FarmHouse Expansion - Foundation Operating

Expansion Manual

FARMHOUSE FOUNDATION

WHEREAS FarmHouse members, especially alumni, are concerned about providing quality education experiences to as many FarmHouse members as possible, and

WHEREAS Brotherhood and identification with FarmHouse extends beyond chapter affiliation, but loyalty remains primarily with the chapter of initiation, and

WHEREAS Contributions to the local FarmHouse associations or chapters are not legally tax deductible, and

WHEREAS Locally established FarmHouse foundations do provide tax deductible status as well as the opportunity to support the chapter of initiation, but because of

1) A foundation's on-going need for legal counsel, timely reporting to the International Revenue Service, financial management and investment experience, and

2) Competition with the international FarmHouse Foundation for donations from some alumni;

THEREFORE The Trustees of the FarmHouse Foundation propose:

To encourage each chapter and association to form a local FarmHouse Foundation Council as an arm of the international FarmHouse Foundation to conduct fund-raising activities locally with the assistance of the international Foundation; thus, local chapters and associations would not need to go to expense or have to spend the time necessary for establishing and maintaining a properly functioning foundation.

Any already established foundations formed to support a local FarmHouse chapter could:

1) Become the local Foundation Council

2) Continue to exist as a legal entity, but functions as the local FarmHouse Foundation Council.

3) Maintain their present status and activities without change.

BASIC UNDERSTANDING AND RELATIONSHIP BETWEEN A LOCAL FOUNDATION COUNCIL AND THE INTERNATIONAL FARMHOUSE FOUNDATION

1) Any funds raised by or expressly contributed to the local FarmHouse Foundation Council, or a local FarmHouse foundation functioning as such a council, are credited to the appropriate named account, for example the Kansas FarmHouse Foundation Council of the FarmHouse Foundation and earmarked to support the educational programs for a specific local chapter.

2) The local Council is periodically appraised of its fund balance on deposit with the international FarmHouse Foundation.

3) The local Council can withdraw all or a portion of the Fund provided it is to be used for educational purposes consistent with the Internal Revenue Service regulations and the FarmHouse Foundation's Trust Agreement.

4) Until the local Foundation Council's funds on deposit with the international Foundation total $10,000, no service fee will be charged, but the international Foundation will retain any interest earned by the Fund.

5) If and when the local Foundation Council's funds on deposit with the international Foundation reach $10,000, the international Foundation will charge a service fee based on 10% of the annual income earned by the Fund. If the local Council's corpus goes below $10,000, the fee would once again be the interest on the balance.

6) In the event the local chapter, association or Foundation Council is dissolved or is inactive for more than one full year (can be extended at the discretion of the FarmHouse Foundation Trustees), any funds in the local Foundation Council's account will revert to the Foundation's General Fund to be used at the discretion of the Foundation Trustees.

PROCEDURES FOR FORMING AND OPERATING A LOCAL FOUNDATION COUNCIL

1) The first step toward starting a Council, after appropriate alumni have had an opportunity to agree to proceed, is to forward to the Executive Director of the FarmHouse Foundation and the FarmHouse International Fraternity a list of the names and addresses of the proposed Council's principal officers and a copy of the Council's Statement of Purpose and Organization (see attached example).

2) The local Foundation Councils are responsible for their own fund-raising program and activities, although copies of all fund-raising letters, brochures, and programs must be reviewed with the Foundation's Executive Director in order to assure that all activities are in compliance with the goals and objectives of the Foundation and IRS regulations.

All materials sent out by a local Council should spell out as clearly and succinctly as possible the local Foundation concept, especially the relationship between the local Council and the international Foundation.

3) In order that there be no questions as to the tax deductibility it is important that donors make their checks out to the FarmHouse Foundation. It is preferable that individual donors be advised to send their checks directly to the International Office. If, however, checks are sent to the Chapter House address, association and/or local Council officers, they should not be cashed locally but forwarded to the International Office.

4) In essence the International Office in Kansas City, Missouri becomes the local Council's bank, or at least banking agent, and will render quarterly statements as to the Councils' fund balance to the appropriate Council officer. Provide the intended use is for educational, charitable purposes as prescribed by the IRS and understood by the international FarmHouse Foundation, money will be released by the Executive Director of the international Foundation by check made payable as directed in writing by the appropriate Council officer.

5) What the IRS defines as educational and charitable is subject to interpretations. However, at the current time it appears to us and most others (several may be a bit more liberal in their interpretations than we are) of our interfraternity colleagues and their legal counsels that scholarships, attendance at Conclave, educational workshops (our Regional Leadership Conferences and Presidents Leadership Conferences for example) and in-house computers are examples of legitimate ways in which the local Council can assist their local chapter through the international Foundation's tax deductible status. Any fraternity-related foundation has the same restrictions.

For additional information, contact the Executive Director, FarmHouse Fraternity and Foundation, 11020 NW Ambassador Drive, Suite #330, Kansas City, Missouri, 64153; phone (816) 891-9445.