The Blue Grass Community Foundation manages about 230 funds from around the area, which are established by individual donors, business or agencies to benefit charitable goals. Most of the funds are endowed and invested in the stock market as part of a large pool.
Barbara Fischer, a grants officer for the foundation, said donors can make the funds as general or specific as desired.
Some funds are aimed at a single organization, while others benefit a broad cause such as literacy, she said. Other donors let the foundation decide how money should be distributed.
Of the funds in Clark County, all are raised and spent locally.
Some of the funds are designated for specific entities such as Rose Mary C. Brooks Place or Winchester YMCA. The bulk, however, are discretionary funds, which are passed out in grants by the Clark County foundation's board, Hodgkin said.
In normal years, up to 5 percent of the funds' total value is available for grant making. The value is based on the average size of each fund over the past 12 quarters.
Last summer, the Clark County foundation was able to distribute $227,500 to more than 20 organizations.
But this year, the value of most of the funds has dropped so low, they have come under the Uniform Management of Institutional Funds Act (UMIFA) which stipulates that the funds may not fall below their original contribution amount. Once the funds drop below the threshold, grant making is prohibited.
"Most of the funds we have given out in prior years ... are all discretionary," Hodgkin said. "That has all been impacted."
Instead of giving out grants like usual, the foundation is using $100,000 that was saved last year to advance two causes. The board has provided a $50,000 challenge grant to Clark County Community Services and $50,000 to benefit a dental program in local schools.
"There are no funds available beyond that which we held over from last year," Hodgkin said.
The Clark County Fiscal Court also maintains a fund under the Clark County Community Foundation, however, the court's fund was set up under different regulations and is not restricted by UMIFA.
Although not restricted, the court is planning for a significant decrease in it's grant-giving this year due to tight fiscal conditions in 2009-10.
This year, the court received $111,000 to give out in grants, but has amended half of that amount into its general fund budget to cover government costs. The court's foundation committee is still determining which organizations will receive funding from the remaining amount.
Meanwhile, the Winchester Board of Commissioner is scheduled to begin budget planning next week, and some have indicated that community organizations may face additional cutbacks as the city struggles to balance its spending plan.
Likewise, Fischer said charitable groups have seen a decline in giving under the sour economy.
"It's not just our funding that's hurting them," she said. "Some of these agencies have endowments of their own and they've seen those drop. They've seen contributions decrease. The situation is just dire."
Despite the difficulties, Hodgkin said donors should still be encouraged to contribute to local endowment funds under the foundation. The funds allow individuals without huge sums of money to give to charitable causes and know their money will be professionally managed, he said.
Anne Ehl, chief financial officer for the Blue Grass Community Foundation, pointed out that the foundation's pool has already recovered some of its market value and never fell as far as the S&P 500, which tumbled 33 percent during the same period.
But, she was cautious in her optimism going forward.
"From what our investment advisers are telling us, and from the research I have done, everyone is hoping that March was the bottom, but there is no guarantee," she said.
Even if the market bounces back, Ehl said UMIFA could remain an issue next year because the funds' values are based on a rolling average.
"I think it is going to be very rocky," she said. "If you get two bad years in a row, it's going to be even more significant."
Contact Mike Wynn at firstname.lastname@example.org