A Timeline of the

1

• A Timeline of the
• Alaska Childrens Trust (ACT) and
• The Friends of the Alaska Childrens Trust (FACT)

2
1988 Alaska Childrens Trust Established by the
Legislature

• Mandated to promote initiatives that strengthen
  families and serve dependent children

ACT Mission To improve the status of children in
Alaska by generating funds and committing
resources to eliminate child abuse and neglect.
3
1996 Initial legislative appropriation for 6
million

• One of 52 Childrens Trust in U.S.
• As of October 31, 2008, the balance of the Trust
  Fund is 8,761,296
• Fund has grown through investment and
  contributions by FACTno other state money has
  been put into the fund
• Principal of the Trust is not protected from
  legislative appropriation if Legislature decides
  it wishes to appropriate. Other trust funds
  including Public School, University of Alaska and
  Alaska Mental Health Trust Authority were
  established by Congress and some or all of
  principal of those funds are protected from
  appropriation by Legislature as matter of federal
  law.

4
1997FACT incorporated as a 501(c)(3)
FACT Mission To increase awareness among
Alaskans about the high rate of child abuse and
neglect in our state, and to raise money for the
Alaska Childrens Trust (ACT).
5
2005

• November ACT develops strategic plan to include
  how FACT ACT should be structured to work most
  effectively.
• December Motion passed to hire contractor to
  conduct an independent study on potential
  structures for the Act.

6
2006

• Organizational assessment completed by The Giving
  Practice (Philanthropy Northwest).
• Options identified from Giving Practice Report
• Eliminate trust activities and turn funds over to
  State
• Stay with status quo
• Stay with State, but negotiate statute and
  operational changes
• Become an Alaska Community Foundation
  donor-advised fund
• Utilize Foraker Group as fiscal/operational
  sponsor
• Merge with FACT
• Create new 501(c)(3)

7
2007

• Joint ACT/FACT Restructuring Committee formed to
  address existing structure of the Trust and make
  recommendations for its future.
• Based on recommendations of Giving Practice, the
  ACT Board agreed to remain within the state
  government and work on legislation and
  organizational changes with state government to
  address efficiency.

8
2007

• January ACT passed two Operating Policies that
  address policies procedures for administrating
  funds and awarding grants.
• February Rep. Hawker introduced HB 160 that
  would transform the management of the ACT fund
  into an endowment model for both the ACT and the
  Public Schools Trust Fund.

9
2007

• July FACT urges ACT board to revisit
  privatization based on concerns that FACT is
  unable to accomplish its mission.
• Because the ACT fund is a state fund and subject
  to legislative appropriation, donors are
  increasingly reluctant to contribute to a fund
  which cannot guarantee that the donors intent
  will be followed.

10
2007

• October Alaska Community Foundation (ACF)
  presents options for fund management. The ACT
  board passes a motion to recommend to the
  Governor and Legislature to privatize the ACT and
  that the Trust funds be transferred to designated
  fund at ACF to be governed by a
  gubernatorially-appointed ACT board.
• November FACT hires legal counsel to conduct a
  review of the enabling ACT statutes and to draft
  legislation to privatize the ACT.
• The legal opinion form the Legislative Affairs
  Agency stated, Privatizing the fund would
  require a repeal of the fund and some transfer
  provision for the existing principal.

11
2008

• January SB 206 210 pre-filed by Sen. Bettye
  Davis. Several amendments drafted for SB 206.
• February FACT hires lobbyist.
• March SB 206 210 heard in Senate HESS
  Committee. Bill referred back to bill drafter
• HB 422 introduced by Rep. Peggy Wilson. HB 422
  passes through House HESS Committee and is heard
  in House Finance Committee, but stalls due to
  concerns with language regarding State oversight
  and the structure of the transfer agreement that
  would transfer the Trust fund to the Alaska
  Community Foundation.

12
2008

• November ACT board passes a motion that
  outlines the structure of Alaska Childrens Trust
  under management of the Alaska Community
  Foundation.

13
Governance Structure

• The Alaska Childrens Trust will merge with the
  Friends of the Alaska Childrens Trust under its
  established 501(c)(3). A fundraising committee
  shall be established to raise funds for the
  Alaska Childrens Trust.
• The State of Alaska will maintain State
  oversight of the Trust funds through a
  governor-appointed board as follows
• The Alaska Childrens Trust Board shall be
  comprised of nine (9) members
• the governor or a designee of the governor
• the commissioner of health and social services
• the commissioner of education and early
  development
• three (3) public members appointed by the
  governor and
• three (3) public members nominated and elected by
  the board

14
Transfer of Trust Fund to Alaska Community
Foundation

• The balance of the Alaska Childrens Trust shall
  be transferred to the Alaska Community Foundation
  as an agency fund to be managed as a permanent
  endowment for the benefit of the Alaska
  Childrens Trust.
• The agency fund allows for the ACT and FACT
  boards to merge under FACTs 501(c)(3) and allows
  for maximum autonomy for grant making. The ACT
  board can focus on its mission, establish a
  fundraising committee and hire staff to manage
  the day-to-day operations while ACF oversees the
  investments and ensures that the endowment is not
  invaded so that income will always be available
  to meet the mission of the ACT.

15
Grant Making Under ACF

• The ACT board will approve expenditures, review
  and award grants for community-based programs and
  projects that aid in the prevention of child
  abuse and neglect.
• The Alaska Childrens Trust payout for grants and
  expenses shall be managed in the identical manner
  approved by the State of Alaska for the Alaska
  Mental Health Trust Authority as of October 6,
  2008. This includes maintenance of an income
  reserve to fund grants and operations at a
  consistent level year to year.
• An income reserve account shall be established at
  the time of transfer of the Alaska Childrens
  Trusts assets from the State of Alaska to the
  Alaska Community Foundation at four (4) times the
  previous years annual payout as is currently
  calculated by Callan Associates for the Alaska
  Mental Health Trust Authority as of October 6,
  2008.

16
Principal Account

• At no time shall the principal of the fund
  transferred by the State of Alaska to ACF be
  expended except for an annual allocation from the
  principal for operating expenses as currently
  permitted under state law.

17
Preservation of Revenue Sources

• The ACT legislation would preserve the revenue
  sources from the sale of ACT license plates and
  heirloom marriage and birth certificates for the
  benefit of the ACT.
• Sales of license plates and the heirloom marriage
  and birth certificates average 44,000 per year

18
State Management Fees

• The Trust is allocated charges based on its pro
  rata share of assets managed by the Treasury
  Division.
• Amounts charged to the ACT Fund are derived by
  dividing the ACTs total fixed income Net Asset
  Value (NAV) by the total NAV of fixed income
  assets managed by the Treasury Division. This
  percentage is then applied to the total allocable
  costs related to managing fixed income assets.
  The management fee for FY09 is estimated to be
  16,000.

19
ACF Management Fees

• The ACF administrative fee for an agency fund is
  .5 per annum of the fund balance, calculated
  monthly based on the average daily fund balance.
• Under ACF, the Trust fund could be managed more
  aggressively and the fundraising committee will
  be in a better position to generate corporate and
  foundation contributions because donors will be
  giving to a non-profit public charity instead of
  a pass-through organization. ACT and ACF will be
  able to guarantee that donor intent is honored
  and ensure that the funds will be spent on the
  prevention of child abuse and neglect.

20

Benefits of ACT FACT Merger

• The ability to expand the role of the trust from
  just grant making to include research, convening,
  collaborating, outreach and social marketing.
• Allows for ethical fundraising
• Ensures for long term stability of trust funds
• Unified voice to focus on mission of ending child
  abuse and neglect in Alaska