Loading...
HomeMy WebLinkAboutTR-93-96 THE CORPORATION OF THE MUNICIPALITY OF CLARINGTON REPORT Meeting: GENERAL PURPOSE AND ADMINISTRATION COMMITTEE File # Date: December 2, 1996 Res. #( t � ® ��� 0�� By-Law# Report#:_ ru-93-96 File#: Subject: CLARKE MUSEUM - LONG TERM PLANNED FUNDING Recommendations: It is respectfully recommended that the General Purpose and Administration Committee recommend to Council the following: 1. THAT Report TR-93-96 be received; 2. THAT Council does not endorse the Planned Giving Program - Policies and Guidelines prepared by the Clarke Museum; and 3. THAT each donation/bequest proposal be reviewed individually on its own merits as the Museum receives them. BACKGROUND AND COMMENTS 1.0 At the regular Council meeting of September 16, 1996, the Clarke Museum provided correspondence for a proposed new policy for long term, planned funding for the Museum (Attachment "A"). Per Council resolution #C-682-96, the correspondence was referred to the Treasurer for review, in conjunction with the Solicitor and submission of a report to the General Purpose and Administration Committee. 1.1 Staff does not recommend that this policy be endorsed since estate planning and income tax laws change on a regular basis, as well as being affected by Revenue Canada rulings and appeals through the Courts. This is a complex area of tax planning that should be dealt with by professionals in this area. The Municipality could be found liable should incorrect or inaccurate information be provided. 1.2 As well, the tax impact cannot necessarily be generalized to the extent that is indicated in the policy because each situation is dependent upon the unique circumstances surrounding the structure of the individual's estate. I YC... PAP ­P AE _E 815 -6 PR DQ RECYCLED PAPEn TR-93-96 page 2 1.3 The proposed policy also indicates a wide variety of assets that the Museum would accept as part of an estate bequest. Many of these have implications for the Municipality whereby the Municipality is restricted from investing in these types of instruments and therefore there may be some legal ramifications. There may also be cost implications to the Museum and the Municipality associated with some property bequests. 1.4 The Museum also clearly states in the proposed policy that it would be willing to act as trustee at the request of the donor. This is a significant obligation that is currently outside of the scope of the Museum's operations. CONCLUSION 2.0 As a result of the above discussion, it is not recommended that the proposed long term planned funding policy for Clarke Museum be endorsed. 2.1 Should Council decide to approve the policy, it is recommended that the policy be referred to the Municipality's solicitor for review as well as the Municipality's auditors for review and advice on the income tax implications indicated in the proposal. It is also recommended that should Council approve the policy, each bequest proposal brought forward should also be reviewed by the Municipality's auditors to ensure appropriateness. Respectfully submitted, Reviewed by, rie A. Marano, H.BSc., A.M.C.T., W.H. Stockwell, Treasurer. Chief Administrative Officer. MM/NT/hjl Attachment I i I 816 i Attachment "A" j I CLARKE MUSEUM & ARCHIVES Municipality of Clarington Ap P.O. Box 152 ORONO, Ontario `= LOB 1 M0 905-983-9243 E-Mail TRILL.CTMA 7086 Old Kirby School Road, Hwy 35/115 at Region Rd 9, Kirby, Ontario 5 September 1996 Mayor & Council Municipality of Clarington 40 Temperance Street Bowmanville, Ontario L1C 1R4 Your Worship, Councillors RE: Long term planned funding for Clarke Museum I am writing on behalf of the Board of Directors to request your guidance and support of a proposed new policy for long term, planned funding for the Museum. Last year, the Board addressed the need for alternative sources of funding to supplement decreasing government grants . Planned giving, a means of ensuring monetary support was identified as a possible solution. Our Curator spent seven months researching and drafting the attached policy which has been received for information by the Board. We feel that properly administered, this policy could eventually supplement or even replace the need for government grants making the museum more self sufficient . However, due to the legal ramifications, implementation of some or all as pecs__.of the proposed policy may not be in the Board' s purview. Yo r 1a PST-lC3i expertise in this matter would be greatly appreciated, Thank you for y your time and consideration. i� ;;;;K. E;, v S nc`erely y Mrs . _onna Robins, Chairman Clari-gton Museums/Clarke Museum & Archives - Clarington Museums The Clarke Museum & Archives A Gift for the Future PLANNED GIVING PROGRAM Policies and Guidelines * Wills and Bequests * Gift Annuities * Life Insurance * The General Endowment Fund * Individually Named Endowment Funds v G �V El r u - �qs 818 Planned Giving The Clarke Museum & Archives is an integral and valuable partner in the life of our community. As the speed of change in the world increases, we must seek challenges and seize opportunities. If we are to remain a place of vision and importance, we must tailor our actions to the realities of today's world. Support from donations to the Museum is essential to ensure quality in the preservation and enhancement of our heritage. Planned Giving is directed towards individuals who understand the Museum's need and have the means to help. It is part of the foundation on which we are building the Museum for future generations. We encourage your investment in our common future. Planned Giving is charitable giving co-ordinated with your total financial estate plans: Planned gifts include both current and deferred gifts designed to meet your personal objectives while maximizing tax and other financial benefits. Regardless of the form of your gift, it is our primary purpose to ensure that it is properly managed and administered according to your wishes. In consultation with you, we will develop terms of reference that ensure the spirit and intent of your gift. We will work closely with you and your advisors, to structure the donation so that you receive the greatest possible tax benefit. Benefits to you * With most Planned Gifts you receive.a tax receipt, therefore, lowering the net cost of your donation. * Planned Gifts allow you to make a significant gift while maintaining financial security for you and your family. • Combined with estate and tax planning, Planned Gifts can maintain the value of your estate for your heirs and result in significant tax savings. • Planned Gifts establish lifetime relationships between the Museum and people who care about its future. Benefits to the Museum * Planned Gifts allow the Museum to plan with confidence because far sighted donors have made future commitments. * Planned Gifts provide the Museum with occasions to recognize the generosity of donors through the naming of endowments and projects. i I 819 WILLS & BEQUESTS A gift specified in a will is one way you can contribute to the Clarke Museum and Archives. Specific Bequest This is the most common type of gift, in which the Museum will receive a specific sum of money, stated percentage of your estate, or a specific property such as real estate or securities. Residual Bequest Increasingly, donors are directing that a portion, or in some instances the entire residue of their estate, passes to the Museum after providing for other beneficiaries. Contingent Bequest This ensures that the Museum• will receive all or a share of your estate in the event of the prior death of certain other beneficiaries. Residual Bequest subject to live interest The Museum will receive all or a share of your estate following the death of certain other beneficiaries who shall have the use of the assets in the estate, as prescribed in your will, for their lifetime. Benefits to you: • Bequests to the Clarke Museum & Archives are eligible for tax receipts that can be used against 20% of the estate's taxable income in the year of death and the previous year. • Bequests, if of sufficient size, can be used to create endowment funds. The investment income generated on your initial amount of capital can be used to support an important purpose at the Museum. • Bequests can be unrestricted or designated for a specific purpose. We suggest you or your lawyer, accountant, or estate planner consult with the Museum to ensure that your bequest will be carried out as intended. The Clarke Museum & Archives A Gift for the Future 820 Planned Giving The Clarke Museum & Archives is an integral and valuable partner in the life of our community. As the speed of change in the world increases, we must seek challenges and seize opportunities. If we are to remain a place of vision and importance, we must tailor our actions to the realities of today's world. Support from donations to the Museum is essential to ensure quality in the preservation and enhancement of our heritage. Planned Giving is directed towards individuals who understand the Museum's need and have the means to help. It is part of the foundation on which we are building the Museum for future generations. We encourage your investment in our common future. Planned Giving is charitable giving co-ordinated with your total financial estate plans. Planned gifts include both current and deferred gifts designed to meet your personal objectives while maximizing tax and other financial benefits. Regardless of the form of your gift, it is our primary purpose to ensure that it is properly managed and administered according to your wishes. In consultation with you, we will develop terms of reference that ensure the spirit and intent of your gift. We will work closely with you and your advisors, to structure the donation so that you receive the greatest possible tax benefit. Benefits to you * With most Planned Gifts you receive a tax receipt, therefore, lowering the net cost of your donation. * Planned Gifts allow you to make a significant gift while maintaining financial security for you and your family. * Combined with estate and tax planning, Planned Gifts can maintain the value of your estate for your heirs and result in significant tax savings. Planned Gifts establish lifetime relationships between the Museum and people who care about its future. Benefits to the Museum * Planned Gifts allow the Museum to plan with confidence because far sighted donors have made future commitments. * Planned Gifts provide the Museum with occasions to recognize the generosity of donors through the naming of endowments and projects. I 821 WILLS & BEQUESTS A gift specified in a will is one way you can contribute to the Clarke Museum and Archives. Specific Bequest This is the most common type of gift, in which the Museum will receive a specific sum of money, stated percentage of your estate, or a specific property such as real estate or securities. i Residual Bequest Increasingly, donors are directing that a portion, or in some instances the entire residue of their estate, passes to the Museum after providing for other beneficiaries. Contingent Bequest This ensures that the Museum will receive all or a share of your estate in the event of the prior death of certain other beneficiaries. Residual Bequest subject to live interest The Museum will receive all or a share of your estate following the death of certain other beneficiaries who shall have the use of the assets in the estate, as prescribed in your will, for their lifetime. Benefits to you: • Bequests to the Clarke Museum & Archives are eligible for tax receipts that can be used against 20% of the estate's taxable income in the year of death and the previous year. • Bequests, if of sufficient size, can be used to create endowment funds. The investment income generated on your initial amount of capital can be used to support an important purpose at the Museum. • Bequests can be unrestricted or designated for a specific purpose. We suggest you or your lawyer, accountant, or estate planner consult with the Museum to ensure that your bequest will be carried out as intended. The Clarke Museum & Archives A Gift for the Future 822 i The Clarke Museum & Archives Planned Giving Program, Policies and Guidelines Authorization THE CLARKE MUSEUM & ARCHIVES (hereinafter called 'the Museum') is authorised to encourage donors to make outright and deferred gifts. The types of deferred gifts to be offered include bequests, reinsured gift annuities, gifts of residual interests, gifts of life insurance policies and proceeds and such other gift arrangements as the Museum board of directors may from time to time approve. All programs, solicitation plans, and activities shall be subject to the oversight of the Board or as delegated by the Board to a Community Support Committee. Policies 1. The policy of the Museum is to inform, serve, guide or otherwise assist donors who wish to support the Museum's activities on behalf of the Museum, but never under any circumstances to pressure or unduly persuade. 2. Persons acting on behalf of the Museum shall in all cases encourage the donor to discuss the proposed gift with independent legal and/or tax advisors of the donor's choice so as to ensure that the donor receives a full and accurate explanation of all aspects of the proposed gift. ` 3. The Chair of the Community Support Committee or his/her designate are authorized to negotiate planned gift agreements with prospective donors, following program guidelines approved by the Board. 4. All planned giving agreements requiring execution by the Museum shall be first reviewed and approved as to form by the Museum's legal counsel. Where substantially the same agreement is used repeatedly, only the prototype needs to be approved. 5. The following planned gifts must be reviewed and approved by the Board. A. Outright gifts of real estate, shares in privately-owned companies, tangible personal property, partnership interests, and other property interests not readily negotiable. B. Residual interest gifts. C. Charitable remainder trusts. 3 823 The Clarke Museum & Archives Planned Giving Program, Policies and Guidelines 6. Outright gifts of cash, publicly-traded securities, life insurance, and reinsured gift annuities do not require approval by the Board/Committee. Any gift, however, may be referred to the Board/Committee if subject to possibly unacceptable restrictions. 7. The Museum will not issue gift annuities but may accept assets from a donor, pursuant to an agreement authorizing the Museum to: a) use a portion of the assets to purchase a commercial annuity paying a stipulated amount to the donor and/or other annuitant; and b) retain the remaining assets for charitable purposes. The annuity rates offered to donors will be those recommended by the Canadian Association of Charitable Gift Annuities. 8. The Museum will serve as trustee of charitable remainder trusts at the request of the donor. If they prefer, donors may also select a trust institution, or other qualified trustee, to manage the trust. 9. The following guidelines are established to assure that planned gifts accepted by the Museum will be cost-effective and acceptable to Revenue Canada. GUIDELINES 1. THE REINSURED GIFT ANNUITY A. Description The gift annuity is an arrangement whereby a donor transfers assets to the Museum pursuant to an agreement authorizing the Museum to purchase. a commercial prescribed annuity that will pay the stipulated amount. Assets in excess of the amount required for purchase of the commercial annuity are retained by the Museum and used for purposes specified by the donor and acceptable to the Museum. Determination of the gift receipt and taxation of annuity payments will be in accordance with Interpretation Bulletin IT-IIIR issued by Revenue Canada. B. Guidelines j 1. The minimum amount the Museum will accept for a reinsured gift annuity is $10,000. 2. The cost of the commercial annuity generally should not exceed 70-75% of the assets transferred in order to result in a significant gift for the Museum. 4 i 824 i The Clarke Museum & Archives Planned Giving Program, Policies and Guidelines 3. The donor may designate the purpose of the gift subject to the consent of the Museum. 4. A commercial insurance company shall be selected, and the terms of the annuity contract negotiated, by a person delegated by the Board. Only high-rated companies shall be selected to reinsure an annuity obligation. 2. GIFT OF A RESIDUAL INTEREST A. Description A residual interest gift refers to an agreement under which the property is deeded to the Museum, but the donor retains use of the property for life or a term of years. For example, the,donor might give a residual interest inn a principal residence and continued living there, or a residual interest in a painting and retain possession of it. The donor is entitled to a gift receipt from the Museum for the present value. B. Guidelines The donor shall continue to be responsible for real estate taxes, insurance, utilities, and maintenance after transferring title to the property unless the Museum, upon prior approval of the Board, agrees to assume responsibility for any portion of these items. The terms of the gift and responsibilities for expenses shall be specified in a deed of gift executed by the donor(s) and the Museum. The Museum reserves the right to inspect the property from time to time to assure that its interest is properly safeguarded. 3. CHARITABLE REMAINDER TRUSTS A. Description The charitable remainder trust is a form of residual interest gift. The donor ('settlor') transfers property to a trustee who holds and manages it. If the property is income-producing, the net income will be paid to the donor and/or ! other named beneficiary. When the trust terminates (either at the death of the beneficiary(ies) or after a term of years), the trust remainder is distributed to the Museum. If the trust is irrevocable, the donor is entitled to a gift receipt for the present value of the residual interest. B. Guidelines 1. A charitable remainder trust may be funded with cash, securities or real estate. If real estate is to be contributed and the Museum is the trustee, 5 ! ! i I 825 The Clarke Museum & Archives Planned Giving Program, Policies and Guidelines the real estate shall be subject to a thorough review as described in the guideline pertaining to real estate #5 below. 2. Where the Museum is trustee, it is recommended the minimum trust be $50,000 and that beneficiaries be at least 50 years of age. The Board, however, has discretion to make an exception to these recommendations in special circumstances. 3. If the donor selects an outside trustee, the trust may be funded with any property of any value acceptable to the trustee. 4. The ,trust agreement shall be either drafted by or reviewed by the donor's owns legal counsel. The Museum may make prototype agreements available to the donor's legal advisor, but shall execute no agreement until that person has determined that the trust agreement is in the proper form and that the gift is appropriate for the donor's situation. 4. LIFE INSURANCE A. Description There are various methods by which a life insurance policy may be contributed to the Museum. A donor may: 1. Assign irrevocably a paid-up policy to the Museum; 2. Assign irrevocably a life insurance policy on which premiums remain to be paid; or 3. Name the Museum as a primary or successor beneficiary of the proceeds. When ownership is irrevocably assigned to the Museum, the donor is entitled to a gift receipt for the net cash surrender value (if any) and for any premiums subsequently paid. B. Guidelines Any of these types of life insurance gifts are acceptable to the Museum. In the event a policy is contributed on which premiums remain to be paid, the Museum will pay the premiums provided the donor makes equivalent contributions for that purpose. i i 6 826 The Clarke Museum & Archives Planned Giving Program, Policies and Guidelines 5. GIFTS OF REAL ESTATE A. Description Gifts of real estate may be made in various ways: outright, residual interest in the property, or to fund a charitable remainder trust. The following guidelines pertain to gifts of real estate in general. Where real estate is transferred to a charitable remainder trust, additional requirements of the trustee must be met. B. Guidelines 1. The donor shall secure a qualified appraisal of the property. 2. Unless the Museum has reason to believe this appraisal does not reflect the property's true value, a gift receipt will be issued for appraised value (or present value of the residual interest computed on the appraised value in the case of residue interest gifts). However, the Museum reserves the right to secure its own appraisal and issue a gift receipt based on it. 3. The Museum shall determine if the donor has clear title to the property. 4. The Museum shall review other factors, including zoning restrictions, marketability, current use, and cash flow, to ascertain that acceptance of the gift would be in the best interest of the Museum. 5. The Museum shall conduct an environmental assessment, which my include an environmental audit, and accept the property only if (a) it contains no toxic substances, or (b) they're removed or other remedies taken assuring that the Museum assumes no liability whatsoever. 6. GIFTS OF SHARES IN PRIVATELY-OWNED COMPANIES AND OTHER BUSINESS INTERESTS A. Description Donors may make gifts of privately-owned shares and partnership interests. These can be accepted by the Museum so long as the Museum assumes no liability in receiving them. In some instances the corporation is willing to redeem privately-owned shares, or other stockholders are willing to purchase them. B. Guidelines 1. To be considered for acceptance, partnership interests must not subject the Museum to cash calls or other liability and must not have adverse tax consequences to the Museum. 7 j 827 The Clarke Museum & Archives Planned Giving Program, Policies and Guidelines 2. Privately-owned shares may be accepted if they likely can be sold in the future to the corporation, other stockholders, or to others interested in acquiring the corporation. 7. BEQUESTS A. Description Bequests have historically been the most important kind of deferred gift, and they have contributed significantly to the building of institutional endowments. B. Guidelines Sample Bequest language for restricted and unrestricted gifts, including endowments, will be made available to donors and their lawyers to ensure that the bequest is properly designated. Donors will be invited to provide information about their bequest provision and, if they are willing, to send a copy of that section of their will naming the Museum. During the probate of estates containing a bequest to the Museum and during the post-death administration of evocable trusts containing dispositive provisions benefiting the Museum, the Director-Curator in consultation with the Museum legal counsel, shall represent the Museum in all dealing with the lawyer and executor of the estate. SAMPLE BEQUEST LANGUAGE The following sample bequest language is intended to assist the Staff in responding to inquiries by donors or their attorneys about making a bequest to the Museum. V`'hen providing sample language, determine the 'form' and 'purpose' of the bequest; then combine the language relating to each. If the inquiry comes from the donor, make sure that the donor understands that the language is a resource for his/her attorney and that the Museum is not providing legal advice. I g 828 The Clarke Museum & Archives Planned Giving Program, Policies and Guidelines FORMS OF BEQUESTS 1. SPECIFIC BEQUEST A. Sum of money. "I give to the Clarke Museum & Archives the sum of (amount)..." B. Particular property(ies) such as real estate, stocks, bonds,jewellery, works of art, or other items. Unless the property is useful to the Museum, it will be sold, and the proceeds, less any appraisals, and selling costs, applied per terms of the bequest. "I give to the Clarke Museum & Archives (description of property)..." 2. REST AND RESIDUE OF ESTATE The Museum is given all or a percentage of what remains of the estate after paying debts, taxes, expenses, and other bequests. "I give to the Clarke Museum & Archives all (or stated percentage) of the rest, residue, and remainder of my estate..." 3. CONTINGENT BEQUEST This gift takes place only if the Testator is not survived by certain individuals. "if (name/s of primary beneficiary/ies) do/es not survive me, or shall die within ninety (90) days from the date of my death, or as a result of a common disaster, then I give to the Clarke Museum&Archives (describe amount of cash, property, or percentage of residual estate)..." 4. CHARITABLE REMAINDER TRUST A designated portion of the estate property is used to fund the trust, which then pays the net income to the beneficiary(ies) identified in the donor's will. When the trust terminates (at the death of the beneficiary (ies) or at the end of a term of years, the trust principal is distributed to the Museum. "I direct that my executor raise out of the capital of my estate the sum of$ to be held and invested by my Trustee and to pay to (name of spouse or other individual/s) all the net income which accrues therefrom during his (her,their) 9 829 The Clarke Museum & Archives Planned Giving Program, Policies and Guidelines natural lifetime(s). Upon the death of , such trust fund shall be distributed to the Clarke Museum & Archives...I appoint (name of person or institution of this trust)..." PURPOSE OF BEQUESTS I Whatever the form of the bequest, it may be designated for unrestricted use, or to establish an endowment. Below are 'purpose' clauses that can be added to any of the examples of bequest language listed above under 'Forms of Bequest' 1. Unrestricted Use "...To be used for the general purposes of the Clarke Museum & Archives." (May also add. "...at the discretion of the Board of Directors.") 2. Restricted Use "to be used for (detailed description of what the donor wants the bequest to accomplish)." Examples "...to be used for employment of summer students." "...to be used for acquisitions in the area of Native art." "...to be used for research into lumbering." "...to be used for support of educational programs for young people." 3. Establish an Endowment "This gift may be merged with any of the investment Asset of the Museum, but it shall be entered in the Museum's books and records as the JOHN & JANE DOE ENDOWED...SCHOLARSHIP, FELLOWSHIP, CHAIR, RESEARCH FUND etc. The income from the endowment shall be used to...(support educational programs for the staff, provide educational programs for young people, finance travelling exhibits, etc.) Before providing specific language for an endowment the Board/Committee should check with the Director/Curator to make sure that the proposed endow- 10 i i 830 The Clarke Museum & Archives , Planned Giving Program, Policies and Guidelines ment is consistent with the mission of the Museum and that the amount of the bequest would be sufficient for the endowment. POWER TO VARY PROVISION It is recommended that the following paragraph be added if the bequest is either for a restricted use or to establish an endowment. "If, in the opinion of the Board of Directors of the Clarke Museum & Archives, it should be impossible, inadvisable, or impractical to use this gift for the specified purpose(s), then the Board may in their discretion use the gift to the best advantage of the Museum, keeping in mind the original wishes of the donor. In any such alternative application, the support provided by the bequest shall be clearly identified with the name... 11 831 GIFT ANNUITY AGREEMENT Use this form where there is a single donor and the annuitants (are) the donor or the donor and a surviving spouse. DEED OF AGREEMENT THIS DEED OF AGREEMENT made this day of , in the year BETWEEN: (hereinafter called the "Donor") OF THE FIRST PART AND THE CLARKE MUSEUM & ARCHIVES (hereinafter called the "Museum") OF THE SECOND PART WHEREAS the Donor wishes to transfer certain of (his/her) assets in the ownership of the Donor to the Museum; AND WHEREAS the Donor understands and agrees that the Museum will purchase a life annuity for the benefit of the Donor and (his/her) spouse; AND WHEREAS the Museum undertakes that it will diligently seek a quality commercial annuity for the Donor; AND WHEREAS it is the Donor's intention that if any amount should remain following the purchase of the said annuity, it shall be retained by the Museum to be used by the Museum for the purposes described in Article 5 of this Deed of Agreement; NOW THEREFORE in consideration of the mutual covenants and agreements set forth below, the Donor and the Museum agree as follows; i 1. PAYMENT TO MUSEUM Subject to the terms and conditions of this Agreement, the Donor herby pays and transfers to the Museum the amount of $ to be used by the Museum for the purposes set forth below. � 12 i 832 2. AUTHORIZATION OF THE MUSEUM TO PURCHASE AN ANNUITY The Donor hereby authorizes the Museum to purchase, from a licensed life insurance company in good standing, on the terms set forth in Article 3(a), an annuity for the life of the Donor. (alternate wording for joint and survivorship annuity: "...a joint and survivorship annuity for the lives of the Donor and his/her spouse") 3. TERMS OF ANNUITY (Use this wording if the Donor is the only annuitant) (a) The Museum agrees to select an annuity from a life insurance company based on the following requirements of the Donor: (i) the annuity will pay an annual amount of$ to the Donor (alternatively: to the donor's account at the Bank) (ii) Payment under the ahnuity will commence not later than the day of _in the year and shall be made (monthly, quarterly, semi-annually, annually). (iii) The annuity so acquired will be guaranteed by the insurance company for a period of ten (10) (alternatively: five (5)) years (the 'Guarantee Period') and the beneficiary of the guaranteed payments in the event of the death of the Donor during the Guarantee Period shall be the Museum. (b) The Museum shall arrange for an authorized agent of the life insurance company to contact the Donor in order to obtain the necessary information required for the annuity application and to explain the contract to the Donor. (c) The donor agrees to notify the Museum in writing when (he/she) has approved the annuity, as explained by the life insurance company agent, and signed the application. (Use this wording if annuitants are the Donor and surviving spouse) (a) The Museum agrees to select an annuity from a life insurance company based on the following requirements of the Donor: (i) The annuity will pay an annual amount of$ to the Donor (alternatively; to the Donor's account at the Bank) so long as the Donor is living, and after the Donor's death to (spouse)(alternatively: to (spouse)'s account at the Bank) so long as (spouse) is living. (ii) Payment under the annuity will commence not later than the day of _, in the year and shall be made (Monthly, quarterly, semi-annually, annually). 13 833 (iii) The annuity so acquired will be guaranteed by the insurance company for a period of(10)(alternatively: five (5)) years (the 'Guarantee Period') and the beneficiary of the guaranteed payments in the event of both the Donor and (spouse) die during the Guarantee Period shall be the Museum. (b) The Museum shall arrange for an authorized agent of the life insurance company to contact the Donor in order to obtain the necessary information required for the annuity application and to explain the contract to the Donor. (c) The Donor agrees to notify the Museum in writing when (he/she) has approved the annuity, as explained by the life insurance company agent, and signed the application. 4. TERMINATION PRIOR TO PURCHASE OF ANNUITY (a) The Donor shall have TEN (10) DAYS FROM THE DATE ON WHICH THE DONOR NOTIFIES THE CHARITYTHAT(HE/SHE)HAS APPROVED THE ANNUITY under article 3 (c) to terminate this Agreement provided that the Donor shall be required to deliver written notice of termination to the Museum which must be received by the Museum within such ten (10) day period. The Museum agrees that upon receipt of a notice of termination from the Donor that complies with this Agreement, it shall refund to the Donor the entire amount transferred to the Museum under article 1. (b) If the Museum does not receive a notice from the Donor in accordance with clause (a), the transfer to the Museum will be deemed to be irrevocable. 5. PAYMENT FOR CHARITY'S PURPOSE Any amounts not used by the Charity for the purchase of the annuity shall be deemed to be gift by the Donor to the Museum and may be used by the Museum for any purposes that the Museum chooses for the fulfilment of its objects. 6. NO WARRANTY The Donor agrees that: (a) The Museum is not liable for and makes no warranties or guarantees to the Donor regarding any tax savings or other benefits which may or may not result from the Donor's purchase of the annuity. (b) The Museum has advised the Donor to seek independent professional advice with respect to all of the terms of this agreement and the purchase of an annuity. The Donor agrees that the relationship between the Donor and the Museum is not a fiduciary relationship. (c) Subject Article 4(a), the Museum's liability under this Agreement shall be limited to payment to the Donor (Donor and surviving Spouse) of all annuity payments received 14 I 834 from the life insurance company for the Donor (donor and surviving Spouse) during his/her lifetime (during their successive lifetimes). 7. GENERAL PROVISIONS (a) Notice. Any notice required or permitted to be given under this agreement shall be writing and may be delivered personally or mailed by prepaid registered mail addressed to the Museum as follows: and addressed to the Donor as follows: Any notice sent by prepaid registered mail shall be deemed to be duly given and received on the fourth .business day following the date of mailing, except, that no Saturday, Sunday or holiday shall be considered a business day. In the event of disruption of mail service, notice shall be served personally. (b) Entire Agreement. This Agreement constitutes the entire agreement between the Donor and the Museum and supersedes all prior agreement, understandings, and discussions, whether oral or written, regarding the subject matter hereof. No representations, inducements, promises or agreements not embodied in this agreement shall be of any force or effect with reference to this Agreement or otherwise. (c) Severability. If any provision of this agreement is found to be wholly or partially invalid, this agreement will be interpreted as if the invalid provision had not been a part hereof so that invalidity will not affect the validity of the remainder of the Agreement. (d) Governing Law. This Agreement shall be governed by the laws of the Province of Ontario and the laws of Canada applicable thereto. I.N WITNESS WHEREOF of the parties have duly executed this agreement as of the date first above written. Witness Signature of Donor Clarke Museum & Archives Per: Name and Title 15 835 CLARKE MUSEUM & ARCHIVES ENDOWED FUND AGREEMENT I ESTABLISHMENT OF AN INDIVIDUALLY-NAMED ENDOWMENT The Clarke Museum & Archives (hereinafter "the Museum") hereby agrees to establish the ENDOWMENT FUND ("Fund") per the terms of this agreement, to become effective when contributions for this Fund total at least $10,000. II PURPOSE The purpose of the Fund shall be to support the general purposes and programs of the Clarke Museum & Archives. III DONOR(S) (the name of the primary donor(s), his/her/their/affiliation with the Museum, why the Fund was established and some brief biographical information about the donor) IV FUNDING The Fund shall be funded with the following: (It may include) 1. A cash gift of 2. A gift of securities (or real property) valued at $ 3. A gift of the remainder interest in a charitable remainder trust executed on (date). 4. A gift of the residual interest in (description of property) executed on (date). 5. The gift portion of a charitable gift annuity executed on (date). 6. A life insurance policy assigned to the Museum on (date). 7. Any other gifts or bequests that (name) or persons may designate for this purpose. S. Additional gifts that the donors intend to complete by (date) which, when added to the initial gift, total at least $ 16 j 836 i V INVESTMENT The donor(s) intend(s) that the property contributed for this Fund or other property substituted for it, shall be held and invested by the Museum as a permanent endowment unless the purpose is amended in accordance with Article VII, but in no case shall the contributed property, or property substituted for it, be held for a period of less than ten years, in accordance with Section 149.1(1)(e)(i) of the Income Tax Act. The income earned on the endowment shall be used for the purpose authorized by this agreement. The investment, management, and expenditure of all funds shall be in accordance with the Museum's policies and procedures. IV ADMINISTRATION The principal of this endowment shall be retained, administered and managed by the Museum. The distribute'd income shall be used for the purposes described in Article II. V•II AMENDMENT This agreement may be amended by the mutual consent of the Museum and _during (his/her/their) lifetime(s). If changed circumstances should at some future time make it impractical to continue using _z _} the income from this endowment for the designated purpose, and the donor(s)-either is (are) not living or not able to consent to an amendment, then the Museum may redesignate the purpose of the endowment income, providing that the Fund shall continue to bear the name(s) of and the amended terms shall adhere as closely as possible to the donor(s)' original intent for this Fund. Donor(s): For the Charity: Date 17 X37 Clarke Museum & Archives Endowment Policies following quarter. The number of units assigned shall be determined by dividing the amount of the addition by the unit value as of the end of the immediately preceding quarter. The funds within the endowment shall consist of all individually-named funds and the general endowment. Investment Management The endowment shall be managed by the Finance Committee of the Board whose responsibilities in the area of investment administration are as follows: To recommend to the Board policies for the management of the endowment. * To make recommendations to the Board on the selection of portfolio managers. * To determine how assets are to be allocated. To monitor the management of the endowment portfolio in order to enhance return and control risk, and to keep the Board fully informed. Asset Allocation The monitoring and adjustment of the mix of assets among the investment classes is a major factor in achieving investment return. The Finance Committee shall carefully review the mix of assets in the endowment and periodically make, or instruct the portfolio mangers to make, transfers within prescribed asset limitations. Ordinarily 40-60% of the portfolio shall be invested in equities and the balance in fixed-income and cash equivalents. Portfolio Managers The Board, upon recommendation of the Finance Committee, may appoint one or more portfolio mangers and may allocate endowment assets among them in whatever proportions it deems appropriate. One or more mangers shall be given responsibility of equity investments and one or more for fixed-income investments, or any manger may be give responsibility for both. Minimums for Designated Endowments Any amount may be contributed for the general endowment or for any previously- established named endowment. The minimum required to establish a named endowment, the income from which can be used at the discretion of the Museum, is currently $10,000. 19 i R 3 9 Clarke Museum & Archives Endowment Policies Permissible named endowments for specific purposes and the current minimum contributions to establish them are listed on attached Schedule A. A named endowment for a non-listed purpose may be established subject to the consent of the Board. The amount required for such an endowment will depend on the objectives to be accomplished, and will be negotiated between the donor and appropriate representatives of the Museum. Execution of Endowment Agreements A named endowment can be established either by a lifetime gift or by bequest. When it is created by a lifetime gift the donor and officers of the Museum will sign an endowment agreement that sets forth the terms of the endowment. When the donor executes a will containing language direction that a named endowment be established, no other documentation is required. Contributions for existing named endowments or for the general endowment require only a transmittal letter of bequest language stating the donor's intention. 20 840 GIFT ANNUITY If you have accumulated an amount of capital and rely on the annual investment returns, but have seen your after-tax income decrease due to lower interest rates and higher taxes, consider a gift annuity. To help you and the Museum meet some long-term needs, you can set up a gift annuity by contributing an amount of capital, usually in the forms of stocks or cash. In return, the Museum's financial advisors guarantee a specified annual income or annuity for the remainder of your lifetime (and that of your spouse if you wish). The funds will be professionally managed to ensure the optimum rate of return. BENEFITS TO YOU: • Depending on your age at the time of your gift, the interest rate that is set is usually higher than what you could get at a bank. • All or a portion of your annuity income is tax-free, resulting in higher after tax income. • Part of the original capital may qualify immediately as a charitable gift to the Museum and you will be issued a tax receipt. * At the end of the annuity period, the balance of the fund forms a gift to the Museum to be used as you have directed. It may be appropriate to replace your original investment in the annuity with a life insurance policy. The premiums could be paid with the increased after-tax income from the annuity and the death benefit would go to your heirs. Because tax exemptions and interest rates vary with the age of the annuitant, arrangements are tailored to individual circumstances. The Museum will help you explore the options that best suit your situation. I 21 i 841