle ways: Annual Giving and Endowed
Giving. These two ways of giving are kept in separate accounts known as the Annual
Fund and the Permanent Fund.

ANNUAL FUND: The vast majority of the funding for our foundation (about $65 million
per year) comes from annual voluntary donations by Rotarians. Rotary asks that we set a
target of $100 per member per year for donations. This is only $2 per week – not an
impossible amount. Even more important than the $100 target, however, is to have each
and every member donate SOMETHING every year. We want and need 100%
participation! See “A Guide to Annual Giving” in your materials package.

When TRF was founded in 1917, it was a very minor thing. It did not accumulate very
much money and it was not until 1930 that it made its first grant ($500 to the
International Society for Crippled Children). It was not until the death of Paul Harris in
1947 that donations were made in a significant degree and the Trustees saw a need to
distribute funds in a regular manner. They decided that they would turn over all the funds
of TRF in a three-year cyclic program. Donations coming in for the Annual Fund would
be banked or invested for two year and then expended in the third year. The interest
earned in this THREE-YEAR CYCLE pays for all the overhead and expenses of TRF.

PERMANENT FUND: A number of years ago, the Trustees of TRF saw the need to
address expected peaks and valleys in annual donations by having a true endowment fund
in which only the annually earned interest would be expended. Additionally, having an
endowment fund would be appealing to those wanting to formulate estate plans and other
major donations with an ongoing impact. Both the US and Canada have tax laws which
encourage estate planning with donations to charitable organizations such as TRF. The
Permanent Fund is also a wonderful vehicle to use to memorialize a deceased Rotarian.
See the “Memorial Envelopes” in your materials package.

DESIGNATED vs, UNDESIGNATED: A person making a donation can put restrictions
or set certain rules for how they want their money to be used. When this is done, the
donation is known as a “restricted” or “designated” donation. As an example, if you were
to donate $100 to TRF today and you wanted all of that money to go to the Polio Plus
program, you could do that. Your donation would be restricted or designated. It could
only be used for that specific purpose. When a donation is made for the general purposes
of TRF, it is known as an “unrestricted” or “undesignated” donation. When goals are set
for donations to TRF, the goals are ALWAYS stated in the form of UNDESIGNATED
Prior to beginning a term as District Governor, the DGE is required to submit a form to
RI in which the District Foundation Goal is set. In the recent past, our district has asked
the clubs to determine their own goals and the cumulative total becomes the District
Goal. Remember – this goal is ONLY undesignated donations to the Annual Fund.
SHARE: We often refer to The Rotary Foundation as OUR Rotary Foundation. This is
not only because it is the charity our organization uses to further its goals of International
Peace and Understanding, but also because WE have a good deal of control over the way
our money is expended. This control happens through the SHARE program. When we
make undesignated donations to the Annual Fund, 50% of that comes back to our district
for us to determine how it will be expended. We can choose to use that money for
additional District Matching funds for Foundation Matching Grants, to fund an additional
Group Study Exchange, to fund an Ambassadorial Scholar or any other program of TRF.
But it is only the undesignated funds that qualify for SHARE. Why? Simply because a
designated donation must be used 100% for the designated purpose. 50% cannot be used
for something else. This is another reason why undesignated donations are so important.

Every year, usually around the end of September, our District is notified of the amount of
SHARE funds we will have two years in the future. We then have to fill out forms to
indicate the general categories of how we want to spend those funds. The forms must be
signed by the current District Governor, the immediate past DG, the DGE , DGN and the
District Foundation Committee Chair. Clubs are always asked for their input into this
decision. Please read the section on SHARE in your Foundation Handbook.

Some may ask: “What about the other 50% of undesignated contributions that does not
come back to our District?” That money stays with the Trustees for their determination.
But, just think about it for a minute. When TRF “matches” our money in a matching
grant, where does that “match money” come from? It comes from that 50%. So does the
money for large 3-H grants and for GSE teams. Over the years, there has been some
confusion about where the money for Ambassadorial Scholars comes from. None of that
money comes from the International Office. Every bit of it comes from District SHARE
funds. Only Districts, though the use of their own SHARE money, fund Ambassadorial
Scholars. Some District choose to use all of their SHARE money for this purpose and
some chose to use none of it. That is a District decision of how they want to use THEIR

If one looks back over the last ten years, our Foundation has experienced a pendulum
swing in the favorite way to spend SHARE funds. Ten years ago, our district was like
most districts in the world, we used our SHARE money to fund Ambassadorial Scholars.
In our case, this was ALL we did with our SHARE money. In the summer of 1995, our
DG consulted with his District Foundation Chair and worked out a strategy to change the
way we would use our SHARE funds. We began to use a portion of our funds for
Matching Grants. Change is difficult. Even though this change was initially resisted,
today, the majority of our SHARE funds are used for Matching Grants and now some
want all of our SHARE funds to be used in this way.
It’s important to have a perspective with this. One of the great things about TRF is the
way it uses a multitude of programs to impact the problems of the world. Using all these
programs in a planned manner can result in the end product being greater than the sum of
its individual parts.

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