Managing sums

Designated fund or foundations

What to choose for managing funds from various solicitations to parents
or community donations

How can we effectively manage the sums of money that come from parents and the community, in full compliance with the Education Act? What are the differences between a “foundation” and each school’s “designated fund”?

These are the two key questions that we will attempt to answer in this comparative exercise of the two available tools, the Foundation and the Designated Fund: their inherent costs, their own legal requirements, the protection they provide, their durability, and so on.

Getting started

  • Each school must take note of its needs:
  • Why collect money?
  • Who will be approached?
  • How will this canvassing be carried out?
  • Who will provide the necessary follow-up?

Then

Analyze the tools available (a foundation? a designated fund?) to store and distribute the money raised:

Finally

Choose a tool that meets the needs of your school AND is well suited to those who will be using it.

 

We would like to thank the Table des secrétaires généraux de l’Estrie-Montérégie for authorizing the use of Info-Flash: Designated Fund and Foundations, Year 4, No. 1, which was revised in January 2018.

Legal framework
Purpose (Mission)
Legal recognition
Administration fees
Administration
Registering as an NPO
Registering as a charity
Bookkeeping
financial state
Frames
Responsibilities of administrators
Operations
Interest income
Fund properties
Archiving and preservation of documents
Possible problems with each tool
Foundation
Companies Act, Part III
A cause: for example, school perseverance
Charter and application for registration. (Requires fees to be paid.)

Legal entity separate from the school and the educational organization

Must obtain permission from the educational organization to use the name from the schoolto solicit. Even then, the foundation remains a separate entity.

Equipment, stamps, travel expenses, stationery, legal fees, financial statements, bookkeeping, etc.
Board of directors elected by a general meeting of members.
Obligation to produce annually the declaration of information in the company registers.

Registration fees to be paid.

After making a registration request, will be able to issue receipts for charitable donations.
The foundation must have detailed bookkeeping and records that will allow tax authorities to verify the amounts reported in annual returns.

The foundation must itself collect its income and issue receipts for charitable donations. These tasks cannot be done by the school organization.

Must be prepared annually and sent, if applicable, to the tax authorities.

If applicable, registration in the GST and QST file must be made.

The foundation is not required to respect the administrative and educational frameworks of the educational organization and the school.

However, the educational organization may when it authorizes the foundation to use the name of a school, ensure respect for its supervision.

In order to benefit from protection, directors must provide the Foundation with a liability insurance policy. (Costs)
Opening a bank account, issuing checks or bank transfers, deposits, etc.,
After opening the bank account, the Foundation must check under what conditions and how to invest the money.
All money collected is the property of the Foundation which decides on its use.

In addition, a donation can be linked to a commercial condition, or be directed.

The various documents relating to bookkeeping must be kept for 7 years.
Succession is difficult to ensure, because when the children of the founding members have left school, the foundations often fall.

We must clearly separate the activities of the foundation from those of the school.

There may be a problem of confusion between the school and the foundation, particularly when the foundation moves away from its initial mission.

School staff and governing board members who are members of the foundation board of directors can easily have a conflict of interest.

The foundation is not required to respect the administrative and educational frameworks of the educational organization. However, when authorizing the foundation to use the name of a school, the educational body can provide for compliance with its framework.

Designated funds
Public Education Act, article 94
There can be several projects in a Designated funds.
The Education Act provides that as soon as there is a school or a request from a school, the educational body must create an FDS.

The DF is part of the educational body.

May use the name of the school without further authorization.

None. The GB has the right to meet on school premises and has the right to use the administrative support services and school equipment free of charge according to the terms and conditions established by the school management.
The governing board has sole decision-making authority over the allocation of funds. A resolution is essential to authorize expenditures.
No obligation
If the educational organization is registered, it will be able to issue receipts.
The school body maintains separate books and accounts for each DF.
A document is prepared by the educational organization so that the GB can follow the evolution of the DF.

The educational organization is registered and makes the required reports.

The school is required to respect the administrative and educational frameworks of the educational organization.
Members of the GB are covered by the school organization’s insurance.
All these aspects are taken care of by the school, the educational organization.
The educational organization pays interest at least once a year into the DF.
All money collected must be allocated to the school and the DF is monitored by the GB. It is the GB which decides on the allocation of the sums.

No commercial conditions can be attached to a donation.

The educational organization must keep all documents associated with the financial operations of each DF for 7 years.
Succession is ensured by the composition mechanism of the GB provided for in the Education Act.

It may seem difficult to obtain donations without being able to use the expression: Foundation.

So, it can be useful to use the expression: Fundraising campaign - School XXXX

LEXICON: School organization ⇒ School board or school service center, as the case may be.

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