|1. Under state law, who has access to the principal of an endowment fund?
Every state has different rules and regulations. Generally, the by-laws of the endowment fund and the endowment gift instruments govern the uses for the fund's assets.
2. Who is responsible to see that the endowment fund is operated properly?
The trustees of each endowment fund are responsible to insure that state law and the provisions of the by-laws are complied with at the fund level. Local leaders must guard and be watchful of their own funds.
3. How would Operation Jewish Education/The 5% Mandate preserve the principal of the endowment? How am I protected? Can the school "drain" all the money or is there some insurance that the principal will remain intact?
Operation Jewish Education/The 5% Mandate, as an organization, does not touch any endowment or communal funds. Operation Jewish Education/The 5% Mandate is an idea and a concept that asks every Jew to dedicate 5% of his or her estate either by will or during his or her life-time to any endowment fund of their choice. Every potential donor must investigate the legitimacy of the designated fund to which they plan to dedicate their money. Each school and the endowment fund trustees must monitor and protect their own funds.
4. When may a school use the principal of their endowment fund, i.e., meet operating deficits, build a new school, etc...?
The by-laws for each fund set up the criteria and specific uses for both the principal and the interest. Each endowment fund and its trustees are responsible to comply with the mandate of its by-laws, donor's conditions and state law. We encourage the fund's board not to invade the principal to meet current needs. By increasing the principal and using that income, day schools' needs will be met for generations to come.
5. Is the interest earned from the fund used specifically to pay student's tuition and teacher's salaries? Can the interest be used to build a new building?
All revenue received by the school may be put into a fund. Income is derived from either tuition, donations or endowment fund revenue. Each community, its parents, its trustees and its administrators must determine on a local level how to allocate these precious funds, based on the needs of its own school. Every local community has the ability to determine for itself its priorities and whether the funds should be used to reduce tuition, increase teacher salaries, provide special need services or a balance of these uses.
6. When can a school begin to withdraw interest from the account?
A school can begin to withdraw interest from its account immediately, subject to the limitations set forth in its by-laws and the conditions of the donor.
7. How does the allocation of the funding "process" work? Does the financial administrator of a school submit a budget to the board overseeing the fund?
Each endowment fund's funding process will be unique to its own by-laws.
8. What role does Operation Jewish Education/The 5% Mandate play in managing the school's endowment funds?
Each school's endowment fund is operated by its board of trustees. Operation Jewish Education/The 5% Mandate's role is to encourage schools and their community to adopt the 5% Mandate as their own, in order to assure Jewish survival and the right of every Jewish child to high quality Jewish education, irrespective of a family's means.
Pledging of the 5%
1. How binding is the Letter of Intent the donor signs pledging his or her 5%
The Letters of Intent pledging 5% are not legally binding. A binding obligation is created when a donor designates a gift by will, trust or by a life time gift to a specific institution. The purpose of creating large number of signatories to the individual Letters of Intent is to set a standard of normative behavior focusing national attention on the obligation of everyone to fulfill The 5% Mandate.
2. Can the donor pledge 5% of his or her estate to one school and at a later date transfer it to a different school? If this is possible, what is involved in making this kind of change?
Yes. The final designation of any gift is a decision made solely by the donor. Again, the purpose is to ensure that everyone is mandated to give 5% somewhere.
3. What is a schools procedure for collecting the 5% pledge after a donor has passed away?
Every school must establish their own procedures and it would be similar to collecting any pledge.
4.Can one divide his or her 5% among different schools?
5. The 5% that one gives from his estate, is it calculated based on estate funds after all debts have been paid off.
6. What limitations are imposed on the school as far as applying money towards tuition rather than doubling the salaries of the administration?
This sort of decision would be exactly like the decision making process that is used to allocate all expenditures. The local constituencies decide how all funds are to be spent.
What does one give?
1. Is the premise of the fund to give 5% of one's estate while living, or after passing away
The primary focus of Operation Jewish Education/The 5% Mandate initiative is to establish a benchmark that is applicable for all Jews, as was the half shekel tax. The tremendous capital needs of our educational systems requires massive amounts of funding. If every Jew participates in this initiative, within 7 years there should be enough in local funds that all day schools can live off the interest alone. As with all charities, 20% of the population will step forward and give an excess of their required participation. If the 5% estate tax becomes a standard of normative behavior, a substantial number of individuals will say "why wait, I might as well see the benefit of my philanthropy manifested immediately."
2. If this program is successful, what happens if a new school wants to open up, aren't they at a disadvantage?
Yes, all new schools are at a disadvantage. A new school should open an endowment fund right away so it can immediately begin receiving revenue.
3. I am already giving more than my 10% required charity, does this exempt me from having to participate?
The nature of the crisis of funding Jewish educational facilities has required the implementation of Operation Jewish Education/The 5% Mandate in addition to the 10% annual giving. The Jewish people are facing an extraordinary crisis. It is important to properly fund Jewish education.
1. What is the specific role of the trustees of the fund?
The trustees are the guardians and custodians of the fund who are responsible for the prudent management of the fund's assets as required by law, the donor's instructions and the fund's by-laws. Nearly all prudently operated respected funds use independent professional asset managers to oversee the fund's investments.
2. Are the trustees fundraisers?
While the trustees generally are not obligated to raise funds for the endowment, hopefully, the trustees will lead by example and execute Letters of Intent and/or make committed lifetime gifts to the fund.
3. Should the trustees of the fund be the same people as the board of directors of the school?
The board of directors has the option of taking upon themselves the duties of being the fiduciary of the endowment funds. However, fewer difficulties will arise if an independent board would be the overseers of each school's endowment funds.