Talking Shop: Handling Grant and Expense Payments for a Foundation

# Banking

# Payments

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Member question: “How is your company handling grant and expense payments for its foundation? Is this handled leveraging existing company processes, tools and teams or outsourced to service providers, such as Foundation Source , etc.?

“We’ve outgrown the manual check process and need to scale up here and are curious to learn how you manage this.”

Peer answer 1: “Our foundation accounts are with our concentration bank and managed by specific individuals in our corporate team.

“We have raised the question of providing electronic payment (wire) access to the team but checks still seem to be favored.”

Peer answer 2: “Our foundation operates pretty independently. We offer some support with our relationship banks, but they operate their own ERP and accounts.

“Our investment team advises them on long term cash investments, but I believe they partner with an outsourced provider, YourCause , who processes the payments.”

Peer answer 3: “Our foundation operates fairly independently, except that our shared service center processes all payments from the foundation’s Fidelity account. With Covid-19, all payments were migrated from check to EFT (electronic funds transfer).

“The beneficiary account for any charity getting a payment greater than $5K, or ongoing donations, is prenoted (an anti-fraud measure) and the charity must confirm the test amount. Unfortunately, some of our charities are charged $15-$25 for incoming EFTs, but we think this is worth the cost to avoid fraud.”

Peer answer 4: “Our foundation is also independent. Nearly all of our foundation cash activity flows through our foundation’s cash account at our custodial bank.

“Related to grant payments, several years ago our foundation hired a third-party, Benevity , to manage all of its grant payments. Foundation staff use the Benevity tool to approve grants and schedule/make payments to the grant recipients. Once a month, Benevity bills the foundation for all grant payments to be made by them in the upcoming month and we pay Benevity from our foundation’s cash account.

“The only grant payments that run through the local checking account are typically grants awarded to non-501 (c) (3) organizations, as Benevity is only equipped to handle 501 (c) (3) grant payments.”