About the Endowment Trust

It Pays To Be Well Endowed
By DC McBroom

As we know, eventing is a highrisk sport. Because of this, safety is a concern in which everyone involved in eventing is, or should be, interested. Over the past several years, a great deal of attention has been focused on finding ways to make our sport as safe as possible on many different levels. Safety issues have been a major motivating factor behind many of the changes we’ve made to our rules. Several of the programs that have recently come online, such as the Instructors’ Certification Program, the Course Advisors’ Program, and the Training Program for Eventing Officials, include safety as a key component. And the list goes on and on.

One area of concern that has gone relatively unnoticed, however, is the financial safety of our national organization. It is no secret that the costs of administering our sport are ever increasing and the USEA is constantly challenged to find ways to meet its fiscal obligations. If you’ve visited the USEA’s website recently, you may have seen, or better yet clicked on, the “Donate USEA” link that members may use to donate funds to help cover the yearly operating costs of the USEA program of their choice. This initiative achieved a high level of success this year and, through the generosity of our members, it exceeded its 2006 “Give Eventing a Leg Up” goal of $150,000. With this year’s short-term operating costs safely financed, you now may be wondering about the long-term financial safety of the USEA.

This is where the USEA Endowment Trust (also known as the Endowment Trust, or ET for short) comes into play. Until recently, the ET was arguably one of the “best kept secrets” within the USEA. Most of our members knew nothing of its existence. Even today the Trust and its inner workings remain a mystery to many. Efforts are now being made to reverse this, though, so keep reading to learn more about its history and its current- day operations.

In the late 1980s, it became clear that the USEA was facing a big change. At the time, its national headquarters were located in Massachusetts. However, the growth and development of eventing in the U.S. taking place during the previous few decades had created the need for a larger and more efficient office building in which to house the Association’s center of operations. When the costs of creating such a space became evident, nine movers and shakers from within the USEA came together with the goal of founding a financial, not-for-profit entity separate from the USEA, but whose purpose was to assist the Association in meeting its fiscal obligations related to the construction of these new headquarters. About the same time, these founders also recognized the need to provide the USEA with a long-term “financial safety net” should the Association be met with an unforeseen catastrophic monetary event in the future.

With both of these needs in mind, the founders set out to find a way to kill two birds with one stone. They accomplished their goal through the creation of an Endowment Trust. The Trust’s main components were two large funds (funds being the not-for-profit term for accounts) known as the General Fund and the Building Fund. Monies designated by their donors to help with the construction of the new headquarters would be placed in the Building Fund with donated monies that were either undesignated or designated to provide for the long-term financial stability of the USEA collecting in the General Fund. In the event that donors wished to give monies with designated uses other than those of the General or Building Funds, the Trust was configured to allow for the creation of smaller, very use-specific funds known as Honorary Funds.

Realizing the need to provide the USEA’s “financial safety net” with a safety net of its own while at the same time allowing for the timely and necessary flow of monies into and out of the Funds, the Endowment’s founders also devised a method of operation which addressed these needs as well. Monies placed in the Building and Honorary Funds carried no restrictions with regards to the timing and amount of their distribution. However, restrictions were placed on monies held in the General Fund. Until the value of the principle (meaning monies donated along with any interest earned by those monies) of the General Fund reached $500,000, no distribution could be made from this fund. Once the value of the principle surpassed this benchmark, an additional restriction was placed on the amount of monies that could be distributed from the General Fund to ensure that its principle would never be reduced below this $500,000 value.

By the end of 1990, the work of the founders was nearing completion. On March 25, 1991, the Declaration of Trust that put this work into writing was officially signed and the USEA Endowment Trust began operations. Immediately from the start, savvy donors recognized the two main benefits of giving to the Endowment. The first was that their charitable contributions would soon be worth more than the amounts they originally donated due to the interest those monies earned while being held by the Trust. The second was the protection that the Trust afforded their contributions. Since only the Trustees had the right to “invade” the principle of the Endowment, and that could only be done if the USEA ceased to exist, donors could rest assured that the monies they gave would not meet with some untimely demise. Donations began to trickle in and by 1995 when ground was broken in Leesburg in preparation for work to begin on the new Association headquarters, the Building Fund had grown to the point where it made a significant impact in helping to cover the costs of construction.

In 1996, Chris and Joyce Brown took advantage of the Trust’s Honorary Fund mechanism when they established the Laura Poston Fund in memory of their friend and stable manager who died of cancer at the age of 34. Created to help support the educational activities of the Adult Rider Programs in every USEA Area, this honorary fund is still in existence today and our Adult Rider programs continue to reap benefits from the Brown’s generous gift.

In 2004, the ET’s General Fund reached a major milestone when the value of its principle finally reached and exceeded $500,000. In December of that year, the Endowment’s trustees marked the occasion by making the first distribution from this fund when Sue Hershey and Karen O’Connor requested financial support for the Instructors’ Certification Program. In 2005, the trustees were able to make two more distributions from the General Fund, one to help support the USEA’s ever expanding Information Technology initiative and the other went to the USEF for use in its efforts to rescue and rehabilitate horses impacted by Hurricane Katrina.

Although the Endowment Trust was set up for the benefit of the USEA, it was, and still is, an entity separate and distinct from the Association. However, since its inception, while the Trust has covered any hard costs (printing, postage, accountant fees) it incurred, the USEA has borne its soft costs (staff labor, overhead, et cetera). In an effort to take responsibility for all of the Endowment’s costs, in 2006 the Trustees voted to distribute 50 percent of the funds eligible for distribution from the General Fund each year directly to the USEA. Currently this 50 percent distribution still does not cover all of the soft costs incurred by the Trust, but it is envisioned that, as the principle of the General Fund continues to grow, the distribution will eventually equal and then exceed these costs. When that happens, it will be a win-win situation for all involved because it will allow the USEA to continue offering its many worthwhile programs to its members.

If, at this point, you’ve decided to join or rejoin the distinguished ranks of USEA members who have so generously supported and continue to support the Endowment through the years, you have several different giving options from which to choose. The simplest is a direct gift of monies through the use of cash, check, or credit card. Work place giving is another easy option and many employers not only encourage the use of direct payroll deductions when gifting to charitable organizations, but they will often provide matching funds. The Trust is also able to accept gifts in the form of stocks and mutual funds. For members who wish to provide a legacy for future generations, planned giving through the use of wills or other forms of estate planning is available. And, because the Trust is a not-for-profit entity organized under Section 501(c)3 of the IRS Tax Code, gifts to the Endowment are deductible for income tax purposes. So, you see, it really does pay to be well endowed.